Though no employer likes to think about employee theft, it’s a huge problem for businesses of all sizes – from corporate giants to local bistros. Employee theft is a fact of business life.

According to fraud experts1:

  • Annually, U.S. business loses $50 billion to employee theft.
  • Experts estimate that 7% of revenues are lost to employee theft.
  • Three-quarters of employees admit to theft at least one time.
  • Over 35% admit to stealing twice or more.
  • One-third of business bankruptcies are caused by employee theft.

Think it can’t happen in your company?

  • 23% of thefts involve more than 1 million dollars. Poof. Gone!
  • Male employees steal more frequently than female employees.
  • Employee theft takes place regardless of employees’ education levels.
  • More than 37% of employee theft is committed by company managers – the people you trust. The people you need to run your business.

The problem is prevalent, yet many company owners and managers minimize the impact, or according to one report2, some owners “are blind” to the problem – a problem that cuts margins, lowers productivity, and creates a negative corporate culture within your business – a problem that can pervade a company for years, slowing growth and profitability.

Why are business owners “blind” to employee theft?

There are lots of reasons managers and owners tend to ignore employee theft.

  • The suspected thief is considered essential to the business.
  • Finding, recruiting and hiring replacements is expensive.
  • The problem is relegated to the administrative level so managers can focus on managing.
  • The business may fear legal ramifications when authorities are contacted.
  • Forensic accountants, needed to verify and prove employee theft, may be considered expensive and intrusive.
  • The owner doesn’t want to appear distrustful, or doesn’t know what to do.

There are any number of reasons owners and managers shy away from the problem of employee theft, but there’s also no doubt that management must address the problem, implement security procedures, and elevate employee theft to the management level. It’s that important to business success.

Protect Your Business

Hire a security expert to identify risk exposure to employee theft. Then take steps to mitigate the threat.

Employees can steal “things” – from laptops to inventory out the back door. Other employees, with computer access, can steal proprietary information, valuable patents and in-house systems, download to a flash drive and out the door.

Access to both actual and digital assets should be (1) monitored and (2) limited to an “as needed” basis. Create separate accounts for each employee and set permissions – the information that can, and can not, be accessed by each employee.

Vet new employees. Conduct a background check and verify references, and all other resume information.

Create an employee theft policy – a zero-tolerance policy – and put it in writing as part of the employee in-take manual given to new hires.

Have your company employee theft policy reviewed by legal experts for compliance with law and workplace regulation.

Create internal systems that prevent a single employee from performing a financial task end to end. Add layers of oversight – and your signature – to any checks, invoices, orders, and other business documentation.

Track log-ons and log-offs automatically. Also, record entries and exits from sensitive areas of your physical business. Use security cards, and even bio-metrics if you can afford them.

Prevention of employee theft is an on-going process of refinement and redundancy. Layers of security, from smart doors that log card swipes, to surveillance cameras in the parking lot, may ultimately lower the incidence of employee theft in your company.

Nevada State Bank Examines How to Lessen Internal Fraud

View Nevada State Bank’s webinar called “Insights: Protecting Your Business from Internal Fraud." It includes a panel of business fraud professionals, moderated by Crissy Semeraro, Vice President and Bank Operations Manager at Nevada State Bank. 

 

  1. www.statisticbrain.com/employee-theft-statistics/
  1. www.cbsnews.com/8301-505143_162-48640192/employee-theft-are-you-blind-to-it/

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.