How To Insure Against Employee Theft

Even with the best employee theft prevention strategies, you’re still not going to stop every instance of theft. No matter how hard you look, someone is always going to be able to escape the system… at least for a little while.

That’s why some larger companies choose to purchase insurance policies called fiduciary bonds.

These policies help eliminate the risk of theft, fraud, embezzlement, bribery, and a number of other issues caused by employee misdeeds.

The system works so that once a company is able to prove that is has suffered losses due to the actions of its employees, the insurer pays the company for the loss and gains the rights to take civil action against the employee.

If the insurance company successfully sues and is rewarded above the policy amount, the company is given any additional amount awarded.

This type of insurance is important for many companies as the misdeeds of employees can lead to expensive liabilities for a company. However, these policies can be expensive and are generally only used by large companies.

For everybody else, business security solutions and a good business security system is more than enough.

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Stop Employee Theft Now

Employee theft can be a major cost for companies of all sizes. Between physical theft of merchandise and cash, under ringing, bad customer service, and employees not doing what they are supposed to, you might be losing a lot more than you think each month.

While it can never be stopped entirely, there are some business security solutions you can do to immediately stop most employee theft. They include:

Conduct thorough background checks before hiring people. Background checks may cost a little bit but when you consider how much a stealing employee can cost you later down the line, the cost is tiny.

Develop strict financial procedures. Have a plan in place for minimizing risk from cash receipts, accounts payable, bank transactions, store credit, and refunds and returns. Your accountant can be a major help in this process.

Spend time “on the floor.” Leave your office and regularly interact with and monitor your employees’ activities. Your presence will help deter theft while also allowing you to detect potential issues.

Restrict access to sensitive areas. Not all employees need access to the security sensitive areas of your business. Use access control systems to prevent unauthorized personnel from entering important locations.

Use good camera surveillance systems. Good well maintained security systems can significantly cut down on employee theft and help to prosecute those who steal anyways. Place cameras anywhere that your employees are handling money or inventory and closely monitor the recording for issues.

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Common Myths about Employee Theft

Employee theft can cut significantly into profits and cause huge problems for any business that does not actively take steps to avoid it. Unfortunately, there are a lot of myths around employee theft that make it more difficult to detect and deal with.

Some of the most common myths about employee theft include:

Longtime Employees Are Too Loyal To Steal

Just because you’ve had an employee for a long time doesn’t mean that he or she isn’t stealing from you. We hear cases all the time about employees who have been with a company for more than 10 years and are suddenly caught with their hand in the till.

It could be that these employees have been stealing from you the whole time, or it could be that something in their life or in their attitude has changed. Whatever the case may be, the lesson is that no matter how well you think you know someone, they could be stealing from you behind your back.

Also remember that the longer they have been with the company, the more they know about how it works and the better they understand how to hide their tracks when doing something wrong.

Poor Customer Service Isn’t Theft

This myth is true in that technically, an employee giving bad customer service isn’t theft. However, for the sake of your business’ bottom line, it really should be!

Poor customer service is the fastest way to stop a customer from ever returning to your company. When an employee gives bad service, they might as well be taking money right from your wallet and giving it to your competitors!

It’s only by monitoring your employees using surveillance camera surveillance systems and immediately correcting issues can you stop this type of theft.

Bad Employee Productivity Isn’t Stealing

Like the previous myth, this one isn’t technically stealing but it can be just harmful. You’re paying a lot of money to employ people to do important jobs. If your employees are not doing the work that you’re paying them to do, they are no better than another employee stealing cash out of a register.

Only by monitoring employees carefully at all times can you make sure that they are doing what they are supposed to and not getting paid to do nothing.

Honest Employees Will Report the Dishonest Ones

Many businesses feel that their more honest employees will report any dishonest behavior immediately so they don’t have to worry about extra security measures. While this does happen from time to time, it’s not the norm.

Honest employees often don’t come forward because they fear being labeled as a rat or simply feel bad about getting another person fired. Relying on honest reporting is a great way to allow theft to continue as normal. Implementing business security solutions is the only method you should trust to stop theft.

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Common Business Security Myths

There are a lot of myths out there about business security solutions that leave many businesses vulnerable to fraud, robberies, and even employee theft. These common myths, that may seem harmless at first, can lead to major problems that are not easily repaired.

Here are some of the most common myths:

People Only Sue Big Companies with Fraudulent Claims

We’ve all heard the stories about people suing McDonalds because their coffee is too hot, or someone claiming to have broken their neck in a major retail outlet when really they are completely fine. But what about smaller companies, are they ever really sued with fraudulent claims?

This myth makes the claim that people only sue large businesses because that’s where the money is at. Unfortunately, the reality is that small and mid-sized businesses are also regularly targeted with fraudulent claims. The worst part is that these businesses are much more vulnerable because they can’t afford expensive lawyers and a large settlement could put them out of business.

Shoplifting Only Happens In Low Income Areas

This is a common and completely untrue myth that claims that people in richer areas are much less likely to be stolen from than in poorer areas. Unfortunately, the facts show that expensive stores in fancy shopping malls are just as likely to be stricken by shoplifters as anywhere else. Additionally, since the products they sell are so much more valuable than in lower end stores, there is an added incentive to steal.

Vendors Keep Perfect Records and Are Completely Honest

Many people don’t ever consider vendors a potential source of shrinkage when looking at where they are losing money. For some reason, while businesses are quick to blame customers or even employees, the activities of the vendors are seen as beyond suspicion.

The truth is that vendor fraud is estimated to account for 5.2% of overall shrinkage. It’s important that you watch your vendors carefully to prevent theft.

People Only Steal Inventory and Cash

The reality is that there are a lot of ways that people can harm your business without actually taking something physical.

Without proper business security systems and camera surveillance systems, customers can make false injury claims, employees can “under ring” sales or not work when they should be, and vendors can make errors that hurt your bottom line. When tracking what your company is losing from theft, be sure that you can measure all of the damage, not just the physical loss.

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Using Camera Surveillance Systems to Stop Time Clock Fraud

Time clocks are an excellent way to keep track of employee hours and pay them appropriately. Unfortunately, some less than moral employees have found ways to game the system and work far fewer hours than they are paid for.

Not a week goes by that we don’t hear about some clever ploy to get paid for hours that were not actually worked.

In one recent case, two employees would work on alternating days and take turns signing each other in. The company, thinking they were getting two full employees each day, turned out to only be getting half of what they were paying for. It took a full 2 months (and a lot of wasted money) before a manager discovered the scheme and fired the pair!

If your company is using a time clock or other employee sign-in method, it’s important that you take an active role in eliminating this type of behavior. By maintaining a good visible security camera surveillance system, you can catch and punish bad behavior immediately and significantly cut down on employee theft.

Hopefully your employees are totally honest with their hours but it’s better to be safe than sorry.

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Increase Your Business Security with These Simple Steps

No matter what type of business you have, keeping it secure and preventing criminal activity is vital both to the safety of your employees, and to the success of your company.

• Start with a plan. Setting goals and measureable objectives helps you understand your needs and track your security progress.

• Make security a priority. Business security systems should be a top priority for any business.

• Run background checks on employees before hiring them. Running a thorough background check on your employees helps prevent employee theft and avoid problems.

• Use visible security measures. People are less likely to engage in criminal activity if they know that they are being watched.

• Use surveillance cameras in ALL important areas. Recording all activities where cash or inventory is handled via a camera surveillance system can help to identify and prosecute thieves. Be sure to always keep your cameras well maintained as you don’t get second chances to stop criminals.

• Always prosecute criminal activity. By pressing charges against any criminal activity, no matter the cause or amount stolen, you send a clear message that you do not take theft lightly.

• Check your plan regularly. Regularly check the results of your security efforts and make alterations when you find things that are not working.

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How Employees Justify Stealing

As business owners, we like to think about our employees as upstanding, well intentioned people who would never even dream of stealing from us or doing anything that harms the business. For the most part, that’s exactly what happens.

Unfortunately, there are enough bad apples that an estimated billion (that’s billion with a b) dollars is stolen by employees each WEEK!

How can that be possible?

As it turns out, some people are great at finding excuses and justifications for their bad behavior.

Some of the most popular ones we hear are:

• “I deserve a higher paycheck anyways”
• “Everyone else is doing it so why shouldn’t I?”
• “It’s not like anyone is going to miss a few small items”
• “This is payback for all of the bad things the company has done to me”
• “The opportunity is too great to pass up”
• “They don’t have any way to catch me so why not?”
• “Their insurance covers the loss anyways so it’s no big deal”
• “They just pass the price on to the customers so the company isn’t harmed”

Using excuses like these, employees in businesses of every size and industry are stealing from their employers every day. Until you implement measures to stop the theft like security camera surveillance systems, there is little that can be done to prevent it.

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