You're well aware of the statistics on how many small businesses fail, and you've put safeguards in place to avoid cash flow issues. However, one thing a lot of people fail to consider is the cost of employee theft and how it might impact the bottom line. Unfortunately, fraud perpetrated by those who work for you is quite common. It ranges from taking a few ink pens home to stealing thousands of dollars in elaborate schemes over a long period.
In a study of 2,690 occupational fraud cases that occurred over a single year, investigators found the total cost reached $7.1 billion, with an average loss of $2.75 million. Of course, smaller companies might see smaller losses, but it's still a huge dent in their profits. Reducing the opportunities for theft and catching the culprits may mean the difference between a company that thrives for years to come and one that crashes and burns. Here are six ways you can reduce employee theft.
1. Control the Money
Retail businesses, in particular, may want to put an owner in place at the register and use other employees to serve customers, package orders or stock shelves. Keeping money out of the hands of employees removes the temptation and opportunity. If your company is bigger and this isn't an option for you, put safeguards in place to ensure employees aren't taking cash out of your drawer. Install inventory controls, for example, and audit your books regularly.
2. Run Background Checks
Before you hire someone, run a full background check and drug screen. While this won't weed out every potential thief, it will turn up problems other employers might have had if they prosecuted the individual for stealing. Make sure you call references. Keep in mind, though, that if an employee was let go for stealing, they aren't likely to put that company on their application or resume.
3. Wrap up Pallets
If you sell in bulk or you store items for long periods, it's very tempting for warehouse workers or those shipping your products from one location to the next to take a few things for themselves. You can prevent this type of theft simply by using stretch wrap to keep the items on the pallet contained. If an employee or shipping partner does cut into the packaging and take things, it will be immediately apparent.
4. Install Cameras
Place cameras in key locations where theft is most likely to occur. Be upfront about the cameras and any monitoring. While employees won't necessarily like it, if they know the reason, they are much more likely to comply. Those planning to steal from you will probably just quit, saving you time and aggravation in training someone who isn't honest. You have to do more than just install the cameras, though. You must also monitor the footage for theft.
5. Assign Doubles
Theft typically occurs when an employee has access and no oversight. If you have a bookkeeper, make sure you also have someone monitoring the books as a secondary measure — or do so yourself. If you have a worker running the register, place someone with them who bags the purchase and speaks directly to the customer but also watches out for errors. Unfortunately, there are occasions where two employees work together to steal from a business. However, it's also likely one employee will tell on the other, and you'll prevent theft simply with oversight.
6. Think Like a Thief
Thieves are quite creative — in fact, if they would apply their brilliance to something worthwhile, they could accomplish great things. However, they are also predictable. They tend to look at the operations of your business and see the holes. If no one wants to take out the trash, then they'll stash some product they're stealing and offer to take it out. They look like a hero, but they are actually removing new items from your store without paying for them. You may want to implement a policy where you look inside all garbage before it leaves the store.
Set the Tone
Set the tone for your business. Deal with all your suppliers and employees with integrity. If a customer comes in with a product that broke the first time they used it, how do you handle that situation? Remember, your workers will be watching what you do. While not all will follow your lead, many will. At the same time, you need to show you won't tolerate theft. If you catch an employee stealing from you, fire them and file charges. Show that you don't tolerate it and the consequences are steep.
Don't let a few bad employees make you bitter toward the rest. There are many good, honest workers out there who simply want a job and a chance to prove themselves. Protect yourself, but don't be paranoid. Enjoy getting to know your staff on a personal level, invest in them and let them know you're in their corner.