When you launch a business, you tend to know everyone in the office. As such, it can give you the feeling that you can trust everyone. But small and mid-size businesses make up 68 percent of employee theft, according to Hiscox, an insurance company.
What if there was an easy way to reduce your exposure? And what if you already had this system in place, but you just weren't taking advantage of it?
Yep. Send your employees on vacation. Here's why.
Send people on a true vacation--no laptops, no phones, no logging on, for two weeks. The Federal Deposit Insurance Corporation has a longstanding recommendation that banks have a two-consecutive-week vacation policy:
"This basic control has proven to be an effective internal safeguard in preventing fraud. In addition, such a policy is viewed as a benefit to the well-being of the employees and can be a valuable aid to the institution's overall training program."
Clearly, this policy helps prevent fraud at banks, says the FDIC. Embezzlement, the agency says, usually requires constant attention. Having someone else fill in for an employee when he or she is out of the office can help you suss out things that may be amiss.
Doing this requires planning and training. For someone to be out of the office for two weeks, you need someone else to step in and do their job. This means cross training. There are added benefits besides fraud prevention--your business will be better equipped to handle an unexpected termination, illness, or crisis that requires multiple people working together.
While it may not seem worth it to cross train and send people out of the office for one to two weeks, understand that fraud and embezzlement are expensive. Hiscox says the average theft comes to $357,650.
Normally, Americans don't have a lot of vacation time compared to their European counterparts, and even with less vacation, they still don't take all of it. The pandemic has made this situation even worse--there's no place to go and not a lot that you can do safely. And so, your employees may be tempted to not take any vacation.
If you're in an essential industry, you may be so swamped that no one has any time to take off. If you're in a business that's struggling, no one wants to go on vacation and have others think they aren't necessary.
You should still encourage everyone to take a vacation.
Two consecutive weeks off may not work for all businesses, but you should definitely encourage, or perhaps require, at least a week of no-contact vacation every year. (The FDIC does admit that even that isn't practical for every bank, but they still recommend it as much as possible.)
Even if your business doesn't have anything do with banking, you still have plenty of people who handle money. This is an easy way to prevent and detect fraud. Plus, it has the added side benefit of giving your employees a chance to unplug and just not worry about work. That's something we all need.
You don't want an employee embezzling, you already give vacation as a benefit. Make sure your staff (and you!) take it.