Take Steps to Prevent Employee Theft

Your best protection against theft is preparation for prevention. No one likes to think a customer, employee or anyone would steal from a business. Yet it does happen. It’s up to you to put systems and controls in place that help keep honest people honest. You also want to implement measures that help protect you from an outside robbery. All businesses regardless of size can take steps to particularly reduce employee theft. Employee theft is often cited as the most common type of theft within small businesses.

As a first step in theft prevention, carefully screen job applicants before hiring a new employee. Background and reference checks are especially crucial for positions in which the new hire will be handling money. Ideally, a background check should include a check of police records. Next, keep up to date inventory records and audit the inventory on a regular basis. Many firms audit quarterly, others bi-annually. Generally, the more frequent the inventory audit the better able you will be to spot and correct the problem. When records are poorly maintained, the chances of theft increase because the chance of being caught decreases.

Careful training and supervision of employees and routine record keeping and review of inventory remove easy opportunities to steal. Only a few specific employees should have keys to the business. Installing time locks and alarms can also help prevent theft. The more doors a business has, the more opportunities there are for theft. Other preventive measures may include the installation of a central alarm system or motion detectors. Major losses can often occur when employees take merchandise after hours. Another way to discourage theft and recognize the value of employees is to offer employee discounts on merchandise. This can give employees the feeling that they are valued and also make merchandise more accessible to them in a legal manner.

Incoming inventory is a target for theft. When inventory is received have two people check the incoming inventory. Log items received compared to the shipping ticket. Upon occasion items aren’t shipped or are miscounted prior to shipping. Be careful not to wrongly accuse an employee. The two employee inventory process helps verify the contents. Flatten all trash cartons and spot check cartons after hours, be sure no merchandise has been left inside such cartons. Keep the shipping and receiving door locked, except when in use.

If you suspect a thief among your employees, document missing items. Keep detailed records of employees who were working on the days in question and hold a training session of the prohibition against theft. If the theft is minor, you may elect to provide training and alert employees to your concerns in general. Continue to document your inventory. If the problem persists, report it to your local authorities. This adds gravity to the situation and may help dissuade or help you catch the thief.

If you would like to discuss ways to reduce the possibility of employee theft, contact the SCORE Association (Service Corps of Retired Executives). More than 12,000 volunteer, business counselors donate their time and expertise to assist entrepreneurs. Business counseling is provided as a free community service. SCORE has assisted more than 3.5 million entrepreneurs. For a referral to the SCORE chapter nearest you, call 1 (800) 634-0245.

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