Tips for Thwarting Employee Fraud

MOST BUSINESS managers and owners are well aware of the threat of loss from outsiders, and they will install alarms, hire security guards and take other preventative measures.

But, most employers pay less attention to reducing the risk of theft by an insider. No one wants to believe that an employee will purposely defraud the company of money.

Most people want to trust their employees, and rightly so. But it only takes one bad apple to do significant damage. Depending on the person’s position within the company, and the length of time the theft continues, substantial losses can result.

Business owners often have a tendency to believe that it can’t happen to them. Unfortunately, employee fraud is quite common. Furthermore, no riskreduction measures can be guaranteed to keep it from ever happening or to detect every instance of fraud or theft.

What you can do

Institute an anti-fraud policy – Many employers wrongly assume they don’t need to discuss insider theft, since their employees know it is wrong.

But experts say a strong, written antifraud policy, published in the employee handbook and/or posted on employee bulletin boards, helps prevent insider theft.

The written policy reinforces the employer’s intent to maintain an honest, ethical environment, as opposed to one where it is regarded as common practice to steal from the business.

Ask employees to report suspected fraud – Honest employees will usually report fraud when there is a good policy for doing so. Provide guidelines and have a system in place for reporting fraud. Explain to your staff how they can report any suspicion of fraud or theft. Take all tips seriously and investigate them.

Maintain a business climate of loyalty and trust – Expectations influence behavior. When you expect employees to steal, some are more likely to do so, reasoning that there is no point in behaving honestly if you are already suspected of being dishonest.

Maintaining an atmosphere in which employees feel trusted and valued, and are rewarded for loyalty, helps prevent insider theft. Encourage ethical business practices among your staff – The typical employee thief is often a first-time offender who rationalizes their behavior to avoid having to face up to their criminality.

Employees who have a weak moral character are more likely to act on it in an environment where they see the business engaging in unethical practices. When the company promotes and rewards ethical business practices, the risk of insider theft goes down.

Galloway Chandler McKinney has been a trusted agency and member of their communities for many years. As a Best Practices Agency, they are able to provide competitive products and professional service with local touch.