The economic downturn has made employee theft a serious problem in the United States. The National Federation of Independent Businesses reports that an employee is fifteen times more likely to steal from a business than a non-employee. And some thirty percent of business failures can be attributed to employee theft according to the U.S. Department of Commerce.
1. Do background checks on a potential employee before hiring.
2. Separate incoming funds and out going funds and make sure they are processed separately, by separate people. The person in-charge of invoicing in funds should not be in-charge of purchase orders. And the authorization and preparation of purchase orders should also be done by separate people.
3. Have a paper trail of serially numbered cash receipts, sales slips and purchase orders. The balancing of sales slips and register receipts should be done by the accounting department, not the sales clerk.
4. Have a secure computer system with limited access that you understand and can check periodically. And make sure that you audit computer records on a regular basis.
5. Never leave blank checks laying around unsecured.
6. Conduct annual inventories. These inventories should be done by individuals who are not responsible for day to day inventory management or record keeping.
7. Install security cameras in sensitive areas and in areas where people seldom frequent, such as closets. This makes it much harder for thefts to go unnoticed and unrecorded.
The reality is that deception can be easily hidden. You can’t always detect dishonesty simply by interviewing an employee. This is why it’s important to run background checks, credit checks and to contact previous employers. While everyone exaggerates a bit, a person who would lie on a resume is dishonest right out the gate.
One of the biggest, and most overlooked, encouragements to dishonesty is a confused work environment. A disorganized environment makes employees unsure about their position, which can increase the tendency toward dishonesty in some individuals. And it is easy to be dishonest in a confusing work environment as unethical actions can be easily hidden when nothing is written down and job duties degenerate to “he said/she said” and “Hey you, do this.” Clear procedures, well established policies and fair employment practices will go a long way in reducing employee theft.
You should also encourage your employees to take security seriously. Industrial security systems can only go so far. The best type of encouragement is to reward honesty. If an employee has a record of honesty, as well as good job performance, he or she should be held up as an example and rewarded. It’s a matter of setting standards and encouraging your employees to live up to them.
Perhaps the most important thing is to set an example of honesty. Don’t treat your employees like chattel. If you operate by clear and unambiguous rules and are honest in your dealings with others, while recognizing and rewarding job performance, your employees will develop a level of loyalty that can prevent dishonesty. What’s easier and less expensive in the long run, policing people or creating an environment where they willingly police each other?