Preventing Employee Theft

There are four parts to employee theft prevention:

-Hire only honest people
-Create an environment that doesn’t tolerate dishonesty
-Build systems that enable detection
-Buy employee dishonesty insurance

The first seems silly. However, most embezzlers have some history of dishonesty. Criminal background checks, drug testing, and resume/reference confirmations all help weed out bad apples. Repeated interviews as well as spending leisure time with key applicants also helps.

Your company culture should be one of absolute honesty. Lies and fibs cannot be tolerated. Stealing in any form should lead to dismissal. Falsifying expense accounts is theft and should be punished. Of course, the leaders of the company must lead by example. As soon as the boss is seen copying fliers promoting his kid’s lawn care business, all credibility is out the door.


Checks and balances in inventory and cash handling procedures is a key prevention technique. Having systems where those who write checks don’t balance the bank accounts is a perfect example. Spot checks of cashier drawers. Marking incoming checks “for deposit only” in the mail room or as soon as the check is presented. Video surveillance is a proven deterrent.

If all else fails, you must have insurance coverage to protect the organization from a devastating financial hit. Talk with your insurance agent about coverage. Pick an amount of insurance that you feel comfortable with and double it. The insurance is usually not that expensive.