Employee theft is a genuine problem that happens frequently in all kinds of firms. According to a CBS investigation, employee fraud costs the average business 5% of annual sales. According to the 2014 Global Fraud Study, small enterprises are “disproportionately victimized by fraud” and are impacted particularly severely.
There isn’t a straightforward technique that can stop your staff from stealing from you. However, there are a number of steps you can take that when combined, will significantly reduce the amount of fraud committed by your own employees.
Conduct a Background Check: Conducting a background check on each of your prospective employees before you hire them is one of the first things you can do. Although it may seem like a difficult undertaking, there is no need for a lengthy procedure.
You can actually find a lot of reasonably priced web services like this one that will verify your background. Most companies offer a range of prices depending on how much information is being analyzed. Basic ones include looking up addresses and Social Security numbers, as well as looking up criminal and sex offender histories. The domestic terrorist watch list check, school verification, and past employer verification are all included in more comprehensive packages.
You won’t learn everything you need to know by researching someone’s past. It doesn’t always follow that someone won’t steal from you while they’re working for you if they’ve never done it before. However, the numbers are on your side. In 92% of the fraud cases examined, at least one behavioral red flag was found before the fraud was actually perpetrated, according to the 2014 Global Fraud Study. These warning signs can include issues with previous work, legal issues, and family/divorce issues. Although a background check may not always reveal these warning signs, it’s an excellent place to begin.
When hiring a new employee, even a quick background check can at least provide you some peace of mind. Although the procedure isn’t perfect, you can rest easy knowing that you did your research and got the hiring process started on the right foot.
Create a Zero-Tolerance Policy: All ages of people react to penalties. There must be obvious, rapid, and harsh consequences in a small firm environment with few resources.
You don’t have to manage your company like a high-security facility. The relationships you have with your staff matter. However, you must establish right away that there will be no warnings and no second chances when it comes to theft. Your employees must understand that their employment will be terminated immediately if they are caught stealing or engaging in any other form of fraud.
Neither during the interview nor as part of the orientation or training process should this be casually brought up. The employee must sign it after it is put in writing. Make it quite clear that stealing from the business is not permitted.
These claims should be supported by a discussion of how your business keeps track of fraud and theft. Any thoughts or plans they have to steal from you should be discouraged by clearly conveying your expectations and emphasizing how difficult it will be to get away with anything.
Develop Solid Relationships with Your Employees: Being best friends with your staff is not part of your job description as a manager or owner of a firm. You must continually assert your authority and let your staff know that you are the boss if you want to earn their respect and prevent exploitation.
That doesn’t give you license to be a miserable ruler. Employees who are frustrated with their employer’s actions will only come to work in order to get paid. They don’t care if your business succeeds or fails, and they don’t give a damn about doing well. In the worst circumstances, it leads to extremely irate employees who will act out to exact revenge (for example, stealing from you).
Neither during the interview nor as part of the orientation or training process should this be casually brought up. The employee must sign it after it is put in writing. Make it quite clear that stealing from the business is not permitted.
These claims should be supported by a discussion of how your business keeps track of fraud and theft. Any thoughts or plans they have to steal from you should be discouraged by clearly conveying your expectations and emphasizing how difficult it will be to get away with anything.
Design a System of Checks And Balances: You want to serve as the company’s “eyes, ears, and conscience.” Unfortunately, your to-do list makes it impossible for you to constantly monitor your personnel.
You need a method of maintaining order and reducing employee theft without employing a large security staff or setting up an elaborate surveillance system.
A robust system of checks and balances that is made especially to help your staff keep an eye on one another is one of the finest ways to accomplish this.
It’s a big error to give one individual in your firm complete power over a certain department. Never put too much reliance on one individual, whether it be a friend you’ve known for 30 years or a new hire with a stellar résumé who started last month. You never know when a person’s struggles in life will push them to perform a desperate act. One that might cost your company.
Once the process is in place, you’ll need to periodically check on it to make sure everything is going according to plan. To make sure the figures are accurate, it’s a good idea to have a dependable outsider evaluate your financial statements and other data.
Invest in a Point of Sale System: It’s crucial that your company has a top-notch point-of-sale system if you want to process sales swiftly, manage inventory efficiently, and build great client relationships.
However, a point of sale (POS) system also aids in reducing staff theft, something many business owners are unaware of.
A good POS restricts the amount of trouble your employees can get into by enabling you to designate the portions of the system that they can access. Your employees won’t be studying the books. Alternatively, view reports that you have no business viewing. or changing stock levels. Given the current state of fraud statistics, this kind of control is crucial.
A solid point-of-sale system keeps track of the sales that your staff members make. When examining the figures, if inconsistencies are discovered, you can link each action to a particular employee. This not only aids in your investigation but also serves as a deterrent to any employee who may be considering engaging in fraud.
Employees have the ability to steal time as well as commodities and money. You may monitor the arrival and departure times of your staff with the Time Clock tool. You’ll be informed whether they are stealing 20 minutes here or 20 minutes there.
Set Up an Easy Way for Employees to Report Theft: Don’t be a snitch doesn’t apply when it comes to reporting fraudulent activities, despite what the proverb says.
According to the 2014 Global Fraud Study, 42% of fraud cases were uncovered through tips from other people. And of them, 49% of the tips came from other workers.
Many employees have little hesitation when selecting whether or not to disclose fraudulent activities perpetrated by their coworkers because theft significantly impacts the company they work for and ultimately their own job security.
This is especially true if they have a simple and anonymous way to report the activities. Making a quick online form that staff members can use to report fraud is one method to achieve this. A free and simple-to-use tool is Google Forms.
When running a business, you will have to contend with employee theft on a regular basis. There is no quick fix to get rid of it, and you can’t just put your efforts into prevention on auto-pilot. Combining the tips in this article with one another is an excellent approach to reducing the amount of employee fraud that takes place.
