Employee theft is a growing problem in the United States.  With the downturn of the economy over the last several years, this problem has only gotten bigger.  Recent figures show that employee theft adds up to as much as $400 billion lost from businesses each year. 

As much as 90 percent of all companies experience some form of employee fraud.  For small businesses, as much as 5 percent of their revenue is lost due to employee theft or fraud. 

No business sector is immune to this problem. Schools, colleges, hotels, hospitals, retailers, and healthcare are all at risk for workplace theft and fraud.

How Does It Happen?

There are many ways an employee can steal or defraud their employer.  The ways can vary, depending on the industry and the role of the employee.  Some of the easiest and most common ways are: 

• Stealing cash

• Stealing inventory

• Theft of time

• Credit card theft

• Workers compensation fraud

• Stealing from customers

• Stealing supplies

Unfortunately, the prosecution rate for employees who steal from their workplaces is very low. 

Many companies (especially smaller businesses) are unsure of how to even prosecute an employee.

They’re also weary of how much it may cost them and how much time it will take.  This means theft statistics are probably underreported and it's a more severe problem than numbers reveal.

Tips to Prevent Workplace Theft

There are several steps companies can take to help reduce and prevent workplace theft.   In many cases these steps start before the employee is even hired. 

1. Use Background Checks

It is a good idea for a company to screen potential employees with a pre-employment background check.  It's even more important to do this if the employee will be handling:

  • Cash
  • Merchandise off high value
  • Private financial data
  • Medical data

Each company should check with the laws in their state before conducting such a screening, as laws can vary.

2. Check References

Many employers skip over this step.  But, it can be a good way to weed out the potential bad apples.  Checking references of former employers or supervisors can be especially helpful.

3. Make Conduct Policies and Guidelines Clear

If a company does not have a conduct code or a code of ethics they should consider adopting one.  Once this is in place it should be given to all current employees and communicated to potential employees. 

All hired employees should sign and date a copy, agreeing to abide by the standards.  If clear standards are set, there is no question what's acceptable or allowed.

4. Audit

Conducting audits on a regular basis is a good way to prevent workplace theft and fraud.  When employees know that someone is coming behind them and checking their work, many tend to be more honest.

5.  Watch for Signs

Research shows that there are signs that are common amongst those who commit theft in their workplace. 

Many do so because they feel underappreciated, or see the behavior of management as unethical or unfair.  They feel they are owed something by the employer, so their behavior is justified to them. 

Here are a few signs to watch for: 

• Unexplained change in behavior

• Unexplained company debt

• Missing financial records

• Employee not taking vacations

• Being over-protective of their workspace

• Preferring to work unsupervised or at home

6. Set the Mood

Setting the right tone in the office or other workplace will show employees that the company takes this seriously. 

Management can do this by holding regular one-on-one meetings with each employee.