Every organization, regardless of its product or service, is vulnerable to employee theft, and it has been estimated that nearly 95 per cent of all companies have experienced some form of this activity.
If that statistic doesn’t shock you, this one should: 20 per cent of every dollar earned by a company is lost to employee theft. In other words, it takes $1.25 in new sales to recover from that theft.
Workplace theft and fraud has escalated into a $600-billion problem in North America, and employers cannot afford to be cavalier in their attitudes. Although it’s painful to believe that any of the trustworthy people you’ve hired may actually be the ones who are dishonest, it’s important to face reality. Common false assumptions about employee theft include:
— “It had to be an outsider. There’s no way that one of my people would do that.”
— “Our employees are too well paid/too loyal to ever steal from us.”
— “Senior staff would never do something like that.”
— “I can rely on employees to report any knowledge of wrongdoing.”
— “It’s easy to spot someone stealing so it would be detected before the problem escalated.”
Unfortunately, many employers are too fixated on perceived external threats such as tough competitors or fluctuating market conditions to realize there may be fraudulent actions taking place right under their nose. Here are some ways to prevent theft from happening:
Make ethics part of your culture. Management sets the tone for an ethical workplace. Not only should management clearly demonstrate the integrity and honesty that it expects everyone in the organization to uphold, it should examine the culture to evaluate where it is managing risk well and reinforce principled conduct in areas where it may be lacking.
Know who you’re hiring. One of the most proactive ways to fend off theft is to follow through on conducting background checks of potential job candidates. Talk to former employers to verify experience, lengths of employment and reasons for leaving and conduct a thorough check of any history involving unethical behaviour including violence, theft and fraud.
Implement internal controls. Shredding sensitive materials and keeping track of inventory is just the start. Long-term measures must be put into place to safeguard assets while reducing opportunities for theft. Three types of controls that most companies can implement include: separation of duties (no single employee should be responsible for both recording and processing transactions); restricted access (only authorized individuals have access to assets and accounting systems); and developing policies to determine how transactions are initiated, authorized, recorded and reviewed.
Educate your people. Nip theft in the bud by educating all employees about the long-term effects of theft, how to detect fraud and their responsibility in reporting it. Make them aware of the procedures to report incidents and train them regarding company policies about stealing. This is a vital investment of time and resources as employees are not only front-line watchdogs, but also ambassadors of your company and protectors of its reputation.
Do not tolerate small indiscretions. Stealing starts out as a small action (innocently “borrowing” something or swiping an item or monetary amount that might not be missed) and is repeated, gradually escalating until it becomes a habit. On top of this, when a policy is violated, ensure the incident or allegation is investigated immediately and thoroughly. It is critical that everyone in the organization knows where you stand and fully realizes the consequences of illicit activities.
Create a positive work environment. After all of this is said and done, the most important way to protect your business is by creating an environment that makes people feel good, makes them eager to contribute and makes them want to preserve it. Workplace theft has been closely associated with feelings of mistreatment or injustice by the employer, so ensure that your people are satisfied with their work and the company they work for — starting with a policy of open communication and mutual respect between management and staff.
— With reporting by Barbara Chabai
Colleen Coates, CHRP, CCP, is a practice leader with People First HR Services Ltd. She can be contacted at email@example.com
Republished from the Winnipeg Free Press print edition September 17, 2011 H2