How to deal with employee theft

While the vast majority of employees in this country will work hard for their employers this week, others will steal more than $1 billion in inventory, money, parts, components, supplies, information and customers. The American Management Association estimates that 95 percent of all businesses will experience employee theft this year.

The really unfortunate part of those statistics is that most employers have plenty of signs that something is amiss, but they fail to see them or fail to take action. They should, however, since the Department of Commerce estimates it will take $20 in additional revenue to offset every $1 lost.

It’s understandably difficult for an employer to accept the idea that trusted employees steal. As a result, many managers develop misconceptions about employee theft, believing that:

· Most theft is caused by non-employees;
· Well-paid and senior employees will not steal;
· Honest employees can be counted on to report employee theft;
· Employee theft is obvious and can easily be detected; and
· Managers do not need to formally inform employees that theft will not be tolerated.

Employees steal for many reasons, and most explain it by rationalizing their actions, blaming the company for poor oversight or for providing easy opportunities to steal. Many blame management for setting a poor example. Others believe: everyone does it; the company can write off the losses; the company makes a large profit and employees deserve a larger share; or the company deserves it as a result of some mistreatment of the employee.

If you are the victim of employee theft, the first thing you should do is take a thorough look at your company processes. Theft usually occurs as a result of a breakdown in procedure. Do you lack a system for checks and balances? Are employees not following clearly defined procedures? Are you paying enough attention? Use the situation as a wake-up call to re-examine the way you do business.

Here are some tips:

· Do background checks on your employees. In a hurry to find workers, some employers will just go on a “gut” reaction or assume that because a prospect is a friend or relative of a current trusted employee, the new prospect also is trustworthy. Sometimes that theory works; sometimes it doesn’t. Check everyone out thoroughly. Nothing is foolproof, but doing some research should keep you from making an obvious mistake.

· Don’t assume that well-paid employees will resist the temptation to steal, or that trusted employees will report others who steal. Don’t assume that new employees are more likely to steal than those who have the most seniority. Remember that things change in our employees’ lives just like they do in ours. Increased debt from a child in college, strained personal relationships, or an addiction could all change a long-time, trusted employee’s attitude.

· Remove the opportunity to steal. Establish a system of checks and balances—and oversight for key processes—that ensures different people are performing tasks and can routinely check one another’s work. Have an outside auditor perform an unscheduled inspection from time to time. Ensure that employees responsible for accounting and financial functions take time off routinely so irregularities in their work are more easily spotted.

· Work with your employees to create a plan to discourage theft. Allow them to help design policies, checks and balances, and consequences. Provide a confidential forum in which they can speak about their suspicions without fear of repercussions. Ensure that employees know that management and ownership are subject to the same rules and processes as everyone else in the company.

· Realize that theft often occurs when employees are under personal financial stress. Create an environment in which they can come to you with such problems. Incentives such as bonuses for high productivity or sales can help deter theft as well.

· Create policies that are clear, consistent and comprehensive in dealing with employee theft. Distribute the policies in written form. Avoid double standards and overly punitive reactions. Be mindful of morale among other employees. Keep discussions of problems confidential and low-key. Deal with issues on a case-by-case basis, but employ consistent policies across the board.

· Be a positive role model. The tone for integrity and trust starts at the top of any organization. Talk the talk, and walk the walk. Set an example of ethical behavior and equitable management. Regardless of the level in the organization at which theft occurs, it must be dealt with quickly and fairly.

If you suspect theft and decide to investigate, do so thoroughly and factually. Making an accusation toward an employee can permanently damage relationships not only with that employee but also with those with whom the individual works closely. Be sure you are on solid ground before you make your suspicions known or state any accusations.

Here are a few tips to help you in this situation:

· Be sure you have good information. What is the source for the information about the suspected theft? Is this a trusted source? Is the information reliable?

· If necessary, review the information with an attorney, auditor or other professional.

· Be sure you are current on all of the legal considerations when interviewing a suspect about a possible theft.

· Stick to the issue at hand. Don’t bring other employee performance issues or other opinions into the discussion.