Boo! Your Employee Stole From You

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So here’s a scary statistic: For small businesses and non-profits with fewer than 100 employees, the average damage from employee fraud tallies up to $200,000. The numbers are actually lower for large businesses…Why? Probably because larger organizations find the time to plan and put into place the systems to prevent fraud or at least, mitigate the damage when it happens.

Other potential reason? Larger companies are less likely to hire the same person to “wear multiple hats” without backups or an auditing process. One of the most common types of fraud for a small organization is having the same employee writing checks, handling bank deposits and reconciling the accounts. When a business sets up a system like that, it creates an opportunity to steal and all the person needs is an incentive. Sadly, incentive to steal isn’t hard to come by for some employees.

Related to this is the employee in charge of all the payroll and HR functions. It’s too easy to create fake employees and time sheets and funnel that “pay” into an account set up by the employee. Or, when an employee is terminated, the payroll administrator/HR employee can keep generating time sheets and redirect the ex-employee’s “income” into a personal account.

What’s even scarier is that when you create a system without checks and balances, you can wind up putting your customers in jeopardy. If someone in your company uses your customers’ personal information to steal from them—and you haven’t created a system to prevent that from happening—you can be an accessory to the crime.  BOO!

How to Manage Your Fear

So, what can you do to protect yourself? First, create a culture of ethics. If you’ve got a bakery and it’s customary for employees to “break” a few cookies as they’re working—so they can eat them—you’ve got a culture that invites larger thefts.

Second, put into place a checks and balances systems and then follow it.  One retailer had a rule that only managers could approve returns. The manager didn’t want to be always running downstairs to approve them, so she gave carte blanche to the employees. Seven thousand dollars of false merchandise returns later, both the thieving employee and the trusting manager were fired.

Third, nobody wants to go through the hassle and emotional drain of prosecuting an employee who has stolen from you. Consider this: Many businesses are ripped off by people who have drifted from company to company, stealing and never being reported to the authorities. If you got ripped off, chances are that if the person’s previous employer had reported his behavior, you would have been protected. A background check would have revealed it. Don’t pass this person on to another business.

Scary is Good in the Movies, Not in Real Life

No need to stay up all night worrying about this scary stuff. Start dealing with the fear by getting the processes in place to protect yourself with systems that not only protect you, your business and your customers, but also help avoid temptation for the people who are better off without it.


We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business, with offices in Austin, San Antonio, Dallas and Houston. Contact me at Caroline@valentinehr.com or call (512) 420-8267.