All businesses can be hurt by employee theft — and when staff members steal, they're literally walking off with a portion of your profits.
One survey revealed that a third of employees would steal from their employers if they thought they could get away with it. Another study showed that 38% of those surveyed had already stolen something from their companies.
What can you do to protect your business? The following four steps can help a great deal:
- Start by communicating company values to your employees. Publish a code of ethics and encourage your employees to subscribe to the values of fairness, honesty, and integrity. Let them know what constitutes theft and the consequences if they are caught.
- Review internal controls with the help of a professional. You must have an adequate system, yet managers often neglect putting one in place until serious problems arise. One simple step is to segregate duties. If you have one employee opening the mail, making the bank deposit and entering cash entries in the journal, you obviously have a weak system of internal controls. A better system would require one employee to open the mail, another to list the money coming in, a third to enter receipts in the cash journals, and still another to deposit the money in the bank.
- Watch for suspicious behavior. Here's one surprising clue: Workers who never take a day off might be involved in illegal activity because they're afraid they'll be discovered if someone fills in for them. And be wary if there are close associations between your employees and your vendors that could make it easy to cover fraudulent transactions. If you have any doubts, your accountant can help identify and track fraud.
- Bond all employees who handle inventory or money. And no matter what system you have in place, don't underestimate the possibility that your employees are more creative and devious than you think.
Take action today. Make sure that — in your office — crime doesn't pay.
How Bad is the Problem?
Here are a few instructive facts about internal theft:
- Between $60 billion and $120 billion is stolen every year, studies show. That comes to an average of $500 to $1,000 per employee!
- Some theft involves fraudulent acts such as stealing cash and forging or altering checks.
- Some of the most damaging thefts involve software or documents that could be valuable to your competition.