Almost 1/3 of all business failures are caused by employee theft. According to the U.S. Chamber of Commerce, annual losses due to dishonesty or employee theft equal over $50 billion in any average year. That’s quite of bit of loss and your company needs to understand the liability and put in processes to reduce the amount of theft and loss your business will incur each year. However, the hidden cost of employee theft has little to do with actual product and is something you aren’t even considering as theft – and it costs you thousands of dollars!
Here are some different types of employee theft to look for:
When your company sells products, employee theft would be staff taking home product. Nearly 30% of all shrinkage is due to employee theft. Inventory shrinkage, missing items from your inventory list, is something that all retail and product-based businesses have to contend with.
Employee time theft happens when you pay an employee for time spent working that didn’t actually occur. Time thieves steal by being dishonest on their timesheets, finding ways around timekeeping systems (such as asking a co-worker to clock them in or out), extended lunches or breaks, doing non-work-related items while at work, or adding personal errands in while traveling for business.
Workplace ethics can be tricky because one person’s version of what is acceptable may not match up with an employer’s point of view. Many people do not see activities such as making personal copies or taking home a small amount of office supplies as theft. While there are plenty of articles written from employers that state anything taken from an office is theft, over 75% of people can claim having taken something from the office at some point. Printing your airline tickets for your vacation or forgetting that company pen was in your pocket is one thing, but you have to watch out for employees who take reams of printing paper or who print hundreds of pages of personal documentation during work hours.
The U.S. Department of Commerce has reported that one-third of all business bankruptcies is caused by employee fraud. This comes into play with actual monetary theft, theft of equipment, supplies or inventory, or insurance or workers’ compensation fraud.
Embezzlement is most common from employees who have access to your accounting and books. These employees find ways to ‘fake the numbers’ to cover up the movement of money from your company to another location. Not only does this cost your firm money, once discovered, you’ll also be paying the legal fees necessary to charge the individual for their actions.
And perhaps MOST IMPORTANT: The Hidden Cost
The real hidden cost of employee theft is having to find, hire, and train a new person to take over the vacant position. This is a double-whammy since you’ve already lost money due to the theft and now your company is out even more capital to replace the thief. Glassdoor reports that US companies, on average, spend $4,000 for each new employee they hire and it can take up to 52 days to get through the whole hiring process. Depending on the number of people you need to fill your team, this can really add up!
How can your company protect itself from employee theft? There’s no sure-fire way to guarantee that no team member will ever steal from you again. However, spending time upfront building processes that help you find the right person for the job – someone with integrity, ethics, and the drive they need to succeed – is a solid plan fo avoiding hiring individuals that don’t have your company’s best interests at heart. Contact us today to discuss how to improve your hiring processes so you hire the best possible employees and avoiding becoming a victim of employee theft.