Your employees are like family. They’ve been there through the good and maybe not-as-good years, you’ve celebrated personal and professional milestones together, and you trust them to help run your business. You would never think that they would be capable of stealing. But with 75% of employees admitting to stealing from their employers, it is likely happening to you.
Unfortunately, employee theft is on the rise. According to a recent report, U.S. businesses lose $60 billion (yes, that’s BILLION with a B) a year to shrinkage, with employee theft identified as the single biggest cause. That’s equivalent to 7% of annual revenue – 7%! What would you do with an extra 7% added back to your bottom line?
This isn’t to say that all employees are bad and steal. Instead, it’s to bring awareness that theft happens, and it is happening at your expense. Check out the list below for 4 common ways your employees are stealing from you.
THEFT OF TIME
There are hundreds of different ways employees can steal time. Coming in late, taking excessive or longer breaks, falsifying timesheets, spending too much time on social media or taking personal phone calls. While many employers have come to accept this, theft of time is just as costly as theft of merchandise.
Be especially aware of ‘Buddy Punching’. A common form of time theft where employees will clock in for someone who may be running late, or clock out for someone to give them extra time.
THEFT OF PRODUCTS
Stealing products is not only common but the way they are being stolen is getting creative. During the day an employee takes the trash out to the dumpster. This doesn’t seem out of the ordinary because it is a daily task. Fast forward to later that night, and the employee comes back to the store and grabs the bag of trash out of the dumpster. But why would they want that trash? Because it’s actually a bag filled with new, expensive merchandise that was disguised as trash to sneak it out of the building. While it may sound extreme, this form of theft is preferred because it is discreet and usually reaps big benefits for the thief.
Some forms of product theft are not as extreme, for example not charging a customer for a drink with their meal, or not scanning all of the merchandise brought to the register but putting it all into the customer’s bag.
It’s also possible that employees aren’t stealing products, but are stealing supplies. Office supplies are a necessary cost of doing business. However, when employees think the supply closet is for their own personal use, the cost of doing business increases.
THEFT OF CASH
If given the opportunity, stealing cash can be rather easy. Too often, retail employees will conduct a phony return transaction for cash and then pocket the money. Others have figured out how to force balance their drawer or collude with managers to bypass override measures.
Conversely, employees in the restaurant industry have been known to add an additional amount to the tip left on a credit card receipt in order to take home extra money at the end of their shift. However, when this is noticed by the customer the business must refund the difference which not only results in theft, but also a poor customer experience.
Industries like construction where some of the day-to-day transactions may happen onsite have experienced theft of cash in a completely different way. Employees are creating and submitting fake vendor invoices to be paid by the company. The invoices get paid and a check is sent to a P.O. Box belonging to the employee.
Another way cash is being taken directly from the business can happen with the bookkeeper. Often bookkeepers are in charge of both accounts payable and balancing the books. Without the proper controls in place, money can go missing even if the books are balanced.
Theft of cash may be different from one industry to the next, however, it is just as harmful and it is becoming harder to detect.
THEFT OF DATA
This one often gets overlooked. It’s easier to think about needing to protect yourself from merchandise walking off or money missing from the register. According to Entrepreneur.com, 85% of employees admitted to taking company documents or items they had created upon leaving the company. But it doesn’t stop there. Some employees admitted to taking proprietary information, business strategy materials, customer data and even patent documents.
While the theft of data isn’t a new concept, it is becoming a larger issue as data is becoming more valuable and the availability of it is loosely monitored.
As you’ve read, employee theft takes place in a variety of different forms. As business owners, you likely will not be able to eliminate theft altogether. But with the knowledge of ways to prevent it, clearly defined and communicated policies, and being aware, you can certainly minimize it.