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Protecting the Company Against Theft and Fraud

May 18, 2000
Related Topics: Workplace Violence, Policies and Procedures, Safety and Workplace Violence, Featured Article
In addition to integrity testing, measures to eliminate employee theft and fraud involve both overt and covert actions on the part of management. Three overt actions are especially crucial:

1. Establish specific policies defining fraud and theft within the context of your business, with discipline procedures clearly spelled out ("up to and including termination and criminal prosecution" is a common phrase in such policies).

2. Educate every employee through your training programs about these policies. These policies should not be just one more page hidden in your employee manual. Spend time going over policies and procedures involving employee integrity in pre-employment information interviews and sessions for job applicants, orientation sessions for new employees, and training programs for all employees.

Update policies and procedures regularly to keep them specific and timely for your business circumstances. When policies or procedures change, re-educate the workforce (don't just send a memo!). The seriousness with which you take these policies will directly influence the seriousness with which your employees take them.

3. On a monthly or quarterly basis, let employees know about their successes in preventing losses through theft or fraud. In effect, thank them for partnering with you in maintaining a zero tolerance policies for such acts. (For comparison, a good model for such notification to employees is the common practice of posting the number of days without a work-related accident. Employees response positively to a successful track record and work to keep it going.)

On the flip side, make a big noise when theft or fraud is discovered. If a laser printer disappears from the office, the thief obviously prefers that you shrug it off and sweep the matter under the carpet. Don't oblige the thief! Even if you do not know the perpetrator, you must show passionate outrage (but not to the point of making innocent parties feel accused) to let all employees know that honesty is the only policy in your business.

Finally, three covert policies will help uncover and eventually eliminate employee theft and abuse:

1. Consider installing video surveillance equipment in main equipment and storage rooms, computer facilities, and other areas. A wall-mounted camera and remote monitor can be purchased and installed for well under $500, according to our phone research with several nationwide merchandise outlets including Circuit City, Costco, Office Depot, CompUSA, and others. It's an investment that pays dividends both in what it may reveal about theft as well as the stealing and fraud it can prevent.

The camera need not be watched at all times, of course, to be effective as a deterrent to stealing, equipment sabotage, and other problems. Merely the presence of the camera in the room usually intimidates would-be thieves. The unit can easily be connected to a VCR for a continuous or sporadic visual record of site activity.

2. Contract with a professional security agency to periodically review your internal security measures. This need not be expensive. You can involve a security expert as an occasional speaker in your employee training program. His or her visible presence will be eloquent and powerful testimony to how seriously you take the problems of theft and fraud.

To link up with this kind of assistance, contact a reputable security service in your area and ask for a free or low-cost inventory of your security needs. Make clear that your central purpose is prevention of theft and abuse, and only secondarily apprehension after the crime. Choose the security firm with the overall plan that best suits your budget and specific security needs.

3. Investigate "lock-out" options for computers, telephones, and e-mail to prevent unauthorized long-distance charges, personal business on company time, and legally if not morally hazardous materials finding their way onto company hard-drives. When faced with sexual harassment charges or other work environment issues, many companies have found it hard to explain why sexually explicit files had been downloaded from the Internet onto company computers; why e-mail archives contained racist or sexist humor; and why telephone records showed calls from business telephones to adult-only numbers. Permanently erasing such records from a computer hard-drive is no easy matter; investigators have sophisticated electronic means of detecting and reconstructing supposedly deleted files.

By devoting attention and energy to eliminating theft and fraud in your company, you can protect and improve your bottom line significantly while setting the bar high for what you expect from an honest workforce.


Recent Articles by Arthur H. Bell, Ph.D. and Dayle M. Smith, Ph.D.

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