National News
Employee theft is popular but not inevitable
December 29, 2015 posted by Steve Brownstein
Small business owners have plenty on their minds this time of year: rising costs, year-end tax reports, equipment failures and Christmas sales competition. Near the top of the worry list should be losses from employee theft.
According to the U.S. Department of Commerce, nearly one-third of business failures are related to employee theft or fraud.
The stealing can take many forms - outright theft out of the cash drawer, fraudulent disbursements from inflated expense reports or embezzlement of raw materials or inventory. An employee is 15 times more likely than a non-employee to steal from an employer, reports the National Federation of Independent Business. Such thefts add up to bigger losses than from shoplifting.
National studies show that employees who steal typically have worked for the business for several years before starting to steal and will continue for an average of three years before being caught.
The holiday season — when business owners are busy with customers while juggling inventory management and expanded operating schedules — may be an especially tempting time for employees to tap the till. There are easy and common sense ways to eliminate employee theft, say the experts.
Here are five ways to prevent workplace theft and fraud:
- Let your employees know you are watching. In-store surveillance cameras are essential in fast-paced retail businesses. Security cameras at the front counter and in warehouse or supply storage areas help keep the environment honest. Create an “always there” presence to minimize risk of employees walking off with your merchandise,” advises the Pinkerton security services company.
- Stay on top of the cash. Make unannounced internal audits and use an outside firm for a yearly audit. Control cash receipts by using pre-numbered sales slips. Use someone other than the sales clerk to balance daily sales slips and register receipts. Track your checks. “Always use pre-numbered checks with amounts and payees typed or written in permanent ink. Writing checks using QuickBooks software is recommended, says BizBest Media Group.
- Create the right workplace environment. The U.S. Small Business Administration recommends that employers set up a code of ethics with clear benchmarks for employee behavior. The guidelines should cover protection of company data, avoidance of conflict of interest and (obviously) obeying the law. Offer assistance to employees who are experiencing stress or difficult times.
- Use a thorough hiring procedure. Screen your new hires, even seasonal and part-time workers. Use screening to check previous work history, ask about gaps in employment. Checking references is a must. Make sure those references are up-to-date and credible. There are laws governing hiring procedures in terms of what you can ask about and what’s out-of-bounds. Check with the local EEOC office to stay within the rules.
Drug test, if you can afford it. A drug habit is often a trigger for employee theft
- Recognize the signs. The SBA recommends small business owners look for these signs of ongoing employee theft: An employee prefers to be unsupervised by working after hours or taking work home. There may have been an unexpected change in behavior. Do financial records sometimes disappear?
Be concerned about a worker who won’t take a vacation. To avoid being found out, a perpetrator may not want to leave the job or is overly protective or exclusive about work space. Treat unusual transactions with suspicion.
The food industry in general and restaurant business in particular, are vulnerable to employee theft because the jobs are typically lower-paying, pre-hire screening may be lax and the work provides tempting opportunities to steal.
According to a food service industry newsletter, in addition to the above theft prevention tips, restaurant owners should offer meals to their workers for free or at a discount. “When managers are generous...employees are less likely to steal,” said the experts at foodservicewarehouse.com.
Meanwhile, an FBI report says employee theft is the “fastest-growing crime in America” with retail businesses losing some $37 billion in stolen money and products a year.
