How to deal with workplace theft

It has been said that one in three business failures is due to employee theft and nearly 80 percent of workers admit they have stolen, or would consider stealing, from their employers. Unfortunately, many businesses remain unaware of workplace theft until it’s too late. This two-part guide on cause and prevention will help you identify and deal with theft or fraud.

Why employees steal

Staff steal for many reasons. In most cases theft does not occur out of any need but simply because of opportunity and lax business controls, or as a form of 'compensation' because the worker feels poorly treated. A common rationalisation is: "the business is making heaps of profit and I'm only taking what's really due to me for my hard work."

Theft is not necessarily the realm of the lower paid workers either, as research shows that theft can happen in all areas within a company with a trend towards higher sums and more sophisticated methods at the upper management levels.

Common forms of employee theft

Employees have been known to use a variety of methods to steal from their employer including the obvious ones of stock theft and 'fingers in the till.'

Common forms of employee theft include:

  • Removing cash from the till.
  • Taking home stock.
  • Discounting to 'friends' and colluding with others (turning a blind eye).
  • Fictitious 'supplier accounts'.
  • Fictitious petty cash purchases.
  • Taking cash 'commissions' from suppliers.
  • Using business facilities and materials for personal gain.
  • Giving away or using confidential company information or trade secrets for personal gain.

Signs that theft may be happening

Stock shrinkage and/or reduced sales may be indications of a problem but you will need hard evidence to prove that a particular staff member is stealing from you.

Evidence of employee theft can take some time to become apparent unless you catch someone in the act. Often you may only have a suspicion that figures just don't seem right. For instance, in most established businesses the gross profit ratio remains relatively constant, so downward trends can be a sign of theft occurring.

Here are some of the things you should also be looking out for:

  • stock levels that are lower than your sales records indicate
  • sales figures dropping on the days that a particular employee is working
  • in-house rumours of dishonesty.

Other evidence of theft might include:

  • invoices appearing as copies rather than originals
  • employees who are reluctant to take holidays (as evidence may be discovered in their absence)
  • missing documentation
  • stock left near exits.

Inefficient systems

Businesses with inefficient systems offer the easiest pickings. Thieves love businesses where:

  • stock records are out of date or in such a shambles that missing stock could go unnoticed for a long time - or possibly never be picked up
  • the owner is too busy or 'can't be bothered' with core functions such as buying or keeping expenses under control (for example, by getting several quotes for supplies before ordering) and delegates these tasks to others
  • the books are in a mess because the owner is not interested in accounting.
  • the owner does not set performance or sales targets.

Staff quickly pick up on attitudes. If they perceive that the owner simply doesn't care about monitoring of stock or watching expenses, some may take advantage of the situation to help themselves, justifying their actions along the lines of: "well, the owner doesn't care, so why should we?" Even if they don't steal themselves they may simply turn a blind eye to their colleagues' thefts: "it's not my responsibility" is the common rationalisation.

'Invisible' theft

Not all forms of theft involve the direct stealing of stock or materials. Employees can also steal time from the business by taking much longer over tasks than necessary. Computers and information technology have opened up whole new areas for dishonesty. For example, an employee could sell your database of customer names and details to a competitor. A computer expert can email your latest marketing plan or pricing system to the opposition, or rig the accounting system so that fraud goes undetected for some time.

For more information

ANZ has a range of free workshops for your business, covering topics from 'How to effectively recruit and manage staff' to 'How to write a marketing plan.' Whether you're starting a new business or you're established and looking for inspiration, there's a workshop to suit your business

From overseas: +64 9 523 7220

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This material is provided as a complimentary service of ANZ. It is prepared based on information and sources ANZ believes to be reliable. Its content is for information only, is subject to change and is not a substitute for commercial judgement or professional advice, which should be sought prior to acting in reliance on it. To the extent permitted by law ANZ disclaims liability or responsibility to any person for any direct or indirect loss or damage that may result from any act or omissions by any person in relation to the material.