Awareness is Key
The manager-employee relationship can make the warning signs of employee theft difficult to spot. Managers who work to build trust with their employees don’t allow themselves to question what may be in front of them. The relationship clouds their judgment and the resulting denial can be a powerful blinder. Closing your eyes to potential theft is a dream for would-be thieves. That’s why awareness is critical. Question what doesn’t seem right. Start with these 11 signs of potential employee theft:
1. Big-ticket purchases or significant change in employee spending habits or lifestyle
This isn’t about the employee who buys a new car after saving for a year. It’s about the employee who buys a new luxury car even though he’s always talking about barely having enough money to pay the bills and put food on the table. It’s about the guy who buys a new big screen TV even though he counts down the hours until he receives his paycheck so he can put gas in his car. It’s the employee who books a first-class cruise vacation even though you know she’s having trouble paying her student loans.
This alone doesn’t mean your employee is stealing from you. Maybe your employee did save enough for that luxury car. Maybe the big screen TV is a gift from a wealthy uncle. And, maybe the cruise is a long-awaited graduation gift. The point is this: a significant change is a potential red flag. Use it to stop and think about what else is going on around you.
2. Change in work habits
You know the type. She breezes in every day at 8:27 a.m. If all of a sudden she starts coming in before 8 so she can have some quiet time before everyone else arrives, make a mental note. Unless she has had a huge change in her workload or something significant is happening at home and she doesn’t want to be there, it’s unusual and you should question it.
Likewise, if an employee who tidies his desk at 5:25 so he can be out the door promptly at 5:30 suddenly stays late all the time, you should wonder why.
3. Purposefully trying to work independently or unsupervised
Make a mental note about an employee who always looks for ways to work alone. While volunteering to work in the back room or offering to organize out-of-the way displays shows initiative and seems like a manager’s dream come true, it may simply be a way for an employee to remain out of sight.
4. Problems with payroll, travel, and expense records
We all make mistakes. But accounting discrepancies should be tracked. Is there a question about hours worked versus hours paid? Did she lose a receipt? Did he forget to reconcile petty cash? Did she exceed the entertainment stipend with clients? Did he forget to itemize his expenses? Did he use the corporate card for unauthorized purchases?
Give your employee the benefit of the doubt the first time. But, if it happens again pay attention. This is where small companies that don’t have specific accounting practices or well defined policies about travel and expenses can get in trouble. Take the time to develop a policy and keep a watchful eye.
5. Missing items
You’re busy. You’re juggling multiple tasks at once so forgetfulness happens. Maybe you didn’t have the extra printer cartridges you thought you did. But before you decide you’re headed for early stage dementia, consider that your “forgetfulness” may be something else.
If you thought you saw four cases on a pallet, you probably did. Check the paperwork and ask questions. If you have only two in the backroom inventory and yet the computer still shows three, find out what happened. Was it sold? Did someone make a computer error? Did someone move it? Did someone put it on the floor?
6. Excessive absences
Excessive absences from an otherwise steady and regular employee are an indication that something is going on. If it’s not health issues, family problems, or something specific that makes sense to you, look for other warning signs of theft. Often, a tug of conscience or not wanting to be around when the theft happens can be the reason for the unexplained absences.
7. Suspicious cars, especially cars parked near back doors or dumpsters
This seems like common sense for restaurants and retailers, but it makes sense for other businesses too. How often do you drive around or look outside to see what’s going on in the more isolated areas of your workplace? Consider impromptu check-ins during the day or near the end of the workday.
8. Change in employee behavior
This is one managers have a tendency to dismiss. But, again, we’re talking about a noticeable change. There is a reason that your employee who usually shows zero initiative all of sudden is offering to take out the trash and work through his breaks. Is it your superior leadership example? Maybe, or is it something else?
Acknowledge the positive change but beware. Be specific and let your employee know you’re paying attention. “I’ve noticed how hard you’ve been working; I see you taking out the garbage and wanting to work through your breaks.”
It’s important to also make sure your employee knows your expectations. For example, breaks are required and they need to be scheduled according to customer, co-worker, and workload needs, not individual preference.
9. Pattern of friends or family showing up, or insisting they only go through the employee's checkout line
Internal theft isn’t always a solo operation. Watch buddies who come in and only want to go through their friend’s line. If they came in for an innocent hello, they shouldn’t care about going through someone else’s line before chatting for a few minutes. If it’s a one-time situation, it’s probably nothing. But, if it becomes a regular thing, question what’s going on.
10. Change in voids, over rings, cash drawer over/shorts
Follow and investigate patterns. A pattern of small overages may mean your employee is stealing by voiding a sale after the customer pays and pocketing the sale amount but not the tax. For example, an employee may void a $6.36 sale, and steal $6 from the drawer.
A pattern of shortages, especially in dollar amounts, may mean your employee is stealing directly from the drawer.
A pattern of over rings may mean your employee is pocketing cash payments. In particular, be wary of any employee who tends to pile merchandise in front of the register while taking care of customers. The blocked register view gives an employee the opportunity to ring up less than charged or to over ring something secretively and pocket the difference.
But retailers aren’t the only ones who need to pay attention to these sorts of discrepancies. Billing, invoices, and receipts can all be manipulated so employees can steal.
11. An increase in damaged merchandise or misplaced product
Are your damages higher than usual? Are there more reported shortages during receiving? Is there a spike when certain employees are working? Have you noticed misplaced product or damaged product in out-of-the-way places or in bags? These are red flags for employee theft. Be especially sensitive to:
- Products sold in multiples: Employees may purposefully damage the packaging and steal a few of the items.
- Packaging with minor damage: Employees may purposefully damage the packaging taking care not to damage any of the products and steal them at a later date.
- Empty packaging: It may be shoplifting or it may be employee theft.