A majority of employees admit to stealing from their employer at least once in their lifetime. The loss from employee theft can be damaging to any company and can be particularly painful for small businesses.

Employee theft isn’t exactly inevitable, however. Steps can be taken to prevent theft or mitigate the frequency of it. When theft does occur, the way it’s managed can also prevent future theft.

Different Types of Employee Theft

The first step to preventing theft is to understand the different types. Stealing money or merchandise may be obvious forms of theft, but employees may become more devious and skim from accounts or void transactions to cover their tracks. Employees may also “steal time” by altering their in and out times.

Businesses can lose a lot of money due to employee theft. With a large number of employees admitting to stealing from their place of work at least once, it’s important to keep an eye out for theft. But what kinds of employee theft are there? Knowing what to watch for can help you prevent theft in the workplace.

Theft of Inventory

Employees can be the cause of up to 50% of inventory shrinkage. If your company sells physical products, employees may steal that inventory either for their own personal use or in order to resell it. Cameras on-site can help to mitigate potential theft or at least to catch thieves in the act. Another option is to keep more expensive inventory items locked up securely and allow only managers access.

Theft of Services

Companies that offer services may often include an employee discount on those services. However, there is the potential for abuse with any discount. Employees may try to use those services for free.

Theft of Data

Data theft can be one of the most dangerous types of data. It can put client information at risk as well as company trade secrets. Data theft can also include employee personal information, credit card numbers, customer contact lists, and more. Company assets can be in danger. Plus, the ramifications of the loss of sensitive customer and employee data can go far beyond just the theft itself. Customers and employees alike would hesitate to trust your company again with their data.

Theft of Money

The theft of money, typically cash, is more of a risk for retail establishments than other types of business. Employees manage cash in cash registers and therefore have opportunities to take cash. Alternatively, an employee could overcharge a customer and then keep the difference for themselves. Any business that has petty cash may run the risk of cash theft.

Theft of Payroll

Every business has payroll tasks and employees responsible for them. That means that every business is at risk for payroll theft. Employees responsible for tasks related to finance can steal from their employers by either cashing coworkers’ checks themselves or by writing false checks and then cashing them.

Theft of Time

Employees can steal time from their employer in two ways. First, they can falsify their time clock records to make it look like they worked longer than they did. Second, they can use work time for non-work tasks. Every employee needs a break throughout the workday and it’s perfectly normal to spend some time socializing with coworkers. This second type of time theft occurs when employees spend excessive amounts of time on non-work tasks.

How to Spot Employee Theft

Missing inventory and office supplies are noticeable signs of theft. A drop in profits may be a more subtle sign of theft that will take some investigation to link. Poor labor ratios may help to identify time theft.

Employee behavior may indicate theft, as well. If certain employees are suddenly interested in staying late or coming in early, they may be finding opportunities to steal when no one is around. Employees whose lifestyles don’t fit their wages may also be stealing to fund luxuries or addictions.

Why Do Employees Steal?

Employees steal for many different reasons and theft can manifest in different forms. Being aware of signs and taking steps to prevent and address each type can help to keep your inventory and supplies on the shelves and your cash flowing to the bottom line. Understanding why employees steal is also important to preventing theft.

Some employees steal simply because the opportunity is there. Others may feel wronged by their employer in some way and steal as a form of retaliation. Still others may steal because they believe the theft to be harmless because their employer has insurance against theft. Another major factor in employee theft is security measures and punishments for theft. If security is lax and punishments aren’t enforced, theft may be more likely to occur.

How to Prevent Employee Theft

Fortunately for employers, there are some steps that you can take to prevent employee theft. Some of these steps are security measures. Others are methods of discouraging theft by making it undesirable.

Hire Carefully

Stringent hiring standards may help to prevent thieves from infiltrating your workforce. Making sure there is no history of theft via a criminal background check may help you to weed out some thieves. Speaking with previous employers and references may also help you to identify warning signs of dishonesty.

Make Theft Undesirable

Strict punishments can help to deter would-be thieves, but they can also make thieves get more creative with covering their tracks. You can make theft undesirable in other ways, such as making wages very attractive and ensuring employees’ needs are met. Employees that are happy with their employer are less likely to steal.

Offering employees free or reduced merchandise may help to prevent inventory theft. If employees simply have to ask for merchandise or pay a small portion of the regular price for it, they will be less likely to risk stealing.

Implement Security Measures

Implementing inventory procedures and other tracking measures can help with spotting theft quickly. Cameras and computer monitoring will keep employers on the up and up with employee actions and suspicious activity. Regular financial audits and cash controls can help to identify and prevent theft problems.

Be Consistent with Consequences

Having policies in place to address theft consequences can be a disincentive to stealing, especially if employees are educated about these policies from the very beginning. If an employee does steal, it’s important to be consistent with following through on established consequences. If employees feel that they will be able to get away with stealing or suffer lesser consequences, they may feel the risk is worth it.

How to Handle Employee Theft

If your measures to prevent theft have failed and you discover that employees have been stealing from you, it’s important to handle it correctly. Handling theft properly can help ensure that theft does not reoccur, either by the same employee or other employees. It’s important to have employee theft consequences and apply those consequences equally. Stealing from work is not only a fireable offense, it’s also a crime.

Gather Evidence

Whether you want to involve the police or not, it’s important to have solid evidence before accusing an employee of theft. It’s essential to be able to prove that the theft occurred so you can take appropriate action. It’s also important to be 100% positive that you’re confronting the right person.

Terminate the Employee

Many workplace infractions can be handled with a warning or a writeup first. Termination is typically a last resort for behavior that persists even after other progressive disciplinary measures. Theft, however, is generally not one of those infractions. If an employee steals from the company, a warning isn’t going to do anything except show leniency. That leniency can encourage others to steal as well because they’ll see theft as being something that carries no real consequences. An employee that is willing to steal from your company is not one you want to keep on the payroll.

Contact the Police

Theft of any type is a crime. If you have insurance that covers internal theft, then a police report might actually be required. The police report will function as the evidence the insurance company needs to cover your claim.

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