Preventing employee related theft

As much as we’d like to put our faith in people we work with, sometimes it’s just not possible when the temptation placed before them is just too great. Psychology dictates that a person will most likely steal something when they know that they won’t get caught.

As a small business, it might not be practical to install a computerized inventory and point of sale system in order to keep track of your sales and inventory because the income does not justify the cost. But there are still ways to prevent people from stealing your hard earned income or stocks.

I talked to some friends who owned small businesses, some of which were passed down between generations within their family, and asked them to share how they were able to keep things in check. These were the accumulated tips they gave. See which works for you.

Tips on How to Prevent Employee Theft

1. Never give them a reason to steal - They said that one of the reasons why people steal is when that person can justify it with his conscience. In this way, they would feel that stealing from you is like justice being meted on you. Pay your employee’s a just wage and a give them a good reward for their efforts when times are good, be honest to them when times are either bad or good. Treat them fairly, with dignity and respect.
2. Never put them in a position that they can be easily tempted - put checks and balances in their work place so that they won’t get the temptation to steal. One of the ways of preventing theft is to take an inventory of the stocks. Although it may seem a tedious job, religiously do this. Without checks and balances, some people will get lulled into thinking that no one will ever know when they steal. That is also one reason why some Chinese businesses have a family member manning the cash register always. Because they are family and they can be trusted. Although this is not always the case as I have heard of some family members taking a swipe at the till.
3. Watch for Telltale signs - A friend’s father gave this suggestion. He said that he could easily tell if one of his purchasers was scamming their company when the guy suddenly had a new shirt on every few weeks. He said that as the boss you knew how much the person was earning and with a little math you could determine if there was any unexplained wealth in his cashflow. Of course pretty soon he was running out of purchasers because the temptation was just too great, so he decided to put his wife in that role instead.
4. Don’t hesitate to make an example or put your foot down- being just and fair also means that when you have to swing the hatchet, you swing it. So when the time comes to let them go, you have to let them go. Otherwise the others would feel that you are a softee and they too can get away with stealing because they know they’ll be given a second chance.
5. Ask for a police clearance - in this day and age most big companies will ask for a police clearance from applicants to check whether they have any prior convictions or not.
6. Putting them to the test - One person I asked mentioned that he sometimes puts his employee’s to the test by means of putting extra money on the till so at the end of the day when he/she adds up the sales he/she will notice some extra cash. It is a test of their honesty and integrity by testing what they would do knowing there is some extra and unaccounted money. It is a complete reversal of tip no. 2 of not putting your employees in a position that they can be tempted.
7. Walk the floor - Being visible in the workplace also helps to reduce the temptation to steal because it reduces the chance for people to slack off because they know that management is around. When inspecting, they also don’t have a definite time pattern as to when. It also helps the business when you do routine inspections because you can easily see areas in the business that could be optimized further to reduce cost or to increase profit. Some even go the next step by installing CCTV cameras.
8. Inventory, Inventory, Inventory - What goes in must be what goes out + what is left inside. Be it cash or items for sale. Sometimes it might be hard because of cases of huge inventories, but that is where the spirit of innovation comes in. Some Chinese friends have devised innovative ways of counting their inventory in bulk. For example, I saw a gasoline station who counted coins by weighing them. They knew that “X” amount of coins weighed this much. Some grouped items for sale in 50 gallon drums that were packed to the brim, so that when inventory time came, they just had to count the number of drums.
9. Be Generous - one person I asked said that with his old employees he never had any problems with theft. One reason was because he was always generous to them. When somebody had some health problems, he would help out with the bills. When a sudden monetary need came up, he would dole out or if somebody needed to take a leave, he would readily approve. He said that his generosity helped foster loyalty in his people, to the point that when it was his turn to need their help they wouldn’t hesitate to give it to him.
10. An honest employee is worth more than a good one - I had to put this piece of advice last because I felt that it stood out. The person who told this to me said that you have to learn to judge what kind of employee you need. In some cases like manning the till, you didn’t really needed a good employee proficient with numbers because that was what calculators are for. As with warehouse personnel who will just be stacking and keeping track of inventory. What you really need are honest people in those lines of work.

If you can share other tips of your own, kindly add them via the comments below.