Curtailing Theft

Recommendations for cost-efficient, effective loss prevention

Written policies ought to concise and strong, and clearly define improper and illegal behavior, including conflicts of interest, kickbacks, embezzlement and other improper activities, Plante & Moran's McHale adds.

"An ethics policy should be given to employees to read and sign at the time of hire, and it should be reviewed with employees at least annually, typically in a training session," she recommends. "In addition to telling employees what's expected of them, a signed ethics statement gives a company stronger legal grounds for discharging dishonest employees."

"It is very important to have written policies and programs, but the goal of these policies is not to deter theft," Lynch of P&L Solutions points out. "Policies do not deter theft. A policy gives the teeth to hold individuals accountable for their actions, which is what will help deter theft. The words on paper are only words on paper until management takes action to enforce those words."


Companies need to have a zero tolerance for employee theft, GMAC's Alden says, and employees need to understand that. "Every company must make it clear that they will take severe action with any employee caught stealing - including termination and prosecution," says Lynch, "and then stand behind that policy when they do catch people stealing."

"Adhere to a strict code of ethical conduct - at all levels," McHale adds. "Ensure the rules of conduct apply equally to everyone within the company. Often, especially in smaller businesses, controls aren't followed at the higher levels of management.

"Undesirable conduct can fall into many categories, from circumventing internal controls - for example, not requiring approvals on certain transactions, to seemingly harmless behaviors, such as personal use of the telephone for long distance phone calls or use of company supplies and postage for personal shipments," she notes. "Employees are keenly aware of upper management's adherence - or lack thereof - to policies and procedures.

"Leading by example is an excellent way of showing your workers what conduct is expected."

Others with whom a company does business must also know there's zero tolerance for improper business conduct or fraudulent behavior, advices McHale. "Moreover, they must be aware that any discovered evidence will be delivered to the legal and human resources departments to determine disciplinary action. Discipline must be fair, appropriate and consistent for all."


Establishing loyalty programs can have an impact on deterring employee theft, GMAC's Alden says. By establishing a sense of loyalty, the employee feels ownership and pride in the business. It is more difficult for businesses to maintain employee loyalty today, but those shops that are able to show management's interest in the employees' well being will have an advantage.

"If a program is effective in developing employee loyalty it will be effective at deterring theft," says P&L Solutions' Lynch. "Loyal employees tend to not steal."

Neither do contended workers. Worker attitude and good management helps deter employee theft as well.

"When a positive attitude exists in the workforce, including all levels of management, pride in doing the job correctly brings honesty right up front," says Alden. "Happy employees and managers tend not to steal. Therefore, it would be wise to keep employees happy - good working conditions, appreciation, training and development, advancement opportunities, etc. - so that they don't have a motivation to steal to ‘get back' at the company for some perceived or real wrongdoing."

Keeping employees happy not only helps prevent them from wanting to get back at the company, Lynch observes, "it is also helps prevent rationalizations that allow employees to convince themselves they are not stealing when they are, in fact, stealing."

Worker attitude and good managers are "the heart of preventing employee theft, he continues. "Employee attitudes will tell you more about the probability of an employee stealing than any other factor. And, that is not limited to their attitude about the workplace. Employees engage in life behaviors that are indicative of the probability of them stealing as well."

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