Tips on preventing employee dishonesty

3 minute read

Every business owner strives to hire model employees who share their passion, work-ethic and values. In reality, new hires don’t always work out and in some cases may even steal from the company.

An effective way to control employee theft is to have a loss prevention strategy. Businesses with rules and procedures to detect employee theft usually have lower levels of employee dishonesty. These businesses are selective about who they employ and make sure that employees understand the consequences of their actions.

Motivating factors for employee theft include opportunity (easy access to cash or merchandise), rationalization (an employee might feel they’re not paid enough so they steal to make up the difference), and need (they’re having financial problems). The removal of any of these factors, particularly opportunity, will reduce losses. As the risk of being caught increases, the probability of theft decreases.

General Considerations

  • Is there a comprehensive, pre-employment screening program in place? Are reference checks conducted and depending on the level of responsibility or sensitivity of the position, are criminal and credit checks performed?
  • Are there written security guidelines that outline company policy for employees who are caught stealing? Are all employees provided with a copy of the guidelines and if so, are they required to sign a receipt confirming they’ve read and understood them?
  • Are there human resource programs in place that are designed to build employee loyalty, as well as align employee and company goals?
  • Is company merchandise or property easy to steal?

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Procedural Controls

  • Are there controls in place for petty cash disbursements, bank deposits, withdrawals, issuance of cheques, payrolls, reconciliation of bank statements as well as payment of invoices?
  • Are responsibilities and functions separated to ensure no one employee has sole control over all parts of a given financial transaction? Is workflow organized so that the function of one employee verifies the work of another employee?
  • Is there an inventory control program that provides for regularly scheduled and random inventory checks?
  • Is the premises supervised by closed circuit television (CCTV) surveillance? (Be sure to keep in mind any applicable privacy law requirements with respect to surveillance).
  • Is all incoming merchandise checked against purchase invoices? Is all outgoing merchandise checked against shipping documents?
  • Is there a designated area within the facility, if possible, for the collection of trash before its disposal?

Employing these best practices is great way to deter staff from stealing and protect your bottom line.