Risk Management | Employee Theft and how to avoid it

Here’s some great risk management tips that all businesses need

Surely the thought has flashed across the minds of most business owners at one time or another. What would I do if I discovered that one of my employees had been stealing from me? How would I confront them? What action would I take?

You may have played imaginary scenes over in your mind numerous times, rehearsing what you might say, if you were ever forced to deal with such behaviour from a staff member.

Employee theft is an unfortunate reality facing many Australian businesses. Lack of job satisfaction and/or career progression, financial insecurity, external lifestyle factors such as alcohol and gambling addictions – these are just a few of the more common motives for employee theft.

Most employees are genuinely well-intentioned and aim to contribute in the best possible way to their companies. However, thieves of all different shapes, sizes and backgrounds operate within the most reputable of firms.

They’re out there somewhere – hiding in clear view amongst their more loyal colleagues on the office floor.

Where appropriate put some of the following suggestions into effect within your business. Then hopefully the only employee theft you’ll ever need to worry about, is who stole the last slice of chocolate mud cake left over in the fridge, from the recent staff birthday party!

Compulsory criminal history checks for all staff

Prior to being offered employment with your organisation, ensure that all candidates undergo a pre-employment background check. For a minimal fee, you can find out whether the person you are looking to hire has a criminal record or not.

Existing employees can also be subjected to these checks, with the understanding that if a staff member is charged with a criminal offence during their employment, they may be terminated.

Although many active, white-collar criminals have managed to escape detection from authorities and continue to commit staff theft, this check will at least this give you some comfort in knowing that you are not employing any known criminals within your firm.

Workplace training to caution against employee theft

If you do not already have one, develop a staff manual to be handed to all new employees upon their induction into your business. This manual should lay down the rules and regulations that all employees must adhere to. A section outlining your company’s anti-theft policy and the consequences of stealing is essential.

Make sure that staff are aware that theft of company data, assets and funds will not be tolerated, and that stealing will result in disciplinary action being taken. In serious cases of staff misconduct, the police may become involved.

Send emails to all company employees, at least four times per year, reminding them of the company’s stance on employee theft. Warn your staff that the company’s financial records are audited both internally, and by an outside accounting firm, at unscheduled times throughout the year.

Advise employees that any personal items including jewellery, bottles of designer perfumes and valuable decorations must not be left unattended on their desks. Include a clause that informs them that your company will not accept responsibility for the loss or theft of their personal belongings.

Arrange to have a company poster created to warn employees against stealing from the company. This poster should encourage employees to report any incidents of staff theft or other criminal activity they happen to witness or suspect of their colleagues.

Copies of this poster can be prominently displayed in staff meal rooms, lift lobbies and near soft drink machines.

Set up an anonymous staff hotline to report employee theft

This can be a hotline or email address where employees can report any criminal activity they have observed at work.

The service can be established either internally or through an external provider. Matters raised through such a service should be treated with the strictest confidentiality.

Internal and external audits of financial records

While financial records should be regularly reviewed by the senior members of your Accounting team, engaging the services of an external Auditing firm is also highly recommended.

Audit professionals will conduct thorough reviews of your firm’s financial records to ensure your team are following proper accounting procedures and complying with tax legislation. They are also very adept at uncovering evidence of fraudulent activity during their searches.

Random and unannounced visits from external Auditors are one of the best ways you can keep workplace thieves on edge. They will be twice as apprehensive about arranging their next act of embezzlement, simply because they will not know when those pesky Auditors are going to show up next!

Security measures to stop employee theft

One of the best ways to prevent workplace theft is to install security cameras throughout your workplace. Commonly used as a way of deterring customers or other external parties from stealing your stock, these devices are equally effective at making internal thieves think twice about taking your cash.

For maximum effect, place surveillance cameras over areas where inventory is held and cash transactions are made.  

If your business trades in valuable goods such as jewellery or high-end fashion, it might be prudent to hire a full-time security guard. As well as keeping a watch on customers, they can keep an eye on your other team members to form a buffer against staff theft.

Safeguard your business with Management Liability Insurance

As anti-theft systems and technologies become more advanced, so do workplace criminals. In the ever-evolving world of theft prevention, companies are in a constant race to stay one step ahead of those enemies within.

Even with the tightest measures in place to protect your company, how can you be truly certain that your business’s interests are protected?

Berkley Insurance Australia provides world-class Management Liability Insurance for businesses just like yours. Your broker can find the right cover to suit your individual needs. Get protected and we’ll keep a watch out for you!

Berkley Insurance Australia Management Liability Policy Wording

Talk to one of our lovely underwriters if you have more questions