All businesses should be aware of the potential frauds that can impact them negatively. One of the most common frauds is employee fraud or theft. Embroker has a list of alarming statistics regarding employee theft.
- 75% of employees admitted to stealing from their employer at least once.
- 90% of all significant theft losses are from employees.
- Businesses lose $50 billion every year from employee theft.
- One in four employees admit to reporting more hours than they work.
Understanding the factors that drive employees to steal can help business owners identify potential theft opportunities before it becomes a real issue. Three common factors that cause employee theft are:
- Incentive: reasons to commit theft, such as personal financial pressure, medical bills, etc.
- Opportunity: there are means to commit theft, such as weak company policies.
- Justification: there is a perceived rationalization for the theft, such as personal entitlement, disgruntlement, and perceived underpayment.
Knowing and paying attention to your employees can help prevent employee theft. Some of the best practices to accomplish this are:
- Educating your employees: sometimes your employees aren’t aware that their actions are considered theft. For example, one of the most overlooked employee theft opportunities is time theft. Clearly communicate your expectations and company policies to ensure there is no ambiguity. This prevents opportunities from rising.
- Addressing concerns and issues: take the time to discuss solutions to employees’ concerns such as inflation, rent increase, divorce, loss of loved one, etc. This circumvents justification by letting employees know you care.
- Keeping your employees happy: cultivate a workplace culture that fosters employees’ happiness. Happy and satisfied employees don’t steal.
- Limiting opportunity for theft: Avoiding giving one employee too much power by establish individual responsibilities, segregate duties, restrict access, document procedures, and verify work independently to decrease the chance of theft.