6 Ways to Mitigate Employee Theft in Business

Starting and running a business is often a journey of immense effort, dedication, and personal sacrifice. Entrepreneurs pour their heart, soul, and finances into their ventures to bring their vision to life. One of the major challenges is securing capital. The source of funding may come from loans, investments or personal savings. After building it from the ground up, the last thing you want to face is employee theft in business. Unfortunately, this is a reality many business owners encounter, posing severe risks to the operations and bottom line.

Some experts define employee theft as the unathorised taking, transfer or control of a company’s money, property or asset by an employee. Also, there is no clear-cut definition for employee theft, but it can vary depending on company policies. This unethical behaviour can be devastating, both emotionally and financially. The realisation that a trusted employee has stolen from your business can feel like a personal betrayal. The immediate impact is a mix of anger, disappointment, and a loss of trust. Someone you relied on undermined your hard work and dedication.

Losses from theft can range from small amounts of petty cash to significant sums that can jeopardize the financial stability of the business. For small businesses, which often operate on thin margins, these losses can be particularly catastrophic, potentially leading to layoffs, reduced growth opportunities, or even business closure. US businesses lose approximately $50 million to employee theft. 

Causes of employee theft.

While each case of theft is unique, several common factors often contribute to this behaviour.

Financial pressure, ineffective internal control systems and lack of consequences are some of the causes of employee theft. Employees facing personal financial difficulties may resort to theft as a means to alleviate their monetary stress. Businesses that do not have adequate checks and balances in place are more vulnerable to theft. Additionally, the business encourages theft when employees observe unethical behaviour being tolerated or when there are no policies to punish theft. To protect your business from the damaging effects, you must implement strategies aimed at prevention, detection, and response. 

Ways to mitigate employee theft in business

Establish clear policies and procedures

Develop and communicate clear policies regarding theft, fraud, and ethical behaviour. Ensure that all employees understand the consequences of engaging in theft, including termination and potential legal action. Regularly update and review policies to address emerging threats and incorporate best practices. It must be made known to employees during their onboarding process to guide them in the business environment.

Foster a positive workplace culture

Promote a culture of honesty, transparency, and mutual respect. Encourage open communication and provide channels for employees. Most employees feel safe to draw their leaders’ attention to things that go south when there is open communication in such an environment. Also, it is not only about punishment. Recognise and reward ethical behaviour to reinforce the importance of integrity within the organization.

Give employees what they deserve

Low salaries and unjust recognitions contribute to theft at the workplace. Reward them when they deserve it. Celebrate with them when they meet expectations. They will feel belonged and cared for.

Strengthen internal controls

Implement systems to reduce opportunities for theft. You may have people in charge of your finances and monitoring but be their second eyes. Know what is going on in the business. What revenue are you expecting in a specific period? What number of items are you expecting from your supplier? What is the state of your resources? Be careful of micromanaging while monitoring or you will create an uncomfortable environment for your people.

You cannot monitor everywhere. This is the reason for people and the segregation of duties. Yet, familiarise yourself with the key results or feedback to easily identify any inconsistencies. Invest in technology to monitor financial transactions, inventory, and access to sensitive information. Limit access to cash, inventory, and financial records to authorised personnel only. No matter the trust you have built in your employees, always ask for feedback or reports. Stay away from complacency.

Marry documentation

Keep records of transactions or operations. This is a problem with some small businesses. Oh, we are still small. We do not want any strict procedures. We are few. Let’s ignore this. Theft does not know the size of a business. Enjoy recording incidence, sales, losses, revenue, the products you gave out for free, etc. They serve as a reference when there are problems or confusion.

Provide training and awareness programs

Educate employees about the impact of theft on the business and their colleagues. Keep reminding them about it. Let them understand how it can cut their source of income, and most will be willing to be each other’s keepers.

Employee theft in business is a significant threat that undermines the hard work and financial investment of business owners. You can protect assets and maintain a trustworthy and ethical workplace. Safeguard the business and focus on achieving long-term success and growth.

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