Just when you thought you could sleep at night!
The insurance guy gives you something else to worry about when you go to bed.
You have trusted employees. Certain employees have been with you through good times and bad. You may know their spouse and their children.
Perhaps the scheme begins with all intentions of paying back the company once things stabilize at home.
Perhaps your employee rationalizes that he/she should be making more money. Perhaps the employee got a little carried away gambling and will certainly pay it back after the next big score. The reason doesn’t matter once you discover the theft. It is a violation of your trust and it becomes personal.
52% of identified frauds were by staff with more than 5 years of tenure. 87% of those committing fraud had no previous record. Think of it like this: the employee that is most trusted has an opportunity to hurt the company more than a fairly new employee. You watch a new employee. An employee that has been with you for 5+ years has earned your trust.
Many employers believe the economy is too tight; margins too thin not to notice an employee stealing from the company. You would notice a dip in inventory, or money that is disappearing. Bear in mind this type of claim is a “drip, drip, drip” type of claim. It is not “the big score” that immediately becomes apparent. The issue could be in the form of kick backs from vendors or suppliers that do not directly hit your financial statement…but costs you profits or jobs. Statistics show the median length of time a scheme went undetected was 24 months. A little each month adds up over time.
Discuss controls with your outside accountant. They will have ideas on how to improve financial and inventory controls. Create separate duties whenever possible to dramatically reduce the risk of employee dishonesty. Have more than one person review your bid and the bids from your subcontractors to you. Check on what happened to the cash the local scrap yard paid for your last delivery. Lastly, review your employee dishonesty coverage with your insurance professional. Insurance is not a preventative measure but it can lessen the impact to your company if fraud occurs. It is relatively inexpensive. This is not a place to be penny wise and pound foolish. Nothing, however, takes away the sting of feeling betrayed.
Bob Manley, VP
The Safegard Group
rmanley@safegardgroup.com