Preventing theft in your business

Many thefts are committed by people who have direct access to cash, stock, or the company's records. It’s therefore a good idea to segregate as many responsibilities as possible among employees and establish good systems where your authorisation is required for some transactions, such as all purchases above a certain value or unusual purchases.

Hold snap in-house audits of all sales and purchases, cash receipts, record-keeping, and stock control. It's also sound policy to review all purchases and expenditure from time to time and to ask tough questions. You should know all your suppliers so you can spot fictitious ones. If staff know there’s surveillance of these areas, they’ll be less likely to take chances.

As an employer, you have certain duties and responsibilities to your employees. But beyond fulfilling your legal requirements, it pays to treat staff well.

The retired owner of a department store offers this advice: "I've always felt that theft mostly results from disgruntled staff. If people feel downtrodden or exploited, they're going to take it out on you somehow, and theft is the easiest option – particularly in a department store! 

“I always treated my staff well and paid them above average rates. Compared to others in the industry I had very little problem with stock shrinkage. Of course, there are always basically dishonest people to contend with, but I found if you're firm but fair, staff will respect you and behave accordingly."

Here are some other actions you can take to help prevent theft or fraud in your business.

Create procedures that require transactions to be recorded in a timely manner and follow an established process. 

Adopt a zero-shortage policy for things like stock and cash, and stress shortage control even if losses diminish.

An anonymous tip-off policy will help encourage employees to report suspicious behaviour.

When hiring new employees, be vigilant about checking the references. Few people who steal have a criminal record, so ask previous employers how honest the person was.

Put appropriate computer and information technology safeguards in place, like using passwords to control access to different areas. For example, not everyone should be able to access the accounting software.

Limit pricing authority to a small group of employees, and rotate business duties to avoid employees gaining a monopoly over functions that are theft prone.

Having only one exit point for staff, in full view of other staff and management, can also make the job of would-be thieves much harder.

Clear communication means ignorance can’t be an excuse. Spell out clearly the business' policy on theft and fraud in employment agreements and operations manuals. Leave no one in any doubt as to what the rules are, what’s expected of them, and reiterate them on a regular basis (not just at inductions).

Make it clear to staff and customers that you'll prosecute thieves rather than settling for an apology. If staff sense you lack confidence in this area, they might take advantage.

You can also make staff feel like they’re directly responsible for theft control by explaining it affects the basic viability of the business, and therefore everyone's job depends upon stopping theft and fraud.

Remove incentives to steal by building trusting relationships with your staff and aim to pay them a fair market rate. While it’s true that even highly paid, highly trusted employees commit theft, making staff feel valued can help dampen their desire to be dishonest.

Include your staff in theft prevention schemes and get their input. Make them aware of your objectives and the measures you’re taking to prevent theft occurring.

Ensure all staff are subject to the same measures, regardless of their role.

Finally, imagine yourself working in the various roles in your business.

• How, when, and how often could you steal if you were in charge of certain functions?
• Think about how you would go about escaping detection.

This exercise can be very productive in revealing some serious security gaps and loopholes in your business.

These measures will go a long way to helping your business avoid theft and fraud. But what should you do if you suspect it’s happening? Learn how to identify and deal with theft in your business with our guide.