Some of the signs of employee theft are painfully obvious, although managers often fail to take notice.

* Unexplained inconsistencies. Often, executives would rather place blame for theft anywhere but on employees or managers. An electronics distributor, for instance, blamed his computer for inventory discrepancies. He later put six employees behind bars. Don't assume employees are at fault, but don't ignore the possibility, either.

* Lifestyle changes. You would certainly ask questions if your $22,000-a-year bookkeeper began driving a $40,000 Mercedes-Benz to work, wouldn't you? The partners of a small law firm stumbled on the source of their bookkeeper's newfound wealth: she was writing company checks to phony names and endorsing them to her personal account. "There is usually a lifestyle change that could clue you in," says one private investigator.

* Bad morale. Not all disgruntled employees steal, but most thieves are dissatisfied with their jobs. If you know that certain employees are constantly complaining about overwork or underpay, make sure there's a system for airing and confronting those gripes; otherwise, those grumblers may start trying to devise their own compensation systems.