What is employee theft: types and prevention tips

Ever wonder where that missing box of staplers went? Employee theft can be a silent drain on your business, costing companies billions annually. But it’s not just staplers and office supplies at risk. Employee theft can take many forms, from cash and merchandise to confidential data.

Ready to identify the weak spots in your business security and discover effective strategies to prevent employee theft?

Don’t let employee theft erode your profits! 

Our comprehensive blog post is all about the different types of employee theft and equips you with actionable strategies to safeguard your business. 

First, let’s talk about what employee theft is!

What is employee theft?

Employee theft is more than just a co-worker taking office supplies. It’s when an employee steals or misuses anything that belongs to the company without permission. 

This can include:

• Stealing cash, merchandise, or equipment.
• Using company property for personal reasons (like taking a company car on vacation).
• Abusing discounts meant for customers (like giving your friend a huge employee discount).
• Stealing company secrets or customer information.

How catastrophic is employee theft in Canada:

Employee theft statistics paint a horrific picture ! A study found that a whopping 95% of companies have been impacted by employee theft at some point! 

Even more shocking, three out of four employees admit to stealing from their employer at least once. The financial toll is significant, costing businesses over $40 billion annually. 

Sadly, for over a quarter of employees, financial hardship is a major motivator for stealing from their workplace. 

Now, let’s delve into what employees are truly pilfering from their employers!

Most common types of employee theft:

Here, we explore some of the most common types:

Theft of cash or merchandise:

This is a direct & often easily identifiable form of employee theft.

Employees steal cash given to them by higher officials by following acts:

• Pocketing cash payments: Employees might pocket some of the cash received from customers without entering the transaction into the cash register.
  
• Voiding transactions: Dishonest employees may void legitimate sales transactions to pocket the cash tendered.
  
• Fake refunds: Issuing fake refunds or processing returns for non-existent goods/materials can be a way to embezzle cash.
  
• Shoplifting: Employees working in retail stores may steal merchandise for personal use or resale. This can be done through manipulating receipts, bypassing scanners, or concealing items.

Time theft:

Time theft occurs when an employee uses paid working hours for other non-related activities without the employer’s permission.

This can manifest in several ways:

• Arriving late or leaving early: Employees may clock in after their designated start time or leave before their scheduled shift ends.
  
• Excessive breaks or extended lunch periods: Taking extended breaks or exceeding allotted lunch times is also a form of time theft.
  
• Engaging in personal activities: Using company time for errands, browsing the internet, or attending to personal matters on the clock all constitute time theft.

Inventory Theft: 

Inventory theft involves stealing a company’s assets for personal use or reselling. The inventory might include raw materials, finished products, or office supplies. Common methods include:

• Manipulating inventory records: Employees might change inventory positions or avoid entering the position in the inventory register to conceal stolen items.
  
• Taking extra items during shipments: Dishonest employees may surreptitiously add extra items to outgoing shipments during the delivery order process, intending to retrieve them later for personal use.
  
• Staged “damages”: Employees may manipulate data by showing damaged inventory and reporting it as accidental or unusable to steal it.

Data theft (Information security breach):

Data theft involves the unauthorized access, use, or dissemination of confidential company information by employees. Stolen data can include:

• Customer information: Employee theft of customer data like names, addresses, or credit card details can have severe legal and financial repercussions.
  
• Trade secrets: Confidential company formulas, production processes, or marketing strategies are valuable assets vulnerable to employee theft.
  
• Intellectual property: Patented inventions, copyrighted material, or proprietary software can be stolen by employees and sold to competitors.

Tips to prevent employee theft: 

• Transparency and deterrence.
• Segregation of duties.
• Regular audits and inventories.
• CCTV security cameras.
• Employee hotlines.
• Promote open communication.
• Track inventory.
• Point-of-sale monitoring.
• Clear security procedures.
• Combat time theft.
• Remote video monitoring.

Transparency and deterrence:

At the time of hiring, it is better to discuss and convey a well-defined anti-theft policy. So employees know what constitutes theft, acceptable use of company property, and the disciplinary actions for violating these rules.

Employees understand what is prohibited and the consequences they would face, making them less likely to steal.

Segregation of duties:

Implementing a system where financial tasks are divided among multiple employees reduces the risk of theft and makes it harder for individuals to cover their tracks.

For example, one person handles cash receipts, another processes payments, and a third reconciles accounts.

Regular audits and inventories:

Regular audits of financial records, cash registers, and inventory help identify inconsistencies that might indicate theft.

Scheduled audits ensure a routine review of financial health, while surprise audits keep employees on their toes and make them less likely to steal consistently.

CCTV security cameras:

Placing CCTV security cameras in strategic locations like cash registers, inventory storage areas, and entry/exit points acts as a psychological deterrent.

The presence of cameras discourages theft by making potential criminals feel they are being watched, and increases the chance of getting caught.

Employee hotlines:

Creating an anonymous reporting system allows employees to report suspicious activity without fear of retaliation. This empowers honest employees to participate in safeguarding the company and can be crucial in uncovering hidden theft.

Employees might be aware of suspicious behavior from colleagues but hesitate to come forward directly. An anonymous hotline provides a safe way to report concerns.

Promote open communication:

Encouraging open communication between employees and management creates a work environment where employees feel comfortable raising concerns about suspicious activity or unethical behavior.

This two-way communication allows employees to report potential theft without fear and empowers management to investigate and address any issues promptly.

Track inventory: 

Closely monitoring inventory levels helps identify unusual shrinkage or discrepancies that could indicate theft. Regularly conducting physical inventory counts and comparing them to digital records allows for early detection of missing items.

Big businesses across the globe are now using inventory control systems with barcode scanners or RFID tags that can further tighten inventory management.

Point-of-sale monitoring:

POS systems track transactions and can be configured to detect suspicious activity like voids or unauthorized discounts, helping prevent cash register theft.

By setting up rules to flag unusual transactions for review, managers can investigate potential theft attempts and take appropriate corrective actions.

Clear security procedures: 

Developing clear security protocols for areas with high-value assets or cash adds an extra layer of protection.

This could involve restricting access to sensitive areas with badge scanners or key cards, requiring dual authorization for high-value transactions, and implementing procedures for securing cash drawers and handling deposits.

Combat time theft: 

Addressing time theft by implementing timekeeping systems and clear work hour expectations discourages employees from stealing company time.

Time theft can take various forms, such as arriving late, leaving early, or taking extended breaks. By using electronic timekeeping systems and monitoring employee schedules, employers can ensure they are only paying for authorized work hours.

Remote video monitoring:

Surveillance cameras, enhanced with advanced video analytics like shoplifting detection AI, enable proactive identification of suspicious activity and security breaches.

Upon detection, alarms are triggered at the remote video monitoring center, prompting immediate response from operators who assess the situation via live video feeds and act according to pre-established client SOPs.

Wrap up: 

We’ve compiled a summary of various types of theft and prevention tips to help thwart employee theft.

Conclusion:

Employee theft can be a significant drain on your business, but there are steps you can take to prevent it.  

This guide explores different types of theft, from cash and merchandise to data, and offers practical prevention tips like clear policies, audits, security measures, and open communication.  

Don’t let employee theft erode your profits! Contact us today to secure your business with a comprehensive employee theft prevention plan.