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Preventing Employee Fraud and Theft

Fri, July 06, 2018

Did you know that employees can pose the biggest theft and fraud threats to an organisation – often more so than customers or burglars?  Surprisingly, the worst offenders can be employees who seem to be the hardest-working and most trustworthy. Here are five ways to help prevent employee dishonesty:

  1. Foster a workplace culture that encourages honest behaviour
    Treating employees well, providing a pleasant working environment and fostering a good rapport between employees and management will help to create a positive attitude towards the organisation and decrease the likelihood vengefulness or indifference towards inappropriate behaviour. Make employees aware that they have a shared responsibility to help prevent theft and fraud and show zero tolerance towards any kind of dishonest behaviour.
  2. Be ever-vigilant
    Always keep security top-of mind and never assume that any employee is above suspicion - even if they have worked for the company for a long time, are very helpful and kind, are hardworking, are close to your family, etc. 

    Warning signs can include employees in a position of trust who regularly come in on their days off, refuse to take leave, regularly stay on until after everyone else has left, appear to be living beyond their means, is reluctant to give others access to financial, stock or other records. Keep accurate, up-to-date cash flow records, stock balances, stores and equipment levels.  Doing this, along with using an independent auditor regularly (but at irregular times), will help to deter would-be fraudsters / thieves and will quickly identify if something is amiss.

  3. Develop security policies and protocols and regularly communicate them
    Regularly remind employees of security policies and protocols that apply to them.  For example, requirements to check refunds with management, review daily transactions, strict controls around price over-rides, etc.

  4. Minimise opportunities to commit fraud or theft
    Limit access to computerised records, the safe, keys and alarm codes. Also, consider changing locks and access codes if an employee is asked to leave their job through misconduct. Change safe combinations six-monthly and also after the termination of someone who had access to the safe. Provide an easy, confidential means for employees to report illegal or suspicious behaviour.

  5. Actively enforce protocols around recruitment, vetting (permanent and temporary employees) and employee malpractice
    Good vetting practice includes: checking CVs; requiring proof of qualifications; following up with referees and, where appropriate, past employers.  Also do police checks, credit checks and, where appropriate, drug tests.

What to do when you suspect or have evidence that an employee has been stealing

It is important to act quickly and decisively if you suspect or have evidence that an employee has been stealing.  Ignoring the problem will not make it go away; it will only make it worse.  It also sends the wrong message to other employees.

There are many potential pitfalls in managing this type of situation, so the best course of action is to seek legal advice and involve the Police.