“The more featureless and commonplace a crime is, the more difficult it is to bring it home.” – Sir Arthur Conan Doyle (“The Boscombe Valley Mystery,” The Adventures of Sherlock Holmes, 1891)
Are your employees stealing money from you?
Are they swiping cash? Are they bringing home products?
Or are they bilking your business in less obvious ways?
* purchasing personal items as business expenses
* making business trips into personal holidays
* having service providers provide them with personal services “free”
* buying overpriced products and services from friends who reward them
* fixing the books to artificially boost profits in order to boost their compensation
* putting undeserving (or even nonworking) friends and relatives on your payroll
The list goes on and on.
I don’t like thinking about this subject, and, consequently, I don’t very often. But once a year, I sit back and ask myself, “Am I doing everything I should be doing to make stealing difficult?”
It’s disdainful to think that your employees — those nice people you work with every day — might be stealing from your business. But I want you to spend a few minutes today doing just that.
Think for a moment about the people who have access to the financial decisions you make, including expenditures, cash disbursements, and so on. Imagine — even if it’s a stretch — the ways they could be cheating you if they wanted to.
This is not an exercise in paranoia. It’s a sensible person’s way of imagining what an honest person normally can’t.
When it comes to protecting yourself from theft, imagining the worst is an odious but necessary first step. The next step is looking around.
When was the last time you conducted a very careful audit of the books, including looking at purchase orders, check registers, etc.? Have you had an outsider look at your business for “shrinkage”?
Here is my view on this issue: If you make it possible for your employees to steal from you, they eventually will.
When I first said this in Message #274 (“How Smart Is It to Trust Your Employees?”), several readers scolded me for being cynical. “The best way to keep people honest,” I was told, “is to trust them implicitly.”
This is one of those ideas that you’d like to believe, but life keeps showing you how silly it is.
There was a time in America when we trusted the big accounting firms to give us honest accounting, CEOs of large companies to tell the truth in annual reports, and brokerage houses to provide honest reports on the stocks they were “researching.”
Happily, we’ve been disabused of this naiveté.
Now it’s time to apply our newfound wisdom to our own workplaces. Don’t assume that just because you don’t steal nobody who is like you (or that you like) steals.
Norm Brodsky — who almost never says anything that I don’t completely agree with — tells a story in a recent issue of Inc. magazine about a woman who owned two very successful bed-and-breakfasts. After working 55-hour weeks for nine years, she left her businesses in the hands of the general manager, a close personal friend, and spent two years spending more time with her family. She checked in once a month to go over the numbers. Business was OK — not quite as good as she’d hoped it would be, but OK. After two years, she got a tip from the head housekeeper that stealing was going on. She had a very hard time believing it — but when she finally finished an audit, she realized she was being bilked for about $90,000 a year.
I have had the same experience with friendly employees, employed friends, and business associates who seemed too good to spit in public. (In fact, I’ve noticed that the people I know who spend the most time talking about ethics and morality seem to have the most difficult time living up to high ethical and moral standards.)
Because I believe that even good people steal (and commit just about every other major sin) now and then, I conduct my business on the assumption that if I make it too easy for them, I can’t complain if they do.
So, how do you keep your employees from stealing?
“The first step,” Brodsky says, “is to understand that theft is a business issue and needs to be addressed as such. In most cases, it happens because there’s a problem with the procedures in your business. Maybe you’ve neglected to establish a certain check or balance. Maybe people weren’t following the procedures you already had put in place. Maybe you just weren’t paying attention. In any case, something went wrong. You need to find out what it was and fix it.”
Check — and double-check — purchase orders. Make sure they are filled out properly and signed properly. Try to get a sense of how carefully they were attended to: Does it look as if each one was done individually — or were they all knocked off in one sitting? Look for signatures, redundancies, and irregularities. Ask questions.
Look through the check register and cancelled checks, again with an eye toward anything that seems strange.
These efforts will help catch the standard forms of theft — from double-billing to padding expenses and so on — but for the more creative forms of stealing, you need to get creative yourself. Ask yourself: “Who — of all the people in my world — could hurt me the most by stealing from me? And if I were in his shoes, how would I get the stealing done?”
Then ask yourself: “How can this kind of stealing be prevented?”
Start the process with the person who could hurt you the most and then work yourself around to all the other employees who could hurt you. In each case, identify the method of stealing that would likely be taken and the procedure or protocol that would prevent it.
Compare what you end up with — your imagined fail-proof security system — with whatever it is you are doing now. What you will end up with is a very important “to-do” list — one with tasks that should be accomplished as soon as possible.
If you don’t have the time or the guts to do this yourself, hire someone to do it for you. But don’t turn your back on the issue — it’s not fair to you or to all the honest people who work for you.
When you have completed your audit and implemented all the needed security measures (that will make stealing nearly impossible), sit back and relax. Trust your people.