You’ve carefully selected staff members and given them first-class training, when your worst nightmare becomes a professional reality. An employee is stealing from your company. After the initial shock subsides, you’re left with a sticky situation, violating the trust and confidence you placed in members of your team.

When employee theft strikes close to home, you probably want answers. How does theft occur? What can I do to protect my business assets? Did I fail to see the warning signs? Though you may never fully understand what made your trusted employee turn thief, there are a number of things you can do to enhance small business security.

Theft Happens

No one goes into business for an opportunity to deal with employee misconduct. In fact, addressing personnel issues is among the least appealing aspects of self-employment. Initial feelings of betrayal and violation are to be expected, when employee theft becomes a problem. After all, you’re personally attached to your business and someone crossed the line, undermining your hard work and investment.

As offensive as it is, the gut punch may also serve as a wakeup call, driving home the unfortunate professional reality: People steal from their employers. To overcome a theft incident and prevent future problems, you must first let yourself of the hook. The fact is; no matter how much vetting is done, there’s no way to know for sure whether or not a hire will one day steal from your company.

Sprout Funding logoEvaluating your applicant review and hiring practices are prudent moves, in the wake of a workplace theft, but there is only so much you can do to verify individual integrity. Ultimately, your efforts are best spent on protecting assets and preventing theft on the job.

The Story on Stealing

The Atlantic recently reported as many as 52 percent of employees admit sealing items from work. According to Atlantic contributor, Rene Chun, the problem is getting worse for small business, rather than receding. The problem is so pervasive, managers at some organizations regularly order 20 percent more product than necessary, just to account for the share being pilfered by staff.

One explanation contributing to the momentum in employee theft is the increasingly fuzzy line between work and home. As more people work remotely and mobile businesses becomes the norm, taking things home from work seems less like theft and more like entitlement. Office supplies are of course a top target, because the items are accessible and stealing them is somehow “allowable” in the minds of many employees. But larger items are also at stake. One analysis shows that overall non-cash theft losses have jumped from approximately 10 percent of total loss in 2002, to more than 20 percent in 2018.

A consultant for The Atlantic identified additional contributing causes, propelling workplace theft to new heights. People may be pilfering with greater frequency due to:

  • Reduced Supervision – Staff doesn’t always closely interact with supervisors, so the temptation to steal isn’t tamped-down by direct oversight. Bad habits tend to repeat without intervention, so unsupervised employees may continue taking until caught red-handed. One study concluded small infractions, such as taking a pen from work, may snowball into more serious offenses. The psychological mechanism behind the behavior, known as moral disengagement, allows violations to escalate by justifying bad behavior
  • Resale Opportunities – Though it all comes down to theft in the end, various types of workplace opportunists steal from their employers. Neither is condoned, but lifting a roll of tape to wrap packages during the holidays is not the same thing as selling stolen laptops online. Unfortunately, easy opportunities to resell stolen merchandise may contribute to the spike in workplace theft.
  • Changing Work Conditions – Workforce habits are changing; it is thought full-time employees now work from home for more than three hours each day. The shifting dynamic may reinforce the perception that employer property is for the taking, as long as work’s getting done.

What Can be Done to Prevent Workplace Theft?

Workplace theft may be limited to a single individual, or worse, multiple employees cooperating for ill-gotten gains. In either case, you need better controls to prevent cash and property from going out the door. Use these proven strategies to stop employee theft and reduce your losses.

  • Segregate Job Duties – Segregating responsibilities can reduce the temptation to steal. In the case of cash security, the person controlling the checkbook should not be involved in other finance aspects of your business. And authority should be clearly delineated, i.e. – who signs the checks? Financial recordkeeping should also be cordoned-off from other money handling responsibilities; accounting and banking records should never be kept by the person controlling the checkbook.
  • Put Procedures in Writing – Clever workplace thieves circumvent procedural standards, in order to abscond with company property. It’s important to codify procedures, so behavior that is out of the ordinary doesn’t go unnoticed. In addition to serving as a guide for staff, direct violation of your procedures manual is grounds for discipline, which can help shine a light on misconduct, before you’ve lost your shirt.
  • Don’t Drag Your Feet on Reconciliation – The more frequently you reconcile your sales and banking information, the sooner you’ll uncover irregularities caused by in-house thievery. Bank statements, for example, should be reconciled as soon as possible – made easier by widespread access to online banking services.
  • Take Inventory – Just as fast financial reconciliation protects you from cash theft; regularly monitoring inventory helps prevent non-cash losses. Although it may interfere with day-to-day operations, frequent inventory counts are a necessary part of retail warehousing and inventory management.

As unpleasant as it is to think of your team members as petty thieves, employee theft is a real and growing problem for small businesses. Accepting you’re vulnerable and taking steps to prevent workplace theft can protect you from cash and non-cash theft losses.

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