Employee theft

An Inside Job.

image023Pete owns a small plumbing contractor’s business. He has a lot of equipment, such as backhoes and tools, and a truck to pull the trailer that hauls his equipment to a job site. He also has giant rolls of copper tubing which require a tow motor to move around the shop.

Years ago Pete invested in a security fence topped with razor wire which took care of casual thieves who prefer the after-hours self-service plan for furnishing their home or business. Last year he installed security cameras inside and outside his warehouse after a neighboring business was robbed. He also has a security alarm system for the building.

Today when Pete arrived, he found the front gates wide open. The warehouse door had a giant hole where the thieves used an acetylene torch to cut a hole so that they could abscond with the copper tubing.

Pete knows that one or more of his employees must be involved because the theft has all the hallmarks of an inside job. The security alarm wasn’t triggered and the cameras were turned off. The thieves took only the copper tubing which is readily convertible into cash and hard to trace.

What could Pete have done to avoid this employee theft?

  1. The sad truth is that Pete did everything he could to avoid becoming a victim of employee theft, including installing cameras and an alarm system.
  2. Pete could begin doing background checks on employees in hopes of weeding out potential future problems.
  3. Pete could protect his business from the losses caused by employee theft through insurance coverage, such as a fidelity bond or employee (dis)honesty coverage.

Pete has just discovered the most common of the five motivations for employee dishonesty, which is greed. Greedy employees are inherently dishonest and generally have no remorse for their actions, unless it’s regret at getting caught.

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I Was Going to Pay It Back….Honest!

Another update from the HR jungle….

image021Sam leads the IT department for his company and is the head of their internal security team.  As part of his duties, Sam has administrative rights to all electronic and computer-based systems at the company.  He ensures that new employees are issued security clearances to use the company computers. He sets the dollar limits on company-provided credit cards as authorized by the owners of the company.

But Sam has a problem. He likes to gamble. It started years ago quite innocently when he participated in a sports betting pool with co-workers at a former employer’s office. Then he started spending his weekends at casinos. Sam began using his company credit card to get cash advances at the ATM in the casino.

At first, he paid off the credit card balance each month and no one discovered what he was doing. When he couldn’t pay the credit card balance, he raised the credit limit on the card using his administrative rights as the head of internal security.

Sam’s basically a decent guy and the stress of his situation has finally gotten to him. This morning he walked into the owner’s office and confessed all. As he sat sobbing and promising to reimburse the company, the owner stared at him, stupefied with shock.

What could the owner have done to avoid this employee theft?

  1. The owner could have regularly reviewed all company expenses, including credit card charges, to ensure they were used only for valid company business.
  2. The owner could have required regular reports from Sam’s department showing the authorized limits on all company credit cards.
  3. The owner could have hired an outside auditor to do an annual audit of the company’s financial records in the hopes that the fraud would have been uncovered.

Employee theft arises from five basic motivations, including a gambling habit. Another closely related motivation is a drug or alcohol habit. Employees experiencing any of these addictions may decide to steal an employer’s property in order to feed their habit.

Need help with HR issues? Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff when the policies are implemented.

Join the HR Compliance Jungle today. Click here!

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Visit us: http://www.complianceriskadvisor.com/