Managing employee theft starts with the employers themselves. They have to make theft as difficult as possible for employees and develop strategies to prevent it from occurring in the first place. Implementing a preliminary analysis of the company and its procedures is the first step. Questions that can help identify problems include:

Company merchandise – Is it desirable to steal? Is it easy to steal?
What kinds of financial controls are in place regarding petty cash, bank deposits/withdrawals, paying invoices?
Can shipping & receiving documents or invoices be altered?
Can employees enter and leave the facility without being seen?

A report from The Hanover identifies four measures for controlling employee theft:

Pre-employment screening – Hiring honest employees is a good place to start and this can be accomplished through a thorough pre-screening process: reference checks, background checks and criminal checks can provide valuable information.
Procedural controls and devices – Written procedures addressing security protocols, company policies and what happens when they are violated by employees should be clear and concise. Workflows should be organized so that employees can act as checks on each other and a process for reporting anomalies should be established.
Improving job satisfaction – Since several of the frequent causes of theft are attributed to low job satisfaction, regular communication with employees, training programs, salary reviews and recognition by management are important strategies for employers.
Apprehending and prosecuting offenders – Sometimes the fear of being caught and prosecuted can be an effective deterrent, although less than 1% of employee thieves are prosecuted. If employers don't want to go through the expense of filing charges, requiring employees to make restitution is another option.

Here's a look at the four most prevalent frauds perpetrated by company employees and some recommendations to prevent them from occurring in your organization.

Instant Insights /

The 4 Most Common Business Fraud Schemes

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