Employee Theft and How to Prevent It

According to statisticbrain.com, in 2012, as much as $50 billion (yes, you read that correctly) is stolen annually by employees from businesses in the United States. In addition, this contributes to the 7% of annual revenues that is lost to theft and fraud. 75% of employees have stolen from their employers at least once, and 37.5% have committed the crime at least twice. Theft and fraud are committed by men and women alike, college graduates and high school dropouts. There is no specific demographic to pin point, although these crimes affect businesses as a whole.

So, why do employees steal? Some of the most common reasons, according to CPA Hubert Klein, include perceived financial need, perceived opportunity, and the employee’s ability to rationalize or justify the act. These three factors form what is known as the “Fraud Triangle.” Sure, your employees may appear to be perfectly nice and likeable people. However, the reality is that many people seize opportunity, whether it is because they cannot resist temptation or they are in a desperate financial strait.

precheck

Since the average time it takes to detect employee theft or fraud is 2 years, they may seem to be inevitable. However, this is not the case. As Klein points out, although these three factors are all significant, the best way to reduce the risk of theft or fraud is to prevent or eliminate the opportunity.  Some of the easiest ways to do this is to expect it, set a clear, zero-tolerance policy, recognize the signs, and to have full knowledge of your margins. Furthermore, conducting pre-employment background checks and following up with references and verifications can make all the difference. Having a better idea of whom you are hiring will save your company from being a victim of theft or fraud.

The Pre-Check Company: Helping You Hire the Best! 

Comments are closed.