6 Signs of Employee Dishonesty and 4 Steps to Prevent Theft

Discovering dishonesty in the workplace can come as a shock to employers. We want to believe our employees are trustworthy, but that trust can be destroyed when a dishonest employee is caught stealing something: merchandise, company secrets, money or security.

There are some signs that may indicate you have a dishonest employee on your hands and a number ways to prevent employees from turning to theft in the first place.

Signs That an Employee is Stealing

Not all these signs will apply to your workplace. The particulars will depend on whether the thief is dealing in inventory items, cash, knowledge or something else entirely.
Be on the lookout for:

1. An employee who is reluctant to take a day off, claiming to be too busy or too dedicated. It may be that the employee is afraid someone filling in may discover records or inconsistencies in reports that point to theft. For the same reasons, an employee who prefers to work alone and who often takes work home may be protecting secrets.
2. Missing inventory, office supplies, equipment or money, especially if you also observe that an employee is suddenly flush with cash, a new vehicle, smart phone, big screen TV or other signs of more disposable income.
3. An employee who lies about hours worked or claims larger than normal expenses when traveling.
4. Strange cars parked near the dumpster or loading dock and an employee’s friends and family members showing up at odd times. These signals may indicate that inventory or equipment are disappearing out the back door or that individuals are assisting in taking items out of your company.
5. An employee who seems to know more about company business than expected. He or she may be accessing personnel files, trade secrets or other sensitive information for personal gain.
6. An employee who quickly switches screens as you near their work station, especially if the screen they are looking at is a company site or program. If they are doing their job, they should not need to hide company information.

Theft Prevention is the Best Safeguard

Well-thought-out procedures and processes make a huge difference in preventing employees from stealing from a business, according to EMC Vice President of Compliance and Government Relations Sean Pelletier. Of course, it's essential to have controls on accounting and money-handling procedures with checks and double checks, because, as a 2018 Hiscox Embezzlement Study found, 37% of embezzlement cases were committed by a finance or accounting staff person. Similar controls and double checks are also important in other functional areas, such as inventory control and data management.

“Following industry best practices and doing your due diligence are essential controls,” Sean says, “whether it's requiring a counter signature on checks or doing routine background checks on potential employees, you need to demonstrate that your company won't be easily duped.”

Sean points out that these controls are the first line defense as you establish a culture of honesty within your company. “The next steps, relating to ethics, are a little more esoteric but no less important,” he says. Rather than glossing over ethics, Sean urges managers to recognize that ethics can boost your business as he says, “the most ethical companies are also the most profitable, including Starbucks and Microsoft.” He points to research by Ethisphere demonstrating that the most ethical companies outperformed the large cap sector over five years by 10.72%.

Ethical steps you can take to encourage employees to be honest and to boost the reputation of your business:

1. Establish a code of conduct and be sure all employees understand the rules and responsibilities guiding company actions and interactions.
2. Promote a “see something, say something” environment, and let employees know that if they speak up there will be no retaliation for doing so. It's important that employees and managers understand that open communication makes the company better, and ensures that employees act better. As part of this step, empower employees to protect the company by observing vendors and customers to be sure they are following company rules, too.
3. Be consistent in strictly enforcing policies. “What's good for the lowest-level employee is good for the highest-level employee. If entry-level employees see management getting away with bad behavior, they won't have respect for the company rules and code of conduct,” Sean says.
4. Avoid shortcuts and make sure employees are aware that skipping procedures can open the door for dishonesty, even if the shortcut was not taken for dishonest reasons. Let them know the standard operating procedures are there to protect them as well as to keep the company safe. Examples that may seem innocent, but may not be, include letting another employee use your password to access data that is needed quickly and overlooking a second review of financial transactions.