Throughout my career, I’ve listened to many stories and guided the clean-up of employee theft. Many times, it could have been prevented by following best practices and immediately addressing theft as it occurs. Unfortunately, while many companies focus on theft by hourly employees, the truth is that white-collar crime is on the rise!
Leaders, did you know?
- The median amount lost in an employee theft claim is $150,000
- 5% of an organization’s revenue is lost to fraud every year
- 23% of employee theft cases cost $1 million or more
- The average office fraud goes on for 18 months before being detected
- The most frequent thefts involve billing and check tampering schemes
Employee theft includes:
- Employer’s property for personal use, without authorization
- Data, money, physical inventory, proprietary information, publications, workers’ comp, unemployment claims
- Time theft for hours paid, but not worked
- Payroll information (e.g., social security and banking information)
- Service theft (e.g., allowing friends and family employee discounts)
1.Prevention Starts with Hiring and Selection (includes new hires, contract to full- or part-time, and rehires)
Companies today fail to conduct background, education, and other checks. These often occur when the boss knows the person, the person is a family member, or they believe they are too busy to conduct their due diligence. (Note: Always check with your legal counsel, human resource professional, or business manager for when and how this information can be obtained and used.)
Obtain Background Checks. These are public records. But remember, many companies do not prosecute employee theft. Therefore, it’s essential to use a qualified core value assessment too. These tools provide direct admission about what they’ve done, and pre-hires are likelier to tell the computer the truth than a human.
Conduct Appropriate Employment Checks and Verifications. They can wave red flags! These are important since over 85% of resumes contain inaccuracies and lies.
Remember to Hire for Job Fit. Why? Believe it or not, employee theft and misuse of company data can be due to boredom, hating the job responsibilities, or being promoted too soon because there was no job fit.
Source: Hire Amazing Employees (Revised): How to Increase Retention, Revenues, and Results! available in July 2022; SeibCo.com/books/
2.Handle Theft Issues Immediately (this will deter others)
Keep Your Eyes Open for “Dummy” Billings, Contracts, and Surprise Billables
A daughter stole over $1MM from her mother’s company using dummy billings over 2 years. Why did it go on for so long and for so much money? Her mother was in denial even after being told it was happening.
- Conduct unannounced internal audits
- Use an outside financial auditor
- Review your financials frequently for discrepancies
- Stay in contact with your customers and listen for: surprise contracts, duplicate billings, unusual costs, or delivery of extra inventory
Don’t Retaliate Against the Thief
While you may wish to bash the person’s reputation or withhold their paycheck, don’t! Otherwise, you may end up in a libel suit. Or have a valid employment claim against you for unpaid wages.
- Contact the police, and your attorney and insurance company
- Follow the disciplinary process for letting the person go
- Change passwords, and alert bank and credit card companies
- If the employee was terminated, immediately change the locks and other security systems
- If an unemployment or workers’ comp claim is filed, provide only factual information
Use Best Practices to Take Care of Your Business’s Future
An executive director stole several thousand dollars from a not-for-profit. She set up a personal account and deposited several of the organization’s checks into it. When confronted, she threatened to sue them, using her gender and race as excuses. The board backed off from firing and prosecuting her out of fear of “looking bad.”
How you handle this type of occurrence will determine your organization’s future. When someone steals money or data, it’s important to:
- Tell customers IF there was a data breach by following best practices for your industry
- Work with your attorney, human resource professional, and/or business manager to recover the money or value of items taken
- Determine the return on investment before filing any lawsuit
- Review practices and policies for weaknesses that allowed the theft or issues to occur
- Don’t let threats of lawsuits keep you from doing what is right
When an employee:
- Complains about work, has poor job performance, or is in frequent disagreements with co-workers
- Feels mistreated, not heard, or humiliated by their boss
- Has others input overtime and/or expenses for them
- Is dealing with debt, drug use, or a gambling problem
- Is unwilling to train others to do their job
- Works unusual hours (e.g., comes in too early or stays too late)
- Accepts goods and monies for personal use from suppliers or others
©Jeannette Seibly 2022 All Rights Reserved
Jeannette Seibly is The Leadership Results Coach. She has been an award-winning international executive and family business management consultant, keynote speaker, and author for over 29 years. Her focus is to guide leaders to make a positive difference. Feel stuck moving your team forward? Want straightforward counsel on how to do it? Let’s chat! Contact Jeannette for a confidential conversation.
A note from Jeannette about preventing employee theft of time, money, and data: Many times, employee theft could have been prevented by following best practices and immediately addressing theft as it occurs. What do you need to do and become aware of to prevent employee theft? Does your strategic selection system need to be updated to avoid hiring mistakes? Let’s chat now before it’s too late!
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