If a worker steals from your business, it has obvious monetary repercussions, but there are also many other negative impacts your business could experience. When an employee steals money, supplies, or time from your company, it shows the cracks in your current workplace culture. An employee theft exposes flaws in your company’s security and may have negative effects on employee morale.
Learning more about the ways employees can steal from your business, as well as the reasons why employees feel the need to steal in the first place may help you prevent this from occurring. Review strategies to identify theft and ways you can protect your business to prevent employee theft.
Types of Employee Theft
Employee theft doesn’t always involve physically stealing supplies or products directly from your business. There are many methods employees may use to steal from your company, including the following:
- Time theft: You pay your employees for the time they spend working, which generally excludes lunch breaks or time off. Employees who take extra-long lunch breaks or complete non-work tasks while on the clock and getting paid without claiming it are stealing from you.
- Data theft: Employees who have access to sensitive data, such as client payment information or trade secrets, may take this data to sell or use in other ways.
- Intellectual property theft: You must trust the employees who are present in brainstorming meetings. If not, they could take your ideas and secrets and offer them up to other companies in your industry, ruining your business’s competitive edge.
- Larceny: An employee who steals property from your company or a co-worker commits larceny. This can cause mistrust between workers and a generally negative impact on employee morale.
- Skimming fraud: If your business deals with cash, be on the lookout for skimming. This occurs when an employee takes some money from a transaction before it’s been recorded. For instance, charging a customer extra, but only recording their payment of the standard price for something, in order to pocket the difference.
- Illicit records: Workers who have access to your checks and books could write unauthorized checks and log them into your accounting system fraudulently. These employees may also create fake receipts to make the transactions more believable, which is a form of money laundering.
- Embezzling: Embezzlement is a serious offense that occurs when an employee who has access to your accounts takes money from them without your authorization.
Employees can also abuse their power or misuse the perks you provide them. For example, when a worker provides an employee discount to their friends for products or services at your business, it’s a form of theft.
Understanding the Reasons for Employee Theft
As an employer, it’s important to understand the reasons employees steal. This will help you better identify situations that need additional security or pinpoint workers you should keep your eye on. Some of the reasons employees may begin stealing include the following:
- Drastic life changes: Employees who experience drastic life changes that may affect their financial situation, such as divorce or the death of a loved one, may feel desperate. These workers could be more likely to create opportunities to steal from your company to cover their expenses.
- Opportunity: Workers who are constantly dealing with your company’s finances or products are presented with more opportunities to steal from your company. This may be enough to tempt your employees to engage in theft.
- Addictions: Employees with addictions are more likely to steal so they can financially support their habits.
- Greed: Some employees simply won’t be satisfied with the pay and benefits you provide. This greed could lead workers to steal additional money or other supplies directly from your company.
- Revenge: If an employee feels they’re being treated unfairly or you just delivered negative feedback about their job performance, they may get angry. An employee who’s angry is more likely to commit acts of revenge, including stealing from your business.
How to Detect Employee Theft
Developing strategies to detect employee theft quickly is crucial to protecting your business. The sooner you can take the proper actions to stop employees from stealing from your company, the fewer opportunities a worker will have.
Conduct regular audits of your business’s finances to ensure money isn’t missing. Asset misappropriation accounted for 89% of corporate fraud schemes in the U.S. in 2018.
Implement reporting systems that create checks and balances between employees. When there are at least two employees in charge of your finances, it prevents one employee from having complete control and manipulating the numbers in their favor.
It’s also important to look for red flags that an employee may be stealing from your company. Be on the lookout for an employee who:
- Makes big purchases: If your employee recently purchased an expensive new car, a brand-name watch, or another lavish item you know they can’t afford, take note. They may be getting extra money from somewhere, and it could be your business.
- Asks to work alone: An employee who’s stealing doesn’t want to be held accountable or caught by other workers. If an employee asks to work by themselves, it could be a red flag that they’re scheming and stealing from your business.
- Works late: If an employee who wants to steal from your company simply can’t get time alone to do so, they may opt to work late in order to create this alone time. Keep tabs on employees who make it a point to work late to ensure they’re not involved in a scheme.
- Refuses to take time off: It’s common for employees to use their paid-time-off or stay home when they’re sick. If an employee refuses to take time off, they may be stealing from the company and are afraid to leave their job unattended.
- Has sudden mood changes: An employee who’s usually pleasant but gets defensive if you try to assign different tasks or move them to a new location may be a red flag. They could get moody because your requests have uprooted their theft scheme.
Employee Theft Protection and Solutions
To protect your company from employee theft, it’s important to implement prevention strategies into your processes and procedures. During the hiring process, take the time to get to know job applicants before welcoming them into your company.
It’s also important to compensate your employees and recognize their achievements generously. When you keep up employee morale, your workers are invested in the success of your business and are less likely to steal and put their position in jeopardy. You can also prevent theft within your organization by:
- Creating strict no-tolerance theft policies.
- Closely tracking inventory, cash, and equipment.
- Managing your company’s assets.
- Supervising employees and setting them up in teams.
- Providing mental health services and covering counseling costs.
- Offering adequate compensation and opportunities for advancement.
- Installing security cameras and restricting after-hours employee access.
To ensure employee theft doesn’t negatively impact your business or your clients’ financial situations, consider contacting a reputable bonding company. When you buy bond insurance, you add an important level of protection against financial ruin.
Although you may assume you can trust your employees, it’s important to protect your business from theft. Take these actionable steps to identify, understand, and prevent employee theft and you’ll keep worker morale positive while continuing to grow your business.