How to Prevent Employee Theft

September 20, 2021

It’s absolutely imperative that you do all you can to prevent theft in the workplace. Whether you’re a small or large business, the effects of employee theft can be severely felt by everyone involved. According to the Statistic Brain Research Institute (SBRI) 75% of employees have admitted to stealing from their place of work. In fact, employee theft actually accounts for 42.7% of shrinkage, whereas shoplifting by customers makes up 35.6% of business losses.

The same SBRI study also found that smaller businesses were 64% more likely to fall victim to employee theft, but sadly, only 16% of them will actually take the time to report the crime. This is particularly notable seeing as 30% of those businesses who are hit hard by theft in the workplace will end up closing down as a result, especially if they have suffered from continuous employee theft, according to Coverlink Insurance.

What some business owners don’t realise is that employee theft comes in many forms, with each one having a detrimental effect on their financial situation and they include:

Outright theft by an employee (larceny)
Diverting and redirecting finances and funds (skimming)
Tampering with expense reports and records (fraud)
Forging cheques
Embezzlement
Misuse of customer lists or even customer data
Giving away company secrets to competitors which could subsequently cause you to go out of business

Why do employees steal from their place of work?

When looking to prevent employee theft in the workplace, it’s important, first of all, to understand why an employee might wish to do it in the first place. According to The Association of Certified Fraud Examiners, there are three main driving factors that can cause a worker to commit this particular crime, including the following:

Motive

There will be plenty of motive for an employee to steal from the workplace, such as:

Greed
They’re in financial trouble
Unexpected bills need to be paid
Employees might have an addiction they need to fund

Opportunity

Some types of employee theft are entirely opportunistic and so they might just be one-off offences as a result, especially if those opportunities don’t present themselves very often. Here are some of the opportunities that employees might be looking for in order to commit theft in the workplace:

You have weak financial controls
Cash management processes make it easier for employees to cover up missing or stolen money
There aren’t enough checks and processes in place to trace where your money goes or comes from
Important checks and audits aren’t carried out regularly or they’re scheduled at the same time and/or date every time, giving employees notice

Rationalisation

Employees looking to commit theft in the workplace will try to justify and rationalise their crimes by thinking that the business won’t notice if they steal a small amount of cash or stock. They might even convince themselves that their colleagues are doing the same thing or that they’re entitled to pocket extra money as they believe they deserve a long overdue pay rise.

How do employees commit theft in the workplace?

There are a few different types of employee theft out there that could damage your business financially, many of which you might not have considered to be theft in the workplace. Depending on the industry you work in, employee theft can take several forms and they might well include:

Time Theft

Employees are paid for time they haven’t worked
Employees spend copious amounts of time on their smartphones. According to
Social Media Today, we spend more time on the internet than we do eating, drinking and socialising
Employees using work computers for personal means on company time

Cash and stock theft

Employees could fail to input the right transactions through the till
Employees could charge customer an inflated price for a product and then pocket the extra cash
Workplace stock can be stolen, such as stationery, clothes, food, warehouse inventory and even toilet rolls
Employees who steal stock might also make money through selling it onto a third party

Vendor theft

Fraudulent vendor accounts can be set up
Cheques could be issued to faux vendors
Funds could be redirected to the employee’s own bank account
An employee could even set up a vendor account for workers who have left the company and direct money through the system that way

Tips for preventing employee theft in the workplace

It’s extremely difficult to completely avoid theft in the workplace, but there are some preventative measures you can put in place to try and prevent it as much as possible, regardless of the industry you work in. Some of things you can do to try and mitigate this particular problem include the following:

1. Make existing employees feel valued

Research done by the Illinois News Bureau suggests that higher wages are related to a significantly lower level of employee theft in the workplace. This is unsurprising considering that underpaid employees are more likely to think about committing the crime in question in order to ‘level the playing field’ so to speak. Offering your employees more money, even if it’s just a small increase, can help to increase their morale overall.

You should also make an effort to learn more about your employees in a bid to build a solid working relationship. In turn, this will make your employees even less likely to want to steal from you and cause your business financial harm. You could look to organise a day out for all employees to attend, even if they’re temporary or seasonal workers.

In addition to that, there are ways to make your workers feel even more valued, including doing the following:

Taking the time to recognise personal and business achievements
Provide constructive feedback, training and coaching
Treat employees to perks and even gifts to thank them for their service

2. Pre-screen your prospective employees

This step can help you to ensure that you’re employing trusted, hard-working staff members. It’ll make sure that you aren’t bringing workers onboard who are likely to steal from you, such as those who have a history of committing employee theft in the workplace.

avoid employing those with a view to commit these crimes, then you should look to:

Check all references supplied on their CVs
Ask the applicant why they left their last few roles
Have a background check conducted on potential employees, because this will also include acquiring information regarding criminal history. Here at Delta 74 Private Investigations, we have a team of professional experts who are highly-trained to carry out these background checks on your behalf
Depending on the industry you work in, it might be beneficial to ask applicants to do a drug screening
Lie detector testing would also be incredibly beneficial to ensure you’re hiring the right person for the job; something else our exceptionally skilled team are able to carry out

3. Install surveillance systems throughout your workplace

Video cameras and other forms of surveillance can be an effective deterrent for those who are looking to commit employee theft in the workplace. According to a survey done by the American Management Association, 48% of those asked admitted to using video monitoring in a bid to tackle workplace theft.

Usually, video cameras are located in areas where stealing is most likely to occur, including:

Above tills and checkouts
Stockrooms
Stationery cupboards
Warehouse storage areas

However, you’ll need to read about where’s best to place your security cameras that’ll comply with GDPR and other guidelines and regulations regarding surveillance in the workplace. For example, you cannot place them in toilets or changing rooms as this is a breach of employee privacy.

If you’re looking for in depth, meticulous private surveillance services that you’ll always be able to count upon, then Delta 74 Private Investigations will be able to help. We’ll carry out covert surveillance operations that’ll assist in uncovering those who are committing employee theft in the workplace, if you suspect that your workers are doing such a thing.

4. Responsibly arrange employees’ schedules

This could include putting two workers on the same shift as opposed to one. There are also systems available that you can introduce that’ll work to replace a worker if they’re on holiday, off sick or called to another job. This way, not one person is left on their own at any one time. Not only will this help to reduce employee theft, but it’ll also ensure their safety throughout their time at work.

If your business involves your employees working on a till or checkout, then you should look to count the register before their shift and after they have finished work. This will help to identify any financial discrepancies, if there are any. If suspicions are raised as a result of that, then you’ll be able to easily narrow down who was working the till at that time and subsequently investigate them appropriately.

5. Carry out random, unexpected audits

Your employees should not be given notice of any audits you’ll be carrying out, especially when it comes to your financial books. Spontaneous cash counts should be done at various different times throughout the day and should not be repeated at the same time on subsequent days.

Your stock levels should also be audited randomly for the same reasons, especially if you sell a number of high-value products. These audits should include recording any damaged or returned goods in a bid to identify suspicious activity, if there is any.

When it comes to thorough financial records, then you should consider hiring an accountant to do this for you. If you do decide to go down this route, then you should ask the accountant to review the following:

Cheques issued
Cheques received
Ledgers for accounts payable
Ledgers for accounts receivable
Bank statements

A highly-skilled third party will be able to independently make their concerns known, if they suspect that money is missing or if accounts have been tampered with. The probability of a worker getting away with committing theft in the workplace will increase if that specific person:

Works in isolation, particularly on a regular basis
Controls many aspects of financial transactions and accounts
Doesn’t come under any third party scrutiny

6. Create a safe place for employees to whistleblow

The main majority of your workforce will be loyal, content and honest, particularly when it comes to spotting theft in their place of work. This is because they have their own livelihoods to think about; if your business has to close down due to continuous employee theft, then that’ll leave your workers out of a job and many will have mortgages to pay and children to look after. It’s in their best interests, as well as your own, to make you aware of employee theft in the workplace.

In order to make people feel safe when discussing employee theft, then set up specific areas of your premises where quiet words can be had about the matter. In addition to that, you could introduce an anonymous forum where your workers can go and log their concerns in a confidential way. By making the workforce aware that this programme exists, that alone could act as a deterrent for those looking to commit employee theft.

7. Make the consequences of stealing from your workplace absolutely clear

It’s important that you state in their contract that stealing will not be tolerated and could even result in prosecution. If you aren’t looking to prosecute, then make it clear that any employee that is found to be stealing will lose their job with immediate effect. By making the consequences clear at the beginning of their employment with you, it could help to drive down any incentives they might have otherwise had to commit workplace theft.

Delta 74 Private Investigations are proud to provide our clients with an extensive range of first-class PI services. Whether you need us to carry out rigorous background checks, private surveillance, lie detector tests or even vehicle tracking, to name a few, you’ll always be able to look to our team of experienced specialists for help. For more information, or to enquire about the services we’re pleased to offer, get in touch with us today – we’re always happy to help.