10 ways to help prevent employee theft
Working to protect your business from theft should always be a top priority. But while some business owners might have visions of masked intruders breaking their front window with a brick or prying open the front door with a crowbar, those aren’t the only types of scenarios business owners need to worry about. Surprisingly, some of the people you should be most concerned about may already have keys into the building.
Employee theft is a significant threat to businesses, so it’s important that business owners know the details behind employee dishonesty and take the right steps to try and stop it.
How common is employee theft?
It might be more prevalent than you think, as it can take many forms, including cargo theft, forgery, data theft, cyber-related embezzlement, and theft of cash, cheques, business equipment, or client property.
In fact, employee theft costs Canadian businesses about $1.4 billion every year, according to the Retail Council of Canada, a non-profit that represents more than 45,000 retail stores across Canada.
The amount of product stolen by employees can be significant. A 2012 study by the Association of Certified Fraud Examiners found that 25 per cent of internal fraud cases result in losses of a million dollars, on average. And the Retail Council of Canada found that, on average, employees steal about $2,500 in cash or goods from their employer before they’re caught, while customers only steal about $175. Normally, the $2,500 isn’t stolen all at once but rather over time. The council also believes there are approximately 566,000 employee thefts that go undetected each year.
Employees steal about $2,500 in cash or goods from their employer before they’re caught, while customers only steal about $175.
What can you do to help prevent employee theft?
There are some steps you can take to combat employee dishonesty. Here are 10 tips to help you mitigate this risk:
- Establish a pre-employment screening program.
- The program should include reference checks. You may also want to perform criminal and credit checks depending on the position you’re hiring for.
- Create security guidelines.
- The guidelines should outline the company policy for employees who are caught stealing.
- Use human resource programs.
- Develop programs designed to build employee loyalty and align employee and company goals.
- Ensure that company merchandise or property isn’t easy to steal.
- This could include a number of tactics ranging from locking up merchandise to installing a surveillance system.
- Establish controls.
- The controls should be for petty cash disbursements, bank deposits, withdrawals, issuance of cheques, payrolls, reconciliation of bank statements, and payment of invoices.
- Ensure no one employee has control over all parts of a financial transaction.
- Separate responsibilities and functions so more than one employee deals with any given financial transaction, and organize workflow to ensure one employee verifies the work of another.
- Perform regularly-scheduled and random inventory checks.
- A program should be implemented to manage these checks.
- Monitor the premises with closed circuit television (CCTV) surveillance.
- Be sure to keep in mind any applicable privacy law requirements with respect to surveillance.
- Check merchandise records.
- All incoming merchandise should be checked against purchase invoices, and all outgoing merchandise against shipping documents.
- Be a social butterfly.
- When you click with your employees, you set the stage for a respectful relationship.
As the old phrase goes, it’s better to be safe than sorry. And despite all the precautions you can take against employee theft, you may still find yourself and your company a victim of it. That’s why it’s important to have the appropriate insurance plan in place, so that you’re covered if something goes wrong. Our experts have a wealth of industry expertise and would be happy to help – find out how Northbridge can help you and your business today!