1. Employee screening
“The most important thing is prevention,” said Daniel Ulrich, vice-president of Profile Inc. “Your first line of defense is a proper pre-employment screening.”
Many companies miss out on this step in hiring, sometimes mistakenly thinking they can’t legally perform background or credit checks, but with statistics showing that up to 37% of applicants lie on their resume, it’s worth doing your due diligence before you bring someone on board.
2. Alternating duties
“If one person is always responsible for the same thing and only they are knowledgeable about that task or area it enables them to do things that no one else is aware of,” Benard and Associates president Dean Benard told HRM. “If you alternate duties and train other people it’s more difficult to hide things.”
3. The right policies
No, you don’t need a “Thou shalt not steal” policy, but it is important to clarify for employees what is and isn’t allowed, and to establish preventative processes.
“If an employee uses tools after hours for their own projects, is that theft? If something is being thrown in the garbage, can they take that? Those are the types of situations policies should address,” Harrison Pensa employment lawyer Lorrie Por said. “It’s the policies that aren’t as obvious, that HR may not think of.”
Por also suggested including polices around time theft. Well-communicated policies in themselves won’t prevent people from stealing, but they can prevent employees unwittingly breaking the rules and can help back up a decision to terminate.
Computer monitoring and video surveillance are common ways to catch employees breaking rules, but HR needs to make sure their forms of surveillance are legal.
Employers must balance their employees’ privacy rights with their right to protect their business, Harrison Pensa associate Mana Khami said. Computer monitoring and video surveillance is allowed when employees have no reasonable expectation of privacy, which means all workplace policies around monitoring should be clear and well-communicated.
“Hidden cameras are a very grey area,” she said. “Is there consent? Is it justified? It’s important to balance employee rights with the employers’ right to protect themselves.”
A visible camera can be an excellent tool to discourage theft. While it may not catch someone in the act, it is likely to reduce theft in the first place.
5. Audits and reporting
“If you can’t prevent it, audit and monitor to identify the problem early,” Benard said. Regular audits can catch theft and fraud early, so the amount of damage is reduced. Like cameras, regular audits can be preventative because employees know they won’t get away with fraud for long.
Ulrich also suggested having an anonymous hotline in place so employees can safely expose dishonesty in their workplace.
“An anonymous number is a great way for HR to get information,” Ulrich said. “You’re keeping employees engaged and connected to what’s happening in the workplace.”
From concealed cameras, to casing local pawn shops, to directly confronting employees, there are any number of investigative steps an employer can take depending on the situation. There are two key considerations when deciding how to proceed.
“My advice is always remove the person from their position and tell them why,” Por said. “Remove the employee, but continue to pay them because you don’t know the full story yet.”
The first is proving just cause for termination, in which case you need to show that you were fair to the employee and that the investigation was not vindictive. The second is whether you want to contact police, in which case you need to have a body of evidence that they can pursue.
A discovery of serious theft or fraud and the resulting investigation, termination and potential criminal proceedings can have a serious effect on employee morale and engagement. Confidentiality laws mean it can be hard to communicate with employees about what has happened and the decisions that were made. Put together a statement explaining as much as you can, and allow employees to ask questions.
Once you’ve dealt with an incident of theft or fraud, take steps to prevent it happening again with the key suggestions above: good hiring practices, effective policies, and visible surveillance.
At least one third of businesses are affected by employee theft, according to a 2011 study from the Certified General Accountants Association of Canada, and a 2010 PWC study finds it costs employers more than $12 billion a year. Could a few specific steps help reduce the impact on your organization?