Workplace Theft: Preventing Employee Pilferage

Some tips to protect your company from employee theft, including a book on checking workers' backgrounds.

Tweet

You'd be hard-pressed to find an employee who hasn't occasionally slipped at least one or two yellow sticky pads into his briefcase. But what about those workers with perpetually sticky fingers? They can wreak havoc with your bottom line, not to mention employee morale. And chances are, you're helping them -- by making dishonesty easy. A little foresight, though, will help you put an end to employee theft without turning your company into a police state.

· Don't hire problems. Howard Levinson, a security-management consultant in Norton, Mass., says that "well-thought-out background screening is your best tool." With a candidate's permission, you may do a legal check, which costs from $50 to $500. Be careful, though. In many instances you cannot legally discriminate against an applicant based on an arrest record.

· Establish checks and balances. In 1992, after suffering a serious shrinkage problem, Joe Murphy restructured his staff so that different employees handled purchasing, receiving, and accounts payable. "When you're small, you tend to place those functions in the hands of one person," says Murphy, president of Jim Hjelm's Private Collection, a $6.5-million wedding-dress maker in New York City. "You save in salaries, but you set yourself up for theft."

· Control inventory. Murphy instituted a perpetual inventory system: his staff checks finished goods and raw materials every day instead of only once at the end of the month, and an outside firm does a year-end audit. Levinson suggests that you also consider rotating inventory responsibility. Retail chains, he says, should have managers from different stores take inventory for one another.

· Educate employees. Show them how bottom-line repercussions of theft affect the company, and encourage their help. Outline procedures for reporting theft, ensure confidentiality, and lay out the consequences of dishonesty. Murphy, for instance, stated in a memo to employees that no dress would leave the factory without an invoice and that "any violation would be grounds for immediate termination and legal action." Levinson adds that employees who deal with customers, vendors, and the public should have a good understanding of the company's policy on gifts -- and when they're considered implicit bribes.

· Take a preventive approach. An employee-assistance program can help prevent workplace theft. (See Managing People, July and September 1994, Doc. Nos. 07940952 and 09941223.) Sure, plain old-fashioned greed is a prime motivator, but financial difficulties, substance abuse, and even mental-health problems can also lead to theft. Provide a problem-solving forum for your workers and you may be helping to defuse their impulse to steal.

The Guide to Background Investigations , a 936-page reference book published by National Employment Screening Services (800-247-8713; $124.50), can help guide you through the legal labyrinth of background checks. n

Read more:

Donna Fenn

Inc. contributing editor Donna Fenn is the author of Upstarts! How GenY Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009). Both this blog and the book examine the ways in which GenY is changing the entrepreneurial landscape with new approaches to starting, growing, and managing their companies. Learn more at http://www.upstartsrock.com/.

Sign-up for our Leadership and Managing Newsletter

Email Address: