How To Prevent Employee Theft?
- February 15, 2017
- Category: Law
Discovering that a trusted employee has been stealing from your business for months is a devastating betrayal. The loss of some petty cash or a few computers is bad enough, but if an audit reveals a member of staff has been systematically emptying the business bank account for a few years, it could spell the demise of everything you have worked so hard to build. You can’t always prevent employee theft, but there is plenty you can do to minimize the possibility somebody in the workplace will help themselves to your stock, cash or other valuables.
Theft is a well-recognized problem, particularly in the retail sector. Every year, millions of dollars’ worth of stock is misappropriated by shoplifters. The trouble is that employee theft is a far bigger problem. In fact, employees are five times as likely to steal from a business as a random shoplifter, so this is not an issue you can afford to ignore. If you do discover a theft, you need to call in an experienced law firm such as Elliott Kanter, but it’s better to prevent the theft from happening in the first place.
Carry Out Background Checks and Check References
Always perform background checks on new employees. Not everyone is upfront about their background. Job candidates might not admit they were fired from their last job for theft or they have served time for embezzling funds from a previous employer. This doesn’t mean you shouldn’t take a chance on someone, but forewarned is forearmed.
Employees rarely start stealing on day one of their employment. Most dishonest people wait until they are in a position of trust and they know the day-to-day routines, the reason being they are less likely to get caught if you trust them implicitly and won’t bat an eye if they work late.
It’s important to be vigilant, even if you are friends with an employee. Be alive to changes in behavior, such as a suspicion the person has a gambling habit or they appear to be living beyond their means.
Nobody wants to work with someone watching over their shoulder at all times, but it is sensible to have supervision systems in place. Never give one person absolute control over the business’s bank account and check book. Accounts receivable and accounts payable should be handled by different people so orders and payments can be verified. Sales should be checked by a supervisor at the end of the day and informal audits need to be carried out ad-hoc.
Install Security Systems
If you carry a lot of inventory, it is wise to install security systems, for everyone’s protection. That way, if there is any kind of dispute, video footage can be checked.
Hire an outside firm to carry out an external audit once a year. Any discrepancies will be picked up.
Make it easy for whistle-blowers to report any issues in the workplace, but always check the facts before you accuse an employee of theft, and if the theft is verified by an independent investigator, consult a lawyer.
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