If you’re a business owner, employee theft is one of the most serious threats to your enterprise. Employee theft covers everything from swiping office supplies to embezzlement. No matter the size or scope of your business, you are at risk for loss due to employee theft.
Employee Theft by the Numbers
You may not think that your company could be a victim of employee theft, but recent statistics from private research and public studies indicate that this security threat is on the rise.
- 75% of employees admit to stealing from their employer once and 38% admit to stealing from their employer at least twice
- The FBI has named employee theft the fastest-growing crime in America
- Employee theft costs businesses about 7% of their expected gross revenue
- As much as 33% of businesses hit by employee theft have been driven to bankruptcy
- More than 2 million shoplifters and employees were caught in the act in 2014
- $175,000 is the median loss due to employee theft
- Managers are responsible for more than 37% of all employee theft
- Over 25% of all businesses struck by employee theft lost more than $1 million
What You Need to Look For
With employee theft so pervasive, it might seem impossible to run a business without falling victim to it in some form. If you’re concerned about employee theft, here’s a cheat sheet of warning signs to help you spot potential trouble.
Employees who live beyond their means: You don’t have to pry into the purchasing habits of your employees, but look out for those who seem to constantly complain about making ends meet, but still make big-ticket purchases like a luxury car or high-end vacation. This doesn’t automatically mean that they’re stealing from the company to fund their rock-and-roll lifestyle, but it can be a red flag—especially if this extravagant spending behavior comes on suddenly.
Employees who seek to work independently or unsupervised: If an employee always looks for ways to work on their own, it could be a tactic to remain out of sight and gain access to supplies or funds. Take this observation in context of what you already know about this employee. After all, if they’ve never thrived in the hubbub, this may not indicate anything shady. However, if a typical team player suddenly starts seeking out chances to work unsupervised, pay attention.
Employees who suddenly start coming in early or leaving late: We’d all like employees to give more to their jobs, but if that “extra” involves more time in the office without everyone else, it’s worth watching. If the change in hours isn’t due to a change outside of work (new babysitter, kids starting school, etc.) this might be an indicator of nefarious activity.
Payroll and expense report mistakes: Everyone makes a mistake from time to time, but if an employee starts racking up a number of accounting discrepancies, you need to monitor that activity. Whether it’s timesheet problems, lost receipts, or petty cash issues, mistakes related to payroll or expense reimbursements need to be stopped as soon as possible. The first time it happens, give your employee the benefit of the doubt, but repeated issues can mean they’re trying to skim a little extra.
Ways to Prevent Employee Theft
Whether you already suspect a problem with employee theft or not, it’s smart to protect your business with an anti-theft strategy. As you put together the plan that makes the most sense for you, here are some ideas to get you started.
- Screen all employees pre-hire
- Always have two employees open up and close down the business
- If you use traditional keys, stamp them all with the words “Do Not Duplicate”
- Use surveillance cameras
- Establish clear accounting policies that hold employees accountable and include clear consequences for any violations
- Make daily bank deposits
- Keep track of inventory regularly and follow up on any discrepancies immediately
- Review daily exception reports, noting any excessive voids, refunds, no sales, and other suspicious actions
- Regularly inspect any dumpsters your business uses, especially prior to weekly pickup
- Never let employees ring up sales for themselves, their friends, or their family
It may not be possible to avoid every instance of employee theft, but you can minimize the impact on your business’ bottom line by knowing what to look for and putting safeguards in place. If you’re ready to take the next step to secure your hard work and assets, contact American Alarm Systems for a free consultation with one of our commercial security experts.