Controlling Employee Theft

Your business consultant Knowing the signs can help protect your company against pilfering workers

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Employee theft is probably something you’d rather not think about, but here are some facts that may make you think again. According to a study conducted by the Association of Certified Fraud Examiners, stealing is the second most common transgression committed by employees. Another survey found that the average amount of theft rose from $44.72 per employee in 1989 to $168.42 in 1992, a 376% increase. Hard to believe? Well, believe it, says Aaron Lee, a consultant for the Prevention Awareness Network Inc. PAN, a 25-year-old company specializing in loss prevention, uses private investigation to identify thieves, then counsels employers on how to prevent continued thefts and how to handle the perpetrators.
Lee says he’s seen both large and small theft, ranging from cashiers who’ve stolen $300 to corporate executives who’ve pocketed up to a half million dollars. “It isn’t more prevalent in any particular industry. We’ve worked with airports, drug stores, bars, restaurants, car dealerships, etc.”
Stephen N. Getzoff, a certified fraud examiner for Business Fraud Detection Services, says although it can be tough to pinpoint the problem, some telltale signs of thieving workers include: unusual behavior, such as defensiveness, irritability and suspiciousness; missing documents; frequently used names and addresses for refunds; unbalanced ledgers; inventory shortages; and merchandise frequently shipped to P.O. box numbers.
Lee says the single biggest factor that gets in the way of stopping employee theft is the employer’s fear of confrontation. But turning the other cheek could cost you dollars. Within a four-year period, one of PAN’s clients lost over $194,000 to employee theft. The store manager had been re-ringing the store receipts, deliberately omitting certain transactions each night and pocketing the cash for those sales–as much as $6,000 a month at one point. PAN has dealt with 794 confessed thieves. Of this number, Lee says the majority of losses–in both cash and merchandise-were attributed to people in middle-management. Generally, the notion is that because these workers are longtime employees with more authority and less supervision, they are typically the last to be suspected.

If you suspect there’s a thief in your company, “don’t announce shortages or do other things to alert the thief,” advises Lee. “Play dumb and watch.” Most times thieves will get careless and make it easy for you to see what they’re doing. Clearly outline policies regarding theft in your employee manual. PAN suggests terminating all violators, offering workers an anonymous third-party tip program and prosecuting to the full extent of the law. “If workers think the only consequence for stealing is to find another job,” says Lee, “they may find the risk worth the rewards.”