According to a study conducted by insurance   Hiscox, United States businesses victimized by employee theft in 2016 lost an average of $1.13 million perbusiness. 68   of the employee theft cases identified in the survey involved small- or mid-sized businesses with fewer than 500 employees. Employee theft is a major issue for SMBs and something that can affect any company, regardless of industry.

Not all employee theft takes the form of large-scale embezzlement. While perpetrators of employee theft do sometimes steal hundreds of thousands of dollars from their employers, smaller instances of employee theft can add up fast, including:

• Payroll fraud. Employees who falsify their timesheets, claim more hours than they worked, or cheat with their timecards are committing employee theft.  

• Stolen cash. This category can range from cashiers taking money out of the cash register to employees forging checks. Moving company money from corporate accounts to personal accounts and using company credit cards to pay for personal expenses fit into this category, too.  

• Stolen property. This one might be the area of employee theft that the most people commit, but the fewest people think about. It might not feel like stealing from an employer to take pens, printer paper, staplers, scissors, or other office supplies, but those small thefts can escalate into costly annual losses. More severe types of company property theft include instances of employees stealing merchandise that their company makes, stocks, sells, or distributes.  

• Intellectual property theft. On the extreme side, this type of theft might mean an employee stealing trade secrets from a company and selling them to a competitor. More minor examples include the theft of email contact lists for customers or leads.

There are several strategies employers can use to prevent each of these types of employee theft. Limiting access to financial accounts, implementing checks and balances to monitor cash handling and expense reporting, and using surveillance systems and other security strategies can help. At the root of every employee theft issue is the trustworthiness of the employee who commits the crime. Thorough background checks are the best strategy available to make sure you know who your employees are and what they might do.

Criminal history checks are a start. If someone has ever been convicted of embezzlement or a similar  , you need to know. Just because someone’s criminal record is clean doesn’t necessarily mean you can trust them, so using verification checks for resume details like education and work history can tell you whether a candidate is willing to lie to you. Where permitted, credit history checks can give you a window into a person’s financial habits to see if they are good at managing money. Checking references or communicating with former employers can tell you whether the person has a history of workplace theft or bogus timesheets.

At backgroundchecks.com, we provide background checks designed to help companies like yours put together a comprehensive screening strategy for every position. Whether your business has recently been affected by employee theft or you are trying to limit your risk for embezzlement, we can help.

Sources: 

https://globenewswire.com/news-release/2017/08/23/1091456/0/en/Employee-theft-cost-US-businesses-an-average-of-1-13-million-in-losses-according-to-2017-Hiscox-Embezzlement-Study.html

https://pilotonline.com/inside-business/news/columns/article_8d965044-7bb4-11e8-936a-d35bf093e435.html