Employee theft is a harsh reality especially for small businesses, and it happens more often than you think. According to the National Federation of Independent Business (NFIB), an employee is 15 times more likely than a non-employee to steal from an employer, and employees account for an estimated 44 percent of theft losses at stores.

Employees who steal typically have worked at a business for several years before starting to steal and continue for an average of three years before they get caught. That’s a lot of time to generate losses for the business.

According to the Association of Certified Fraud Examiners, among the motivations for employees to steal are:

• Motive: Greed, financial strife, unexpected bills, addictions
• Opportunity: Weak financial controls, cash management processes
• Rationalisation: Employee has internal excuses, such as “the business won’t notice”, “I deserve a raise”, or “other people do it”.

The 10-80-10 rule proposes that as many as 80% of employee could potentially steal from the company:

• 10 percent of people will never commit crime against their employer
• 80 percent might commit a crime through a combination of opportunity, pressure, and rationalisation
• 10 percent actively seek out ways to steal from their employer

Employee theft is a serious problem for companies that can lead to huge financial losses, and even folding up of the company. Here are some strategies you can practice to curtail employee theft in your company.

1. Improve job screening

Thoroughly vet all job candidates by checking references, performing background checks and conducting your own research through online searches. Background checks can let you know if someone has been charged with a crime. It’s important, though, to make sure you’re complying with the law while carrying out your background checks. Some cases of employee theft are never reported to the police, however, so it’s a good idea to call all references to find out about any past issues or reasons for concern.

2. Know your employees 

Be alert to key indicators of potential theft such as:

• Sudden, apparent devotion to work and working late.
• Lifestyles well above salary levels.
• Strong objections to procedural changes related to financial, inventory or supply matters.
• Drugs and alcohol abuse.
• Moonlighting with materials available at the business.
• Evidence of compulsive gambling, persistent borrowing, or bad check writing.

NFIB recommends that small business employers perform background checks on potential hires. Checking references is one important step. But for employees entrusted with handling your money or financial records, a background check is better.

3. Supervise employees closely

Not surprisingly, studies show that when supervision is lax, theft and fraud rates go up. This doesn’t mean looking over their shoulder every minute. But it does mean checking what they do. It’s also wise to have more than one person looking out for your money.

4. Set checks and balances

While employees need a certain level of trust and authority to do their jobs, you can implement checks and balances to help detect (and hopefully deter) fraudulent activity. For instance, make it mandatory for all new accounts to be reviewed and approved by somebody at a higher level than the person who can create them. Only allow cashiers to do a refund up to a certain limit, and above that [limit] a manager must do it. Assume that every position has the ability to kill your business, so put controls and measures in place to keep that from happening.

Use purchase orders. The payment, receipt, and preparation of purchase orders should be separate functions and handled by different individuals. Use serially pre-numbered purchase orders and always verify incoming orders.

Control cash receipts. Use serially pre-numbered sales slips and conduct weekly audits. Balancing of sales slips and register receipts should be done by someone other than the sales clerk.

Use informal audits. Make unannounced internal audits and have a yearly audit performed by an outside firm.

Track your business checks. Always use pre-numbered checks, with amounts and payees typed or written in permanent ink.

Install computer security measures. Understand your computer systems and software, and how they might be used to divert money or inventory. Restrict access to computer terminals and records. Periodically change entry codes and check regularly to ensure that security procedures are in effect.

5. Use video surveillance

Consider installing security cameras to keep a watchful eye on your business. Cameras should be placed in blind spots, however, avoid placing cameras in areas where privacy is expected, such as bathrooms and break rooms. If you use cameras that are paired with a mobile app, you can monitor your business when you’re offsite, and those with motion detection can alert you if someone is inside the premises when the business is closed.

6. Create an anti-theft policy

Work with your attorney to include an anti-theft policy in your employee agreement to make it clear that stealing from your business will not be tolerated. Provide examples of prohibited behaviors and let employees know that they could face serious consequences if they’re caught in violation of the policy. For example, you will immediately terminate the employee’s contract, file a police report and potentially seek legal action for restitution for any damages.

7. Create an employee tip hotline

Oftentimes, your best information on fraud in the workplace can come from your employees. Consider setting up an employee tip hotline where workers can report ethical issues. Make the hotline anonymous so employees can report issues and concerns without the fear of punishment or retaliation. This needs to be done carefully to avoid signaling you don’t trust employees.

• Be extremely careful about making accusations and conducting investigations – a false accusation can result in a lawsuit against you.
•  Verify suspicions by investigation, and determine the extent of fraud and methods used.  If you can identify the responsible employee, terminate their employment and consider further legal action.
•  If it is a large or complex issue, consider involving legal counsel who can assist with finding additional experts such as forensic accountants or investigators.

Ensuring the security of employees, the building and assets of the company has become increasingly important given the huge losses that can result from the lack of a sound workplace security policy. Together with physical harm to employees or loss of life, theft, vandalism, violence, cyber threats and data breaches can also result in financial losses to the organization. To check against these, standard workplace security measures must be put in place.

What is Workplace Security?

Workplace security involves the safety of employees, visitors, and the physical workplace environment. To ensure this, a workplace safety plan must be put in place. This plan will outline the organization’s security policy and measures taken to maintain a healthy and safe work environment.

The rise of remote work and other hybrid work models creates new security risks, particularly when sensitive data is involved. This means security policies and measures should be regularly reviewed and updated to cater for these new workplace environments.

Importance of Workplace Security

Workplace security is essential for the smooth running of day-to-day activities in an organization and for long-term growth. It is a critical concern for both employers and employees. Effective workplace security measures are essential to:

Protect your employees: Workplace security measures are put in place to protect employees from harm, whether it’s from physical violence, theft, or cyber threats.

Maintain a safe work environment: A secure workplace is not only important for employees, but also helps to build trust and confidence of all stakeholders.

Increase employee morale & productivity: By ensuring the safety of your employees, you’re creating a positive work environment that is free from fear and stress. When employees feel safe, they are able to focus on their work and be more productive.

Protect your company against financial losses: Improving physical security can prevent the financial impact of security breaches.

Workplace Security Tips

1. Physical security measures

Physical security measures are the steps a company can take to protect against unauthorized entry into the workplace, in order to keep employees and assets safe and secure.

Physical security measures that can be implemented in the workplace include:

• Access control systems: Examples are keycard access, biometric identification, or intercom systems to control who is allowed to enter the building.
• Surveillance cameras: Cameras can help deter theft and violence, and can provide valuable evidence in the case of an incident.
• Locks and security doors: High-security locks and reinforced doors help prevent unauthorized access to sensitive areas of the workplace.
• Alarms and security systems: Alarm systems, fire suppression systems, and other security systems provide an added layer of protection.
• Lighting: Adequate lighting can help deter crime and make it easier to identify any potential threats.
• Fences, gates and window bars. These make deters intruders and burglars, and makes it difficult for them to break in.
• Secure storage: Providing a safe storage place for valuable items, such as computers and sensitive documents, can help prevent theft.
• Controlled parking. Designated employee parking areas and security gates can help prevent theft of vehicles and other assets.

2. Employee education and training

It’s critical to educate and train your employees on workplace security procedures. This helps create a safer and more secure workplace, and empowers employees to take an active role in protecting themselves and the company.

Here are some examples of trainings that can be implemented:

• Safety and security awareness training: Educate employees on common safety and security risks, and how to identify and report potential threats.
• Emergency response training: Teach employees what to do in the event of an emergency, such as a fire, active shooter situation, or a natural disaster.
• Data security training: Inform employees about the importance of protecting sensitive information, and how to properly handle, store, and dispose of confidential data.
• Cybersecurity training: Educate your staff on how to protect the company’s digital assets and sensitive information from cyber threats, such as hacking and phishing.
• Workplace violence prevention training: Educate your staff how to identify and report potential incidents of workplace violence, and how to respond in the event of an attack.
• Environmental health and safety training: Tell your employees how to identify and mitigate workplace hazards, such as toxic substances and electrical hazards.
• First aid and CPR training: Teach your staff how to provide first aid and CPR in the event of an emergency, such as a heart attack or injury.

3. Background checks on employees

Background checks on employees help you find out if they have any past history such as criminal history, education, employment history, etc. that may pose security threats to your organization. If you do decide to conduct these checks, make sure to do so in a careful manner. If done carefully and effectively, background checks can help to identify potential security risks.