Employee theft is a risk for every business. So how do you prevent it?
As much as we want to believe that we can trust the people we hire, it would be best to remain skeptical and put controls in place early. The statistics support a need for caution.
The data stipulates that 80% of employees have the potential to steal. We can identify potential employee threats by considering motive, opportunity, and rationale. From this vantage point, it’s easier to identify vulnerable areas within your organization.
As an employer of multiple personnel and having interacted with many businesses in different industries, here’s our take on employee theft in the business world and, more importantly, how to prevent it.
10 Tips to Prevent Employee Theft
- Try to hire honest people. You’re probably thinking, well obviously! You must check references carefully and do your due diligence on background checks. Make sure you have references to support that they have historically been an honest individual in other organizations. This is not a fool-proof prevention method, but it’s an excellent place to start.
- At hiring, clearly state consequences for dishonest behavior. There’s nothing wrong with a gentle reminder that you expect all employees to act ethically and honestly. While some employees may have the potential to steal, you can deter many individuals by clearly stating the consequences of dishonest actions. If you’re in regulated industries, refer to applicable laws, e.g., a business that accepts health insurance must protect patient health information by law.
- Practice timely bookkeeping. Especially when it comes to embezzling money, good timely bookkeeping practices are the best way to uncover irregularities.
- Perform periodic outside reviews of your books. As with anything (IT security included), there’s nothing wrong with an extra set of objective eyes. Regular external help will increase the likelihood of uncovering any suspicious behavior your internal team may have missed (or caused), and will make it clearer that it is not easy to get away with dishonest behavior.
- Separate major financial hats. Whoever receives checks should not deposit them. Whoever cuts checks should not be able to sign them. More on that here.
- Require the use of unique computer logins and multi-factor authentication (MFA). This is now standard practice for cybersecurity, but it also helps to prevent employee fraud related to impersonation. We discuss the importance of passwords and MFA usage in our blog here.
- Create a confidential tip system. Employee reporting is one of the best forms of ‘checks and balances’. Many employees will be afraid to publicly come forward to report suspicious activity for fear of backlash. A confidential tip line or an anonymous form allows internal reporting without consequences for the reporter.
- Monitor all valuable assets all the time. Don’t stop at your bookkeeping when it comes to monitoring. Whether it’s inventory or sensitive data, ensure you are constantly managing every aspect of your business daily and month-to-month to uncover discrepancies that may be linked to employee fraud.
- Understand employee and employer rights. Before establishing consequences or talking to employees about them, seek legal counsel about what is and isn’t allowed regarding employee theft and consequences.
- Connect with your employees regularly. A personal connection between employee and employer has been found to reduce the risk of employee theft. Employees that feel a sense of loyalty and commitment to their organization are less likely to steal. That makes sense, right? Start by making an effort to make your employees feel valued and appreciated as individuals who are a part of a greater team.
Nothing is more important than protecting your business interests–products, brand-specific services, and sensitive data. Protection of your business is key to success. As a managed IT service provider, PK Tech is in the business of preventative cybersecurity for businesses so that you can focus on what you do best without the risk of breach. Get in touch with a team member if we can support your business located in the Greater Phoenix area.