Five Ways to Protect Your Business, employee theft is one of the major threats faced by business that results in huge losses. It is estimated that businesses lose up to $60 billion every year to thefts and fraud attempted by employees. It’s essential for business owners to have a close-knit relationship with employees so that they take ownership of their work and strive to play their role in making the business a success.
However, one cannot just assume that the employees will never steal any resources.
Most business owners fear losses due to employee theft, and they’re right in doing so. Businesses lose around 7% of their annual revenue due to lack of monitoring of business resources. With the advancement in technology, it has become easier for employees to steal from their employers.
These alarming statistics infer that businesses must take precautionary measures to prevent the cases of fraud.
Employees can tamper with different business activities. Here are some common forms of employee theft and fraud:
- Check tampering
- Theft of cash or services
- Workers’ compensation fraud
- Using company vehicles for personal activities
- Overbilling vendors
- Payroll fraud
- Data theft
- Stealing office equipment
- Stealing business ideas and opportunities
- Expense reimbursement fraud
Here’s how businesses can efficiently minimize losses incurred due to employee theft.
1. Performing Background Checks
Before hiring an employee, it is essential to perform a thorough background check. Recruiters try to evaluate the behavior and personality of potential employees during the interview process. However, this perception isn’t sufficient. A background check provides detailed information on a person’s financial and criminal background.
Background check is an effective way of safeguarding a business. A large number of people lie or exaggerate during the interview process. Background check is helpful in verifying the information provided by a candidate. It ensures that the employees have the required skills and they are less likely to create problems down the road.
Before hiring a person, the potential employees must be asked to produce at least three references. A majority of organizations hire employees on a probation period. They evaluate the performance and character of a person during the initial months and offer them permanent job once they’re satisfied.
2. Monitor Employee Activities
Employee activities should be monitored on a regular basis. Most often, the trusted employees are involved in immoral activities. They have access to confidential information and they can exploit it for their personal benefits. Many business owners trust some employees just because they have been working with them for years.
However, time isn’t a parameter to verify the honesty of a person.
Employees have the right to keep their personal life private. However, any unusual behavior may be a red flag for business. If they have a lavish lifestyle which isn’t affordable in their salary or they enjoy gambling, it is recommended to keep a close eye on their activities.
If an employee has suddenly started working till late hours in office, the authorities must look into their motive. This behavior doesn’t depict that they’re involved in any illegal activity.
However, close supervision of employees helps protect your business from any losses. Moreover, it allows managers to help employees with their problems.
It is quite common in businesses to switch duties and responsibilities of employees. However, if any employee is reluctant to hand over certain tasks to other employees, chances are that they are involved in activities that are harmful for your business.
Employees can be asked to report suspicious activities of their colleagues. However, managers need to be extremely careful when dealing with such cases. Some problem-makers tend to wrongly accuse their colleagues. Such allegations should be directly reported to concerned managers and thorough investigations must be carried out before taking any actions.
The accuser should be asked to provide evidence to authenticate their claims.
As long as the privacy of employees isn’t compromised, surveillance cameras can also be installed in the workspace. Employees tend to become more careful when they’re aware that their activities are being monitored. However, it may also give the impression that employees aren’t trusted. Therefore, business owners must be careful when taking such preventive measures.
3. Maintain Written Documents
A code of conduct must be established andemployees should stick to it. Training sessions should be conducted to spread awareness about employee theft and its consequences. It will help in creating an environment where there is no room for employee theft or any fraudulent activity.
All business activities should be documented. Keep these documents at a safe place and only a few trusted employees should have access to the information. The documents must be numbered so that it is easy to determine if any important document is lost or taken away by an employee.
4. Keep Track of Inventory
Business inventory holds record of office supplies as well as the manufactured products that will be sold to customers. Keep your inventory updated. Only a few trusted and skilled employees should have access to inventory. As soon as new products are delivered or sold, the records must be updated to avoid any issues.
It’s also a good practice to make random internal audits to ensure that all business activities are transparent.
5. Protect Data
Data theft is one of the most critical issues for a business. An efficient IT team should be hired to develop an effective data security infrastructure. Hackers usually get access to business data by manipulating business systems. Email scams and phishing are also the most common methods of breaking into a system.
Business database contains important information. If any hackers get access to employee information or critical data, they may use it to cease certain business activities.
In order to protect a business from employee theft and fraud, it is extremely important to regularly update theft-prevention measures. Business reports must be reviewed to check the extent to which the preventive measures have been successful in minimizing losses due to frauds.
Accusing an employee of theft and fraud is a serious matter. Proceed with investigations only after getting in touch with your attorney.