We occasionally hear from small business owners who have recently uncovered evidence that an employee has been siphoning money from the company, or stealing in other covert ways. These owners are usually in crisis control mode. But, if at all possible, it is always better to avoid these problems upfront. Accordingly, we have put together a few ideas on how you might seek to prevent or mitigate employee theft, as well as ideas on how you might wish to address employee theft when it happens.
Preventative Measures:
1) Audits and Oversight – It absolutely imperative that you exercise oversight to be sure that those employees handling money are held accountable. As such, it is generally a good idea to audit your financial records occasionally. These common sense measures may deter unscrupulous employees from inappropriate conduct.
2) Check Inventory and Install Security Devices – When you know your employees are handling money—especially cash—it may be a good idea to install surveillance devices in order to keep employees honest. You may also consider installing security devices to prevent employee theft of merchandise or inventory. Of course, you can also catch on to employee theft by keeping good records of—and frequently checking—your inventory.
3) Outline Expectations Upfront – In addition to actively monitoring your employees’ conduct, it is also a good idea to make sure that your employees understand your expectations. While all employees should know that it is wrong to steal, it is still a good thing to remind them of company policies. By educating your employees on company policies—including a code of ethics, if you have one—you also have an opportunity to remind them of how they can report concerns over other inappropriate behavior in the work place.
Handling Employee Theft:
A) Neutralize the Threat – If you suspect an employee of theft, you need not put the employee back in a position to continue inflicting financial harm on your company. It may be prudent to place the employee on leave, or to change his or her responsibilities during the course of an investigation. But, once you are confident that the employee has misappropriated money or other company property, you are generally within your rights to terminate the employee immediately. Of course, it is always important to follow company policies—and pertinent legal requirements—when terminating an employee.
B) Collect and Document Evidence – If you suspect an employee of theft, it is generally a good idea to collect evidence. Such documentation can be helpful in demonstrating that you had a reasonable belief that the employee was violating company policies, and or violating the law. But, remember, it is generally against the law to ask an employee to submit to a polygraph test.
C) Report the Employee to the Authorities – When you have reason to believe that an employee has committed a crime, you may wish to hand over information to the authorities so that they can initiate a criminal investigation. If the employee is convicted of stealing money, other employers will at least know that this individual cannot be fully trusted.
D) Talk to a Lawyer – Whenever you believe that your legal rights may be in jeopardy, it is always a good idea to consult with an attorney. We recommend talking to an attorney if you believe that one of your employees has stolen from you because you may need to take further actions to protect your financial interests. Moreover, you may also wish to consider initiating a civil action against an employee who has misappropriated money or other company property.
