If you're not worried about the potential for employee theft and fraud in your small business, perhaps you should be. According to a 2008 report by the Association of Certified Fraud Examiners, the median loss by businesses with less than 100 employees was $200,000 per incident. And if that weren't bad enough, the problem only grows in a weak economy. "Employee theft always gets worse in bad economic times," says Timothy Dimoff, founder and president of SACS Consulting & Investigative Services in Akron, Ohio. "Some employees may steal more to survive, but often the larger reason is that they steal because they feel a sense of entitlement to make up for a lack of compensation they believe they should be receiving." Some steal cash or data; others lift items that fit into their handbags or briefcases, such as office supplies, gadgets and USB drives. How can you protect your company? Here are five essential tips for entrepreneurs.
1. Know the warning signs.Think that employee who comes in early and works late, never calls in sick, and never takes vacation time is extra dedicated? Not necessarily. Those could be red flags that the employee could be involved in stealing information or items from your business. Other warning signs, according to Dimoff, include "secretive type of behaviors, employees who own things beyond their means of income, employees who prefer to work alone, employees who ask questions that they shouldn't be asking or seeking info that they have no need to know, and specific clients or customers asking for only a certain employee and if that employee is not available, the client or customer leaves and comes back another time."
2. Make prevention a priority.Especially if your office is small and casual, you may be hesitant about taking extreme preventative steps. But if you're concerned about the potential for employee theft, Dimoff has a few suggestions, including "controlling the flow of all people in and out of every building. This includes making sure that all employees, vendors, customers, and others who enter the premises have to pass through only restricted entrances and exits." Conducting background checks for new hires, checking your books on a monthly basis, and having employees park away from building entrances and exits can also be effective.
3. Go high tech.Technology allows even the busiest entrepreneurs to monitor what's going on in their offices. In addition to video cameras both inside and out, Dimoff suggests "access control technology such as ID cards that need to be swiped for entry and exiting, fingerprint access pads, and good lighting." Security software such as DeviceLock is another good idea -- once installed, the product prevents information theft by controlling and monitoring who accesses your company's data.
4. If a theft occurs, take action immediately.Your actions send a message not only to the offending employee, but also to your entire staff that your company has a zero tolerance policy for theft of any kind. And while you may be tempted to confront the employee and handle the situation on your own, hiring an outside agency or service that specializes in employee theft and detection is the smarter -- and perhaps safer -- course of action. "An agency is trained and equipped to handle any confrontation with the suspected employees so it doesn't turn violent," Dimoff says.
5. Be careful who you trust.It would be nice if you could just trust everyone you bring into your business. Unfortunately, as Dimoff points out, even your best and favorite employees could pose a threat. "Time and circumstances can influence anyone to change and commit theft or fraud," he says. "Many companies are shocked when they discover who was stealing from them, and often the owner claimed he or she treated that person like family. The older and more trusted employees actually have more opportunity to commit theft or fraud."
The original version of this article appeared on AOL Small Business on 5/10/10.