Research on employee theft paints a grim picture: some analysts estimate that it costs businesses as much as $600 billion per year, which comes to about $4,500 per employee. The U.S. Chamber of Commerce reports that as many as 75 percent of employees steal at least once, and that fully 30 percent of small-business failures are directly caused by employee theft.
Preventing theft is an excellent way to reduce the overall risk your business faces – in addition to proper business insurance, theft mitigation strategies can help prevent thousands of dollars in losses. Here are some strategies for minimizing loss from employee theft at your business.
- Maintain employee morale. One main reason employees steal is because they feel discouraged, undervalued, or unappreciated. Maintain morale by praising good work, responding to complaints, and offering the support your team members need to complete the tasks you ask of them.
- Offer non-cash compensation if necessary. If you can’t reasonably offer your employees a raise, show your appreciation with other benefits: flexible work hours, telecommuting options, extra vacation days, etc. Be upfront about your situation, too: employees are more likely to support you if they’re kept in the loop about cash flow and they understand what kind of revenue numbers you need to hit before you can offer them a raise.
- Establish and maintain an accountability system for petty cash and other commonly stolen items. Petty cash is one of the things employees steal most often. Office supplies are also popular. Establish protocol for tracking cash and keep a lock on the supply cabinet (or keep it near your desk) to remove the temptation and opportunity for theft.
- Check references thoroughly. Before hiring a new team member, ask the previous employer whether theft was a problem. A criminal background check will reveal whether the candidate was ever convicted of theft.
Reduce Your Risk: Eliminate Opportunity, Means, and Motive
Risk management for employee theft is similar to any other type of risk management: by taking certain preemptive measures, you can lower your exposure to risk and your potential to suffer losses associated with theft.
You wouldn’t tempt fate by operating an office without a fire extinguisher, and you shouldn’t tempt your employees by making theft easy and convenient. Keep in mind, though, that your risk management shouldn’t go too far: if your employees believe that you don’t trust them, they may feel powerless, which can trigger retaliatory behaviors like stealing.