What to Avoid & What to Do if You Suspect an Employee Is Stealing

What To Do If You Suspect An Employee Is Stealing July 27, 2020

Jin Hyun

Writer

Missing inventory is nearly unavoidable for businesses both small and large. Issues such as spoilage or management errors can lead to some level of shrinkage. However, when inventory cycle counts repeatedly point towards missing stock, it's time to consider a slightly more unappealing possibility theft.

Data from the US Chamber of Commerce revealed a whopping 75% of employees have admitted to stealing from their company at least once, proving workplace theft to be one of the toughest and most far-reaching problems faced by businesses.

Additional statistics have revealed 38% of employees admitted to stealing more than once, while the FBI named employee theft as one of the fastest-growing crimes across the nation. This costs companies roughly 7% of their expected margins and forces 33% into bankruptcy.

By simply knowing the signs and taking the appropriate preventative measures, businesses can stop or eliminate theft before it leaves a serious dent in their finances.

Warning Signs of Employee Theft

Learning how to detect workplace theft is a serious and, unfortunately, crucial business. Therefore, management should always be aware of the warning signs when they begin to suspect an employee may be stealing from them. While these suspicious behaviors could be purely coincidental, it's always better to be alert.

Monitor workplace discrepancies such as-

Cash discrepancies (from petty cash to sudden drops in profit and payroll errors)
Missing goods (from inventory to office supplies)
Staff cars parked close to a landing dock
Unlocked exits

Monitor employee behavior, such as-

A poor or deteriorating work performance
Unreasonable employment complaints
Defensiveness when questioned on work performance or duties
Unusual or erratic work hours

7 Steps for a Thorough Investigation

The skyrocketing rates of employee theft mean an employer will inevitably be faced with in-house stealing at one point or another. So when business owners suspect an employee, what are the steps an employer should take to not only handle the situation but also cover themselves from a legal standpoint?

First things first, an investigation that leaves no stone unturned must be immediately launched with the hopes of compiling physical evidence and a case that goes beyond a reasonable doubt. From there it is a matter of seeking legal help while implementing a series of key steps that incorporate swift action, the calm and detailed collation of all relevant information, and finally, a civil confrontation.

Explore the following steps on how to conduct a thorough investigation.

1. Take Swift Action - The minute an employer suspects theft, actions must be taken before the statutes of limitations end. These laws differ in each state so consulting a legal advisor ahead of the game will be beneficial.

2. Bring in a Neutral Perspective - Depending on the scale or complexity of the theft, consider bringing in an outsider, such as a forensic accountant, to assist in the investigation and provide a neutral perspective.

3. Collect Physical Evidence - Immediately begin collating any supporting documents and evidence. This can include anything from accounting and financial records to personnel files and surveillance videos.

4. Bring in the Witnesses - Compile key questions and then launch one-on-one interviews with any potential witnesses, be sure to take notes that include the date, time, and the person's full name.

5. Keep it Under Wraps - Ensure confidentiality guidelines are put into place from the very beginning, encompassing all personnel participating in the investigation. This will prevent document leakage and fear of retaliation.

6. Confront the Suspect - Once all the evidence has been efficiently collated, present the case to the suspect. Ensure the employee suspected of theft understands that this is a preliminary interview designed to give them the opportunity to refute any claims. In this vital step, remember to focus on the evidence and communicate calmly and respectfully.

7. Create a Report - Compile an incredibly detailed written report of all findings with participant signatures. This is a vital part of the investigation, as it will be used to uphold the case in court and assist in refuting any claims of unfair dismissal or defamation charges.

What Not to Do

While this list is a great must-do guide for employers. Remembering the must-not's are just as vital to successfully weeding out and dealing with theft. Explore the top three actions to avoid below to prevent any legal mishaps.

Do not restrain or attempt to detain the suspected employee - Falsely detaining someone is not only unlawful, but it can lead to charges being brought against the detainer. It can also spark a dangerous scenario for both parties.

Do not defame the suspected employee - Collecting hard evidence and then taking the case further legally is a must. Smearing an employee's name through the mud beforehand or disclosing why they were fired can lead to a defamation case. Keep it all under wraps.

Don't threaten to prosecute unless the intent to press charges is there - Taking someone to court is expensive and time-consuming. Depending on the case, this might not be the best way forward so don't threaten prosecution unless it is necessary.

3 Preventative Tips

Prevention always beats the cure. So, what measures can a company implement to reduce the chances of theft? The following tactics are great ways to dramatically lower those fast-growing rates of employee stealing.

1. Recruit with caution - All potential employees should be screened via human resources before being welcomed into the team. This involves checking and validating references and insisting that all new staff undergo a background check.

2. Have a fraud and theft policy in place and ensure all staff members are aware - Developing a strategy to deal with theft and gross misconduct ahead of time will make it easier for an employer to take quick and decisive action, while further serving as a warning to staff that theft is taken seriously. Employees should be regularly trained in this policy and understand the consequences of a violation. Provide an anonymous avenue for employees to report suspicious behavior as part of this.

3. Regularly oversee employees and operations - This will ensure staff members know they are being watched, but not micromanaged. Also, remember to conduct regular financial audits alongside inventory counts of stock and equipment.