HR is at the frontline when it comes to discovering and stopping shrinkage. HR has an opportunity to prevent the problem through hiring practices, policies and better training. Here are the ways it can help reduce employee theft.
1. Screen Candidates
Vetting potential employees starts with a full background check. However, even calling listed resources may not uncover a tendency someone has to steal from their employer. People’s circumstances change, and their need for money varies. They might even feel they aren’t being paid enough and justify the theft in their minds.
HR can run a psychological profile to see how likely someone is to break the rules. Interviewers can also learn a lot by studying body language and determining if their answers are vague or evasive. While HR can’t always hire perfectly, they can increase the odds of finding a loyal, honest employee.
2. Monitor Remote Work Machines
More people work from home and utilize their own computers rather than company-issued ones. How much software can be installed on a private machine is debatable. HR should push for employees to use company-issued equipment for complete control.
Workers who use their own machines should work closely with IT to secure the device and prevent hacking. If they get a virus and log into the company databases, the entire system could be compromised.
3. Conduct Audits
Theft has many faces. Employees might steal inventory, make out fake receivables, pay themselves with fraudulent invoices or cut checks they shouldn’t to get a kickback. The more experienced they are in their position, the savvier the shrinkage will be.
Conduct regular audits of inventory, receipts and employee practices to spot loopholes and stop theft. Some employees think it’s OK to take office supplies home, but if everyone does so, it can cost a company a lot of money.
HR can provide training to employees explaining what is and isn’t theft. Create a policy where people who are struggling can ask for help. It would be better to help an employee pay an electric bill or get groceries for a month or two than for them to start a theft ring under management’s nose.
4. Secure Laptops and Mobile Devices
Around 91% of corporations lose a laptop or mobile device each year. The company must then replace the equipment, and sensitive data could be at risk. It also loses money while the employee waits for a new machine.
Set up policies for when workers keep their laptops during nonworking hours. Train them to never leave the machine unattended.
Install operating system access so IT can remotely shut down the computer and even wipe it clean should it fall into the wrong hands. For example, Apple computers allow the owner to locate and lock devices from a distance.
HR can work closely with IT to ensure laptops and other issued devices are trackable and manageable from anywhere.
5. Supervise Cash Receipts
An obvious place where employee theft occurs is via cash receipts. Credit cards and checks provide a paper trail. Cash transactions make it harder to prove the worker stole the money.
HR should work with accounting to ensure employee duties are separated. For example, the person collecting the cash should not also deliver the item or record the delivery — or intentionally fail to — in the accounting books.
Require workers to get authorization for refunds, as employees can also abuse them to pocket extra money. HR should consider hiring someone to oversee the process and watch over the supervisor. Checks and balances help companies avoid giving one person the power to steal without detection.
6. Watch Expenses
HR should watch out for false expenses. Insist the company utilize accounting software to look for patterns out of the ordinary. If a particular position typically uses $1,200 per year for conferences and the total suddenly jumps to $10,000 without explanation, there’s a problem.
When HR suspects employee theft, they should have the power to dig deeper and do some investigative work to determine what’s going on. Look for loopholes in the job description that give people access to money or products without oversight. These are the likeliest areas for shrinkage.
7. Use Surveillance
If inventory goes missing, figuring out how it walks out the door can be a crucial component to stopping the theft. HR should start by adding video surveillance throughout the building. Put particular focus on the types of products disappearing and place cameras in whatever warehouse bays house those items.
Another idea is to have IT install tracking devices on expensive items. Remotely access the tags to see where the inventory is taken and who is behind it. Once HR can prove the theft, involve the police.
IT can also install tracking software on computers to monitor for emails about stolen items or unusual database changes that might indicate the worker is stealing.
8. Set up a Safe Reporting Option
Create a safe zone where employees can report on one another without fear or retaliation. Those who work alongside the criminal often see the issue before leadership does. Early reporting allows HR to terminate the worker before they take more profit from the company.
Reporting can be via an anonymous email system or a box where the employee fills out a card and drops it in. HR should also reassure workers if they come to them with an issue, it will remain confidential.
Loyal employees want to see their co-workers respect the company they work for. They may report criminal activity so HR can put a stop to it. However, if they feel they’ll have to admit they reported, they’ll often be less likely to do so.
Think Like a Criminal
HR can reduce employee theft by thinking through the various ways a worker could steal from the company. Observe their job and look for weak points where they might take advantage and pocket money, time or profits. Looking at tasks through the eyes of a criminal helps identify potential problems.
Human resources should bring in a professional hacker, a shrinkage expert and someone with a lot of common sense to determine where theft occurs so the business can put a stop to it.
