5 Types of Employee Theft and What to Do about It
5 Types of Internal Theft and What to Do about It
Internal or employee theft can have a devastating impact on your business. The people you trust could steal the company's money, customer data, and other assets. As a business owner, it's your responsibility to identify and prevent internal theft before it's too late. Here are some tips to help you out.
Keyword(s): internal theft
Every employer wants to think they can trust their employees. After all, you wouldn't have hired them if you thought they'd steal from you.
Unfortunately, employee theft is costing employers money in every industry throughout the country. It's not especially surprising considering how much opportunities employees have to take advantage of their circumstances.
The first step to putting a stop to internal theft is educating yourself about how it's. Our security professionals are breaking down the types of employee theft and how to can shut it down.
Types of Internal Theft and How to Prevent Them
There are five primary ways employees steal from their employers. To protect your business, you need to consider and take action against each type individually.
Theft of Money
The most obvious way employees steal is by simply taking money from your company. Depending on the nature of your business, they might take money from the cash register.
Another common way to steal money is to falsify expense reports. Depending on the type of reporting you use, employees can report personal expenses as business ones.
More sophisticated thieves can steal money by transferring funds electronically or by falsifying a paycheck.
One way you can keep this type of theft to a minimum is by conducting financial reviews more often. Make sure your sales records, industry, and daily deposits are consistent. If you have a cash register, you should always have a security camera that has a clear view of the register.
Another particularly common method of internal theft is time theft. Employees might falsify their time records to show that they were working hours that they actually weren't. As many as 43% of hourly employees admit to doing this.
It's also common for employees to technically be at work during their work time but to take extra paid breaks. For instance, an employee finds a place to nap during his/her shift.
In some cases, time theft can be resolved by simply changing your time clock. Whether you want to use a manual stamping system or a specialized software, make it as lie-proof as possible. Before you buy a system, make sure there's also a way for you to check the validity of clock-ins and clock-outs.
Ensuring your employees are working during their shifts is simply a matter of your managers being more present. Have them do a casual walk-through every so often to make sure they find every employee working.
Whether you're in a retail industry or a service industry, employees can steal your sellable assets. This could be as blatant as walking out with a piece of merchandise. In other cases, it's as simple as asking a co-worker to use his/her time for your employee's personal project instead of billable services.
Some thieves get particularly crafty and bring in other help. For instance, an employee's friend may come into your store and buy some merchandise. The employee then processes a return so the friend gets his/her money back without bringing back the merchandise.
If you're a retail establishment, keeping up with frequent inventory checks can be a tremendous help. This won't tell you who the culprit is, but it will tell you if you have a problem.
Another helpful strategy is to install real or fake security cameras. If you choose fake ones as a deterrent, make sure your employees don't know they're fake.
Another type of internal theft that is often dismissed is stealing supplies. You don't need to fire every employee who has accidentally put a company pen into his/her bag. However, supplies theft can also include expensive equipment and other large items, so it can add up to a significant loss.
It's rather easy to find out if you may have a problem with employees stealing supplies. Go through your records to find out if you're re-ordering any items fast than you previously did.
If you find this to be the case, don't jump to conclusions. Think about any possible reasons this might be happening, like an increase in clientele or a new organizational strategy an employee is using.
If you do determine that an employee is stealing supplies, try placing one trustworthy employee in charge of distributing supplies. You don't necessarily need to have him/her record every item each employee requests. Sometimes just adding that extra security measure will put a stop to the problem.
Many employers forget about the risk of employees stealing company data, but it's the unfortunate wave of the future.
There are a variety of forms this can take. Employees could sell your trade secrets to a competitor or just give them away if they have a conflict of interest. They could use the same information for their own financial gain as well by starting a competing business.
Another common problem is employees steal from your clients or customers rather than you. This has been the cause of many recent data breaches in which shoppers' financial information was stolen.
Information theft could also include employees poaching your clients or your other employees for their own business or for their new employer.
Your employees are particularly likely to start stealing information when they are in the process of leaving. If an employee suspects that he/she will be terminated soon or has put in his/her notice of resignation, you should start being particularly vigilant.
For employees who have access to particularly sensitive information, it may be best to make all terminations and resignations effective immediately. It's also important to change all sensitive passwords, door access codes, and other security codes when an employee leaves.
Keeping Your Business Safe in the Information Age
It seems like each new bit of technology brings new ways for your employees to steal. The key is using that new technology to your advantage with tools like computer monitoring, security cameras, door chimes, and more.
To start protecting your business from internal theft as well as external theft, shop for security equipment online.