| Methods of identifying employee theft. | | | | security-management consultant in Norton, |
| | | | Mass., says that "well-thought-out background |
| Here's a chilling prospect: "If you own a | | | | screening is your best tool." With a |
| growing company and spend most of your time | | | | candidate's permission, you may do a legal |
| preoccupied with developing new products and | | | | check, which costs from $50 to $500. Be |
| markets, you're especially vulnerable to | | | | careful, though. In many instances you cannot |
| employee theft and fraud," warns Thomas | | | | legally discriminate against an applicant |
| Creal, managing director of investigation and | | | | based on an arrest record. |
| litigation support at the Chicago accounting | | | | |
| firm of Checkers, Simon & Rosner. Among the | | | | Establish checks and balances. In 1992, after |
| problems: "Your company could minimize its | | | | suffering a serious shrinkage problem, Joe |
| risks in its financial department by | | | | Murphy restructured his staff so that |
| organizing a system of safeguards and double | | | | different employees handled purchasing, |
| checks, but that's probably way too | | | | receiving, and accounts payable. "When you're |
| expensive." So instead, to identify and | | | | small, you tend to place those functions in |
| reduce your risks Creal suggests running | | | | the hands of one person," says Murphy, |
| random comparative checks -- trend analyses | | | | president of Jim Hjelm's Private Collection, |
| -- going back three to five years, focusing | | | | a $6.5-million wedding-dress maker in New |
| on these likely hot spots: Excessive | | | | York City. "You save in salaries, but you set |
| reimbursement of expenses. "An employee who | | | | yourself up for theft." Control inventory. |
| wants to break the system will identify the | | | | Murphy instituted a perpetual inventory |
| threshold at which his boss starts paying | | | | system: his staff checks finished goods and |
| attention -- maybe $25 -- and file false | | | | raw materials every day instead of only once |
| invoices below that number." You should | | | | at the end of the month, and an outside firm |
| require backup documentation on all expense | | | | does a year-end audit. Levinson suggests that |
| filings, even the small ones. | | | | you also consider rotating inventory |
| | | | responsibility. Retail chains, he says, |
| False invoices. To subvert employees who set | | | | should have managers from different stores |
| up dummy corporations and then submit | | | | take inventory for one another. |
| fraudulent bills, analyze all payments to new | | | | |
| or unfamiliar suppliers by running Dun & | | | | Educate employees. Show them how bottom-line |
| Bradstreet credit checks or otherwise | | | | repercussions of theft affect the company, |
| verifying each new company's authenticity. | | | | and encourage their help. |
| You may also want to conduct random spot | | | | |
| checks of deliveries from new suppliers to | | | | Outline procedures for reporting theft, |
| make certain the goods received match invoice | | | | ensure confidentiality, and lay out the |
| descriptions. | | | | consequences of dishonesty. Murphy, for |
| | | | instance, stated in a memo to employees that |
| Inventory theft. "Maybe someone on one shift | | | | no dress would leave the factory without an |
| in your warehouse is selling inventory out | | | | invoice and that "any violation would be |
| the back door," Creal warns. "Look for trends | | | | grounds for immediate termination and legal |
| that don't make sense, like a de-crease in | | | | action." Levinson adds that employees who |
| inventory during a month when revenues go | | | | deal with customers, vendors, and the public |
| down as well." Some tips to protect your | | | | should have a good understanding of the |
| company from employee theft, including a book | | | | company's policy on gifts -- and when they're |
| on checking workers' backgrounds. | | | | considered implicit bribes. |
| | | | |
| You'd be hard-pressed to find an employee who | | | | Take a preventive approach. An |
| hasn't occasionally slipped at least one or | | | | employee-assistance program can help prevent |
| two yellow sticky pads into his briefcase. | | | | workplace theft. (See Managing People, July |
| But what about those workers with perpetually | | | | and September 1994, Doc. |
| sticky fingers? They can wreak havoc with | | | | |
| your bottom line, not to mention employee | | | | Nos. 07940952 and 09941223.) Sure, plain |
| morale. And chances are, you're helping them | | | | old-fashioned greed is a prime motivator, but |
| -- by making dishonesty easy. A little | | | | financial difficulties, substance abuse, and |
| foresight, though, will help you put an end | | | | even mental-health problems can also lead to |
| to employee theft without turning your | | | | theft. Provide a problem-solving forum for |
| company into a police state. | | | | your workers and you may be helping to defuse |
| | | | their impulse to steal. |
| Don't hire problems. Howard Levinson, a | | | | |