Theft by employees is rampant – just ask any business owner or CEO. And when you start talking about employee embezzlement, the impact can be catastrophic to some businesses, especially small businesses, for several reasons:
- Loss of assets – an employee stealing from a company can take anything from supplies and materials to money away from the company’s resources.
- Loss of credibility – if a large theft or employee embezzlement is uncovered and reported to the public, the perception of the company may be damaged. The “if they can’t manage their own house, how can I think they can manage mine” theory can result in loss of clients and potential clients – for a long time.
- Drain on future finances – Seeing a business embezzlement or theft through the court system takes time and money. And even if the employee is convicted and ordered to pay restitution, without sufficient insurance – employee fidelity coverage – the business may never see restitution made. What is stolen could be gone forever.
So, what is an employer to do? There are a few very fundamental steps business owners can do to protect themselves.
- Hire carefully. That means due diligence is taken to perform background checks on new employees – at all levels. Someone hired in a very basic entry-level position can rise in the ranks. Know who you are hiring at the onset before you promote problems and risk from within.
- Purchase adequate insurance. Talk with your insurance agent to determine what would be the best employee fidelity coverage for your specific business. Don’t automatically opt for the least coverage and be sure to revisit the coverage as your business grows. It is always a shock to find that the insurance does not fully cover a loss if it occurs.
- Establish systems and procedures that include checks and balances. It’s always good to establish systems as a proactive measure against theft in the workplace, but they are only as good as the implementation. Make the processes non-negotiable. No shortcuts, no relaxation of the rules and a zero-tolerance policy stated clearly in an employee handbook.
Even with your best efforts, an employee embezzlement investigation may be needed. Of course, the first place to go is to your attorney. Attorneys routinely work with to collect evidence and facts. The objective reporting of facts makes it easier and clearer as to the path the attorney will recommend. But until the facts are all collected, no one knows what the truth is in a theft by employees in a workplace..
As a business owner, be proactive, but be prepared with the resources you need – just in case.
-Brenda McGinley, CEO, All in Investigations, All in Investigations