Recognizing and Preventing Employee Theft

    Posted on: July 12, 2017 by Signature Insurance Group

    Employee Dishonesty > Preventing Employee Theft

    Though employers never want to believe that their employees would steal from them, it does unfortunately happen, and to a startling degree. A survey from the loss prevention consulting firm Jack L. Hayes International found that, on average, employees are responsible for 5.5 times the thefts that shoplifters are, and one out of every forty employees in the survey had been apprehended for theft in a one-year period. It’s not just about shoplifters: employee theft comes in many forms, including supply theft, merchandise theft, information theft, and fraud, which we will cover in greater detail next week. Once you understand the various types of employee theft, it is important to secure your business in every way you can. In addition to protecting yourself from financial loss with a Management Liability insurance policy, consider the following security measures.

    Preventing Employee Theft

    There are a number of steps that you can presently take to curtail employee theft, and it all starts with your hiring process. When screening potential new employees, make sure to perform a background check for prior criminal activity, and consider making use of integrity tests to screen for potential red flags. If you do not want to use a formal integrity test, ask questions during the interview process that will help you to spot signs of a potentially dishonest employee.

    Once you’ve hired your employees, you need to have certain security measures in place. We recommend using a “buddy system” that ensures that employees are almost never left alone. This will reduce the window of opportunity for them to commit larceny. Employees should be adequately supervised, both in person by management and electronically through video surveillance. Having surprise inspections will also help you to spot dishonest activity, and will make employees less likely to want to steal. You should have a company policy about employee theft that is universal and made completely clear to all employees. If you are firm about having a zero-tolerance policy towards theft that will result in dismissal, employees may be less motivated to steal.

    Finally, don’t be afraid to work with your employees. Implement an anonymous, confidential reporting system where your employees can let you know if larceny is occurring in your company. Keeping it anonymous and confidential will make your employees more likely to utilize it, as they will not be concerned about receiving retaliation from other employees or being considered a troublemaker. In addition, try to make connections with your employees. Be friendly, be approachable, and get to know them. If your employees know you and other members of management as people rather than just heads of the company, they may feel guilty about stealing from your business.

    Responding to Employee Theft

    Unfortunately, even the most secure businesses can find themselves vulnerable to a breach. If you find that one of your employees has been stealing from you, it is imperative that you act quickly and definitively to reduce the financial loss and reputational damage.

    Obviously, if you find that an employee has been stealing from you, the employee should be quickly terminated. The Wall Street Journal has reported that many companies, particularly small firms, often are indecisive in the face of employee theft; perhaps they feel connected to the thief and want to give him or her another chance, or they want to try to recover what was lost, and as a result the company is still vulnerable to theft. No matter how long the thief has been working for you or how high-quality his or her work has been, in almost all cases it is best to remove the employee from your workplace as quickly as possible.

    Once the dishonest employee (and we recommend thoroughly checking to ensure that they are the only one) has been removed, it is time for you to reassess your security practices. Run a thorough audit of your company and current practices to see what your weak points are and what could have allowed the theft to occur, and implement security measures to address your weak points.

    About Signature Insurance Group

    Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.

    Posted in: blog Business Insurance Management Liability