$1.4 billion dollars.
That's how much Canadian businesses lose due to employee theft according to a report from the Retail Council of Canada.1 And the average amount that external customers steal before they are caught—$175—is dwarfed by the $2,500 that an employee makes off with.
Of course, retail establishments aren't the only types of business where theft can be an issue—and cold, hard cash isn't the only thing that's stolen. Other areas that are ripe for theft include inventory, supplies and even data.
The good news is that there are practical and relatively simple steps that any business can adopt to minimize employee theft. Here are five to try:
1. Know who's coming and going.
Access control is a key part of deterring employee theft, making it increasingly important to institute a system where employees scan in and out with badges. This step is particularly effective in monitoring employees who work outside of regular hours, thus having extended and unfettered opportunities for theft.
You can also electronically cordon off areas with sensitive information by configuring your system so that only authorized employees can enter certain doors or floors, which can prevent employees from taking property that doesn't belong to them, including data. And you'll want an office design that ensures employees enter through one main entrance, rather than multiple doors, so that they know someone is watching their steps.
Finally, rely on video cameras to add an extra layer of security. If privacy is a concern, consider focusing them only on exits or in inventory supply rooms, rather than throughout the facility.
2. Maintain strict inventory control policies.
That's what helped the Royal Canadian Mint identify a $110,000 loss of gold from its Ottawa facility in spring 2018. “As a result of robust internal inventory processes, employees reported a small amount of gold missing from the premises," Alison Crawford, spokesperson for the Mint, explained to news channel CTV.2
Best practices include having more than one employee “check in" inventory, conducting random audits after shifts and implementing inventory management software that tracks items from delivery through sale.
Another surprising culprit of inventory “shrinkage" is when employees ferry goods out through the recycling and garbage. Creating a process for employees to flatten all boxes and instituting trash duty as a rotating task can help eliminate employees sending items out to the trash that they intend to later sell.
3. Build checks and balances into your system.
When you deviate from expected patterns, it can be easier to spot theft. For example, switch up which supervisor approves expense reports to spot any irregularities, have different managers check the till on a random schedule in a cash-heavy business and perform informal, unannounced audits on financial records. In addition, have a team that maintains the books—rather than just one person—or designate that various employees check them over from time to time.
Anything you can do to potentially catch employees off-guard—or at least make sure they are clear that an audit or check could happen at any time—can help thwart theft.
4. Implement smart reimbursement procedures.
Another way employees steal is by falsifying expense reports or using the corporate card for unapproved purchases—or worse, by running a scam with a shady vendor. A purchasing card, or “pCard," allows you to set limits on the amount employees can spend, as well as the suppliers they can frequent. With today's technology, you can even set the account up for virtual purchases, further reducing risk without a physical card that can be lost or stolen.
5. Create clear-cut policies—and enforce them.
Although it seems like common sense, outlining exactly what constitutes theft—including supplies, expenses, data and even time—alerts your team to the standards to which they will be held accountable. Documenting anti-theft policies and having employees acknowledge such guidelines by signing a contract means there will be no confusion over what will be a fireable or prosecutable offense.
If you suspect fraud, carry out an investigation by involving your local law enforcement officials and then make sure you have a zero-tolerance policy in place. If you fail to prosecute internal thieves, you could inadvertently encourage the behavior in other employees. But seeing drastic consequences enacted will deter others who might have nefarious plans.
It's important to remember that most employees are loyal and trustworthy. The goal is not to be paranoid, but to implement smart strategies that make it more challenging for employees who might be tempted to take a little extra over and above their salary.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.