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How to Prevent/Deal With Employee Theft in the Workplace – Part 1

Practical tips for a common problem

Posted by Timothy Dimoff on December 18th, 2012

Cash register a little short? Does it seem like you are replacing office supplies more often than normal? Are you finding that materials or items seem to be missing from your small business? You may be experiencing employee theft. Studies show that employee theft far outpaces shoplifting by customers, even stealing eight times more than customers!

The Association of Certified Fraud Examiners reported in a 2010 article that the median loss total for companies nationwide was $160,000. The study also found that small businesses are more susceptible to theft than larger ones possibly because small companies have fewer anti-theft measures, policies and procedures in place.

Tread Carefully

An internal investigation may cost less, but an important consideration is whether you have the resources and experience to conduct the internal investigation fairly and without bias.
Charging an employee with a crime can be very difficult, especially if the person is a trusted, long-time worker whose motive is desperation or compulsion.  You must take the emotional element out of it and always have policies and procedures in place to handle the situation and deal with employee theft. The way you handle a situation is critical so you don’t expose your company to any liability.

Internal or External Investigator?

If you suspect an employee is stealing, decide whether to conduct an internal investigation or to call in outside expertise. An internal investigation may cost less, but an important consideration is whether you have the resources and experience to conduct the internal investigation fairly and without bias. An outside firm may be better equipped to deal with the investigation.

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Either way, you must conduct an investigation and here are some specific tips when dealing with suspected employee theft:

  • Have policies and procedures in place and make sure every employee knows them.  Let employees know that ANY theft will be dealt with seriously, severely and harshly, including immediate termination if that’s your policy, even if the infraction is small.
  • Do your due diligence before hiring employees.  Conduct a thorough background check to determine whether the applicant had trouble with past employers or has a criminal record. Follow up on all references and make sure that there are no character issues or concerns.
  • Always investigate claims of employee theft as thoroughly as possible. Let employees know that the issue is taken seriously and will not be tolerated. Interview all employees to determine what is known about a particular theft incident. Gather facts and corroborate any accusations. Don’t rely on the testimony of any one individual.
  • If employee theft has been documented, you must follow through with discipline. Whatever discipline system you establish should be used consistently to avoid any claims of discrimination. Review the employee’s past disciplinary record to see whether there have been other incidents and warnings. Evaluate the severity of the conduct and the likelihood that the employee will engage in similar behavior in the future.  Determine whether the employee poses a risk for retaliation or physical harm to you, your employees or to the business. If so, take steps to mitigate the risk.

Next month, I will go into more detail on additional steps and considerations for dealing with employee theft including dealing with unions, calling the police, etc.


Timothy Dimoff
Timothy Dimoff

President, SACS Consulting & Investigative Services

Timothy A. Dimoff, CPP, president of SACS Consulting & Investigative Services, Inc., is a speaker, trainer and author and a leading authority in high-risk workplace and human resource security and crime issues.
He is a Certified Protection Professional; a certified legal expert in corporate security procedures and training; a member of the Ohio and International Narcotic Associations; the Ohio and National Societies for Human Resource Managers; and the American Society for Industrial Security. He holds a B.S. in Sociology, with an emphasis in criminology, from Dennison University.

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