Employee Theft

Yes, I’ve blogged on this topic many times. However, claims keep coming in and I keep finding employers without proper coverage.

Today’s Portland (Maine) Press Herald has two stories about employee theft. In one an employee stole $400,000; in the other, $200,000.

Employers must take action to set in place systems that prevent employee theft. The best defense is a great offense. Make it clear to all employees by your actions that you will catch those who steal. Honest employees will not mind – in fact, your good employees are offended by dishonesty that is not punished. More than one employee has rationalized their thievery by saying that others are doing it, why shouldn’t I get my share.

-Every bank account and credit card account should be reconciled each month by someone who is not authorized to sign checks or use the credit card. This basic check will prevent half of all cash theft by employees.

-All accounting department employees and bookkeepers must take their vacation. Some employers (specifically banks) require that key employees take two weeks at a time at least once a year. By some accounts 20% of embezzlements are caught while the offender is on vacation – they are not around to cover up the imbalances in accounts.

-Take regular inventories of supplies and materials.

-Inspect trash bins regularly. Employees frequently hide stolen merchandise in the trash to be retrieved after hours.

-Install video cameras to monitor cash registers and storage areas.

-Keep valuable merchandise away from exits.

-Have a system where employees can anonymously report violations of policies and procedures. A tip phone line connected to a third party can make employees more comfortable with reporting problems.