Tips for Preventing Employee Theft and Dishonesty

The U.S. Chamber of Commerce estimates that 75% of all employees steal at least once, and half of those that steal do so repeatedly.

What Does Employee Theft Mean?

Employee theft is commonly defined as any stealing or use of an employer’s assets without permission. Commonly stolen items include:

• Money
• Time
• Office supplies
• Information
• Merchandise
• Company property

Theft usually occurs when three key elements exist:

Opportunity—Even the most honest employees can be tempted to steal when they see gaps in internal controls or a lack of controls.

Pressure—Drug or alcohol dependency, gambling problems, divorce, serious illness and other economic pressures can lead to employee theft.

Attitude—Some employees may think, because of perceived or actual abuse by an organization or supervisor, that the company owes them something and they have a right to take something to compensate.

Reduce Theft and Dishonesty in the Workplace

Taking action to decrease the occurrence of employee theft within an organization can have positive results. Reduce opportunities for theft and dishonesty by following these tips:

Be Observant for Theft Indicators

• Watch for signs of internal theft
• Look for employees who appear to be living far above their means or have a sudden unexplained rise in their living standards
• Pay close attention to management-level personnel who insist on handling routine clerical tasks themselves
• Be aware of employees who never take vacation or are reluctant to have others assist them, as both behaviors may indicate an effort to cover up dishonest activity
• Be alert for clients who complain about overcharging or inconsistencies in shipping and billing practices

Assign Separate Duties to Prevent Theft

• Try to have a management-level supervisor oversee inventory, accounts receivable and accounts payable operations
• If this is not possible, consider mandatory vacations for sensitive positions—a dishonest employee will have trouble concealing theft if they are out of the office for at least a week
• Divide tasks among several staff members, so no single employee has too much authority or autonomy
• Perform routine reviews and audits of inventory and bookkeeping

Control Access to Prevent Theft

• Restrict access to sensitive areas through physical means (lock and key) or electronic systems (access cards or badges) whenever possible
• Create procedures that outline appropriate security measures and processes
• Consider separating areas such as accounting and bookkeeping, warehouse, executive offices, IT servers, etc.

Create a Security Culture

• Use training and employee awareness programs to inform workers about stealing problems and how to spot signs of theft
• Make sure employees know they can report incriminating information on anyone in the firm without fearing job loss or other repercussions
• Explain the procedure for reporting theft and dishonesty information
• Determine clear, written policies on ethical behavior and have them signed by every employee, including executives
• Set a positive example by ensuring one ethical standard applies to everyone in the organization, including executives and managers

Provide Employee Assistance

Some of the most troubling cases of employee theft occur when workers are in desperate financial situations. Employee substance abuse is also closely linked with financial problems and theft.

Let employees know in advance that they can come to management for assistance. If your firm does not already have an employee assistance program, consider establishing one and making it well known to all employees and volunteers.

Take Steps Before You Hire

Ten percent of job applicants have criminal convictions and up to one-third of resumes contain serious falsehoods or omissions. Consider incorporating these components for more effective screening:

Background Checks—As part of the application, each job applicant should sign a consent form for a background check, including a check for criminal records, a credit check and verification of past employment and education. Include permission for future screenings in the consent language in case a future investigation is needed for a criminal search.

If employment begins before a background check is completed, state in writing that employment is contingent upon a satisfactory background report.

Addresses—Obtain a listing of all addresses for the past 10 years. This is also needed for a criminal records search.

Past Employment—Verify past employment. While many employers will only verify position and dates, you can gain additional insight by asking if the applicant is eligible for rehire—a negative answer to this question could be a red flag. During the interview, ask applicants what they think a former employer will say about them when references are being checked.

False or Misleading Statements or Material Omissions—Applications must clearly state that any false or misleading statements or material omissions are grounds to terminate the hiring process or employment, regardless of when it is discovered.

Criminal Records—Employment applications should ask about criminal records in the broadest possible terms allowed by law; avoid limiting the question to felonies, if possible. Know what convictions can or cannot be legally used for employment decisions and whether arrests may be considered.

Advise applicants that the organization will perform a criminal background and reference check as a standard business practice. Ask whether the applicant has any concerns to share.

Legal Counsel—It’s important to check with legal counsel to ensure you are following all federal, state and local labor and employment laws and regulations.