How to Predict and Prevent Employee Theft

Every year, workplace crimes such as employee theft cost U.S. businesses $50 billion. Most of these thieves aren’t hardened criminals who’ve been plotting to defraud their employers from the outset. In fact, the vast majority (96 percent) don’t have prior fraud convictions. With the right motivation and opportunity, employees will try to justify stealing time, money, information, or assets from your organization.

Not all employees steal, of course, so how do you spot and stop insider threats?

Three Characteristics of Employees Who Steal

While insider threats take many forms, people who have stolen from their employers can typically be described by one or more of the following three characteristics.

Disengaged

Apathetic employees are toxic to the work environment — they miss more work, negatively influence coworkers, cost money in lost productivity, and drive customers away. In fact, low employee engagement has cost the global economy $8.9 trillion, or 9% of the global GDP. 

Desperate

Desperation can send seemingly trustworthy veteran employees down a slippery slope to fraudulent behavior. Circumstances that can drive people to extreme measures include:

• Death
• Divorce
• Family problems
• Financial difficulties
• Addiction struggles
• Medical issues
• Job troubles
• Unstable life circumstances

Faced with any of these issues, an employee could feel there’s no other solution than to misappropriate resources. They might try to justify their actions with excuses such as “The company makes millions every year. A few thousand won’t hurt,” or “I’ll return the money when I can.”

Disgruntled

Disgruntled employees can wreak havoc on your company, retaliating for what they feel is unfair treatment, whether it’s low pay, disrespect, or termination. They may steal proprietary information, facility keys, computer hardware, equipment, money, inventory, time, or things as small as office supplies.

Deterring Theft

Understanding why employees steal is one thing, but preventing theft is another. There are, however, a few things you can do to help nip fraudulent activity in the bud.

Address Suspicious Behaviors

Certain behavioral warning signals can indicate whether or not an employee is more likely to swindle your company:

• Living beyond their means
• Developing an unusually close relationship with a vendor, customer, or other business partner
• Objecting to sharing job duties
• Displaying a wheeler-dealer attitude
• Acting irritable, suspicious, or defensive
• Harassing other employees
• Frequently showing up late or not at all
• Abusing internet access by visiting inappropriate websites or spending too much time browsing

It’s important to monitor these behaviors and promptly address any areas of concern.

Hold Employees Accountable

As with most processes, your approach to security should never be “set it and forget it.” Management should be actively involved in ensuring the honest, appropriate employee conduct your organization expects. The following steps are a good start:

• Have clear company policies that outline expectations for performance and conduct.
• Enforce predefined consequences for noncompliance.
• Implement checks and balances such as having employees share responsibilities or requiring two approvals for transactions.
• Revoke access privileges and confiscate company property immediately when employees leave.

By holding employees accountable, you can reduce opportunities for theft.

Detect and Investigate Suspected Theft

Unfortunately, even with precautions in place, theft does still happen. To help you detect and investigate suspected theft, implement the measures below:

• Secure restricted areas or equipment with hardware or software that can track user access.
• Set up automatic alerts for suspicious activity on key control, accounting, or other systems.
• Establish a tip hotline or other reporting process employees can use to anonymously report any fishy behavior they’ve observed.

Once you’ve been tipped off to possible wrongdoing, be sure to act promptly to minimize the impact on your organization.

By being proactive and aware of what’s going on inside the four walls of your business, you can avoid being a part of that $50 billion tab for employee theft.