Employee theft encompasses the act of an employee unlawfully taking or misusing a company's financial resources, physical assets, intellectual property, services and time.
Sadly, this problem does exist. Although employers prefer not to entertain the thought of their employees engaging in such behavior, the sad truth is that employee theft results in significant financial losses for businesses annually.
Moreover, it can lead to reputational harm and legal complications when sensitive customer information or an employee's salary is stolen. Furthermore, an astonishing 75% of workers engage in theft from their employers on at least one occasion. Whether it involves stealing some minor inventory like a handful of pens or stealing an entire roster of clients, employee theft imposes significant emotional, financial and legal burdens on employers.
Employers are showing a growing hesitancy in trusting their employees when it comes to theft, which is making the issue even bigger. To safeguard your workplace from the repercussions of employee theft, it is crucial to recognize that the problem exists and consider the measures that can be taken to stop it.
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Protect your company
To do the best you can for safeguarding your company's resources and handling employee theft issues, it’s crucial to cultivate a sense of surveillance. Acquire the knowledge to recognize various forms of theft, effectively detect them and implement measures to prevent them. For better understanding the problem you’re dealing with, you have to be introduced to different kinds of employee thefts. By establishing a secure and confidential platform, employees are provided with the means to report any instances of fraudulent behavior. Through fostering a culture of transparency and integrity, organizations can proactively deter the occurrence of fraud.
Inventory shrinkage can be attributed to employees in as much as 50% of cases. In case that your organization deals with material goods, it is possible for employees to steal the inventory for personal consumption or for the purpose of resale. Installing surveillance cameras on the premises can aid in apprehending culprits or simply serve as an obstacle against potential theft.
Data theft is a highly severe form of data breach. It not only jeopardizes client information but also exposes company trade secrets. Moreover, data theft encloses the compromise of employee personal details, lists of customer contacts, credit card numbers and other sensitive data. This puts company assets at risk and has far-reaching consequences beyond the act of theft itself.
Service-providing companies frequently provide their employees with discounts on the services they offer. Nevertheless, there exists a possibility of misuse associated with such discounts. Employees may attempt to avail themselves of these services without paying.
Company’s money theft
Compared to other types of businesses, businesses that sell items in small quantities face a higher risk of money theft, particularly in the form of cash. This is primarily due to the fact that employees handle cash transactions and therefore have the opportunity to take money. Another method of theft could involve an employee intentionally overcharging a customer and pocketing the excess amount, and disgrace business’s reputation.
Intellectual property theft
Intellectual property theft occurs when an employee steals confidential data, including trade secrets and passwords. It’s usually the departing employees who engage in data theft. Although this data usually comprises the departing employee's personal documents and may not always be driven by malicious motives, it exposes the company to potential harm if the employee exploits it for personal benefit.
Every company is susceptible to the threat of payroll fraud, because every company has payroll responsibilities and designated employees to handle them. Employees entrusted with financial duties can engage in misappropriation of funds by either personally cashing their colleagues' paychecks or by fabricating checks and subsequently cashing them.
There are two methods through which employees can engage in time theft. They can either manipulate their time clock records to create an illusion of working for a longer duration than they actually did; or they can utilize their work hours for activities unrelated to their job responsibilities. While it’s reasonable for employees to take occasional breaks and interact with colleagues during the workday, this form of time theft transpires when individuals excessively dedicate their time to non-work-related tasks.
How to prevent employee theft
Implementing stricter security measures in response to an incident of employee theft can create challenges for the current workforce. Enforcing limitations on employee access to company resources and data, especially by adding more obstacles to information storage, can obstruct productivity and make collaboration and teamwork more difficult. But you can still utilize some of the most viable prevention methods that include:
- Ensure that all relevant background checks are conducted before making any hiring decisions.
- Consider requesting employer references as part of the application process. This will allow you to have direct conversations with previous employers and gain insights into the candidate's work ethics and behavior.
- Implement employee training programs that should effectively communicate the company's anti-theft policy and emphasize the potential consequences of not sticking to it.
- Include specific clauses that clearly outline the different forms of theft and their corresponding consequences in the employment contract.
- Treat employees fairly by avoiding underpayment or overworking.
- Establish a robust security system including extensions to company laptops and web systems.
- Implementing thorough and unbiased investigations that consider all relevant evidence and testimonies, without any false accusations.
- Verify and authorize all transactions, reimbursements, and payrolls by multiple authorities.
Manage any concerns related to employee relations using an employee relations platform which provides a comprehensive reporting system that enables employees to confidentially report instances of misconduct.