NFIB

How To Prevent Theft by Employees
08/ 02/ 2002

Small businesses are often more vulnerable to employee theft than larger companies that may have extensive systems in place to minimize pilferage. Small business owners also tend to know and completely trust employees and managers. Today's Workshop, by Jeffrey Moses, shows proven methods that can be used to minimize theft by employees, without creating an atmosphere of distrust.

It's important for every small business owner to realize that some employees, no matter how well-known and trusted, may be potential thieves. Since many small companies mirror a family atmosphere, employees may be entrusted with important keys (to warehouse entrances or financial records, for example), passwords to bank accounts or electronic records and access to other confidential materials.

Manufacturing companies, retail stores, wholesalers and all types of businesses that deal with tangible products are especially vulnerable to employee pilferage. Inventory control is vital for these companies. Frequent and unannounced inventory inspections are a good idea. Ongoing systems must be put in place for tracking inventory from the moment it is ordered, through arrival, storage and ultimate shipment, use or disposal.

To minimize product theft, keys should be given only to authorized personnel. Exterior doors and windows should be locked after hours. Unauthorized employees should not be encouraged (or even allowed) to work alone after hours or on weekends. Change passwords frequently. If possible, install videotaping devices at entrances and common work areas.

It's best to limit the number of external exits from a facility. A building may have been constructed with a dozen exterior doors, but security will be heightened by permanently locking all but the front exit. Security devices can be purchased relatively inexpensively to monitor all door openings at specified periods of the day or night, and video cameras can tape activities accompanying the door openings.

Unannounced inspections are one of the best ways to uncover and ultimately discourage employee theft. One or two managers, for instance, could show up at the loading dock without warning to examine inventory on hand and employee work areas. When potential thieves know inspections could take place at any time, they are far less likely to steal.

The necessity for vigilance against employee pilferage varies from industry to industry. Diamond mines, at one extreme, closely examine every miner upon exiting work areas. Offices, at the other extreme, may have little that could be physically stolen, and as a result devote little attention to security. Any businesses, however, could benefit greatly from increasing awareness of potential employee theft.

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