Watch out for thieving staff

The UK is one of the worst countries in Europe for stealing by employees, according to a report by the Centre for Retail Research. Among 25 European nations surveyed on employee theft, the UK came second behind Iceland.

The concept of workplace thievery embraces a range of crimes, from a clammy hand dipped in the till or a fiver light-fingeredly lifted from the petty cash box, through to using the franking machine for sending the family’s Christmas cards or adding a few extra miles onto the petrol expenses.

As an employer, you may not be particularly concerned by some of the above, but it’s worth bearing in mind that if such misdeeds are occurring by a number of staff over a lengthy period significant amounts of cash could be seeping out of your coffers.

It could be argued that the typical workplace circumstance makes stealing too easy; companies often do not have controls in place to prevent it, meaning employees can purloin paper, tools, products, parts and cash. And, for those employees with a flexible philosophy on ownership, inequality in remuneration provides a good justification for theft.

Security measures such as installing CCTV cameras or employing guards are probably inappropriate in most workplace situations. They can create an oppressive atmosphere and hinder both productivity and creativity, but in some cases they might be warranted. Tony McPhillips, head of employment at solicitor Robert Muckle, says the right to search employees should be a contractual priority. ‘You need to give yourself a fighting chance: you’re on a hiding to nothing if you don’t set out guidelines for the right to search. You’ve also got to have the right to suspend. If there’s an incident you need to be able to suspend staff, then interview people concerned and take statements.

‘The important thing is letting people know what’s acceptable,’ he adds. ‘Is one personal phone call okay but two not? I had one case where 180 phone calls were made in a week to a mobile phone number and another where someone was looking for tickets for the final of the Rugby World Cup and they called up a prize hotline 3,500 times!’

Trust no one

Accountants PKF believe one crime to which growing businesses are particularly vulnerable is fraud, mainly because many of these firms are in the transition zone between being a small trust-based organisation and a larger entity with more formal procedures and internal controls. ‘It is said that in London you are never more than six feet away from a rat,’ digresses PKF partner David Dearman. ‘A similar analogy can be made between an owner-manager and the incidence of business fraud. As the typical fraudster is a long-serving male director or senior manager between 40 and 50 years old, who works in the finance department, owner-managers are likely to be uncomfortably close to the ‘rat’ that could be gnawing away at their business.’

And the catalogue of items that office pilferers have their eye on extends further than just materials or money, it often includes data and lists. Research conducted by computer forensics experts Ibas indicates that 69.6 per cent of business professionals have stolen some form of corporate intellectual property from their employer when leaving a job, with the most common sort being email address books, sales proposals and customer databases. Tony McPhillips gives an example: ‘One client had to grab hold of someone’s mobile phone as he was leaving! He’d sat there on his last day just typing in all the customer contact details and had to be grabbed as he tried to go.’

Fighting the felons

Chartered accountants Peters Elworthy & Moore suggest a number of precautions you can take, including making sure all monies coming in and going out are dealt with by different employees, monitoring the petty cash fund, querying excessive amounts of voids, credits, or damage claims.

  • Never accept photocopies of invoices, delivery notes, and so on.
  • Investigate unusual occurrences such as missing documents or unexplained absences.
  • Tell your staff to pay only for goods received, and remind them not to pay for goods that have not been ordered, even if an invoice is provided.
  • Change locks and computer passwords periodically.
  • As a last resort, if you do discover theft in your business, consider prosecution – it’s a strong deterrent to others.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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