Employee theft can be a significant problem for businesses of all sizes. According to the National Retail Federation, employee theft accounts for approximately 44% of inventory shrinkage in retail businesses. Here is what business owners need to know about preventing and dealing with employee theft:
Preventing Employee Theft
- Conduct thorough background checks: Before hiring new employees, conduct thorough background checks, including criminal history, credit history, and employment history. This can help identify any red flags that may indicate a risk of theft.
- Implement strong internal controls: Implement strong internal controls to prevent theft, including requiring multiple employees to sign off on financial transactions, limiting access to sensitive information and assets, and conducting regular audits and inventory checks.
- Provide clear policies and procedures: Provide clear policies and procedures for employees regarding acceptable behavior, ethical standards, and consequences for theft. This can include a code of conduct, employee handbook, and training programs.
- Monitor employee behavior: Monitor employee behavior for signs of theft, including unexplained cash shortages, excessive purchases, and changes in work habits or performance.
- Foster a positive work environment: Foster a positive work environment that values integrity, honesty, and accountability. This can include offering competitive compensation and benefits, recognizing and rewarding employee performance, and promoting open communication and transparency.
- Investigate the situation: If you suspect an employee of theft, conduct a thorough investigation, including reviewing relevant documents, interviewing witnesses, and gathering evidence.
- Consult with legal counsel: Consult with legal counsel to ensure that your actions are legally defensible and to determine the appropriate course of action.
- Take appropriate disciplinary action: If the investigation confirms that theft has occurred, take appropriate disciplinary action, up to and including termination of employment. Make sure to follow proper procedures and documentation to protect your business from legal action.
- Notify authorities if necessary: If the theft involves criminal activity, notify the authorities and provide any evidence that may assist in their investigation.
- Review and revise policies and procedures: Review and revise your policies and procedures to prevent future incidents of theft. This may include strengthening internal controls, updating training programs, and revising employee handbooks and codes of conduct.