Employee theft is ranked as one of the highest loss areas for small business owners.  It is estimated that up to 75% of employee theft goes unnoticed and unreported!  According to the National Security Survey in one year the U.S. retail industry lost more than $13.5 billion from employee theft.  To help reduce your risk of loss in this area, reduce the opportunity to steal.  It is important to establish a system of checks and balances advises risk-management consultant Tom Kallman.   President of TMK Risk Management www.tmkrisk.com, Kallman believes it is important for key processes to be routinely checked.  It is a good idea to ensure employees responsible for important financial functions take time off on a regular basis, so irregularities are easier to spot.   Kallman adds small business owners Might want to bring in an outside auditor in to perform an unscheduled inspection.   Kallman suggests sitting down with a risk loss consultant or your accountant and setting up an inventory control system that makes employees accountable.  If the proper safeguards are in place, entrepreneurs should consider crime coverage for their firms, Kallman says, These crime policies can protect business from a host of threats including computer fraud, employee theft, forgery or alternation of documentations, and armed robberies.   There are three basic steps any small business owner can take to discourage employee theft:

• Minimize Risk By Hiring the Right Employees 

Always perform background and reference checks on candidates before hiring.

It is a good idea to interview prospective employees more than once, allowing you to check further into their background.

• Educate Employees

Make sure all employees are trained in the processes and checks and balances you have in place to prevent theft.  Monitor transactions as often as possible and mark your business equipment and machinery and keep the serial numbers on file

• Do Periodic Audits

Some business owners conduct surprise audits or make deliberate money errors to test how employees will respond.  If you find a major problem at your company, contact the authorities.  For the sake of your firm and your honest employees, a thief should be handled through official channels.

Employee theft can take many forms, there are the workers who take everything from pens to postage stamps and other office supplies home to the staffers who make off with thousands of dollars by putting fictitious names on the payroll.  Contractor John Klein found hundreds of dollars in long-distance personal calls made by one of his office staff. 

The same number kept showing up on a regular basis, so I decided to check it out. Klein admits he was surprised to find phone number belonged to the relative of one of his staff living overseas.  The chatty employee was fired and taken to small claims court to recover the losses.  Some of the most common types of employee theft include taking merchandise or money, taking supplies or equipment, adding extra hours to time sheets, or putting fictitious employees on the payroll.  Retailers may require employees to park far away from the building to discourage them from taking things.  Taking the proper precautions will protect both your business and the honest employees in your firm.