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How to Prevent Employee Theft

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It may sound simple, but the best way to address employee theft is to not let it happen in the first place. While it may be impossible to achieve that goal, several steps can be taken by a business to reduce the likelihood that employees will be able to embezzle.

Thoroughly Check Out Potential New Hires

First and foremost, business owners should use the hiring process to their advantage and use it as an opportunity to identify, and eliminate, potential risks before the employee is hired. A criminal-background check should be a standard part of this procedure. As part of this hiring procedure, the employer shouldn’t hesitate to ask interviewees about any past issues regarding thefts and criminal convictions. In calling candidates’ references, a potential employer should ask questions that will allow additional insights to shed light on whether the candidate may pose a theft risk. Often former employers may be hesitant about directly discussing problems with past employees. However, they may be more forthcoming when asked a more open-ended question such as “What are some of the areas for which you would NOT recommend this person?” or “What are some areas where the employee may require additional supervision?”

Have an Employee Handbook with Teeth

A business should create and regularly update an employee handbook with clear language detailing the consequences of theft and other bad behavior. Make sure that all employees read it and acknowledge that they have done so. The language in the handbook should identify particular areas or situations in which wrongdoers will be terminated immediately without exception. Once these policies are in place, the employer must enforce these guidelines without exception.

Incorporate Redundancy into the Workplace

The business’s management practices should employ a “second set of eyes” system so that no single employee is completely responsible for a specific area. In a retail setting, it is useful to train employees in multiple assignment areas, this allows for rotations on regular basis.

Encourage an Environment Where Employees Are Comfortable Reporting Suspicious Activity

A business can benefit greatly from a well-publicized, confidential reporting system, one in which the reporting employee incurs no negative ramifications for reporting the suspicious activity of fellow employees. Research has found that 27 percent of employee thefts are discovered by other employees observing an issue and notifying management.

Additional steps your business can take to reduce the risk of employee theft:

  • Make sure that employees’ access to classified or sensitive data is restricted.
  • Hold regular meetings where company policies (including policies involving employee theft) are highlighted.
  • Use periodic surprise audits in areas where employees may be tempted to skim cash or misuse funds.
  • Lead by example. If business owners and senior management follow company rules, their employees are more likely to do so as well.

The steps a business takes initially can save substantial money and headaches later on. Employee theft is a growing problem in the U.S. and it’s a risk a business should not take lightly. Take steps now to develop the policies and practices which will reduce the likelihood that your money and resources will head out the door in employees’ pockets.

You are reading part three of our series on Employee Theft.
For part one of our series on Employee Theft click here.
To find part two of our series on Employee Theft click here.
For the final installment of our series on Employee Theft click here.

© 2015 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website has been prepared by Harrison Law for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.