- your free business email address.

Business Articles

Eight Ways To Minimize Employee Theft

© 2000 by Diana Pemberton-Sikes

Employee theft is a fact of life and certainly a legitimate concern, but if you're paralyzing your business by not hiring help, here are eight ways to minimize the threat and enable you to grow and change:

1. Have the candidate complete an employment application and verify the information before making any hiring decisions. Call his previous employers and check on dates of employment, salary, etc. Some may tell you about work habits (attendance, attitude, performance); others may not. Check references.

If you get any conflicting information or disparaging reports, pass on the applicant.

NOTE: The application must be worded so that the candidate grants you permission to do a background check, and acknowledges that employment is contingent upon the results. For more details on rules and proper wording, visit Employment Screening Resources at

2. Using the permission granted to you on the application, do a criminal background check on top candidates. For a quick, easy, and inexpensive way to do this, buy and download a copy of Net Detective at (You can actually use this handy software for all SORTS of things...).

Again, pass on anything that looks suspicious.

3. Develop an employee handbook that lists your policies and procedures. This may be a simple few page booklet if you're new to the ranks of employer, or a lengthy tome if you start hiring lots of people. Here's a great free resource for creating an employee handbook,

Specify reasons for dismissal, including theft. Make sure your employee acknowledges receiving the handbook by having him sign a short form to that effect. Keep it in his employee file.

4. Protect your most vulnerable assets - cash, inventory, electronics, and--dare I say it?--office supplies. Have your accountant help you set up audit trails you can use to verify cash and inventory counts. Spot check them regularly and investigate any discrepancies.

Brand all electronics with your name ("Property of John's Hardware, Property of Susie's Cotton Candy, id # xxxx, etc.). Maintain a business property inventory complete with make, model, serial number, purchase price, etc. Insure appropriately. Limit access to office supplies by putting them in a locked cabinet or closet.

5. Require your approval on any purchases if your employee will be handling orders. This is usually done by purchase order. For large purchases over a certain dollar amount ($500, $2000, whatever best suits your business), require at least three written bids to verify you're getting a fare price.

6. Don't allow employees to sign checks. Hire an Accounts Payable clerk to verify and prepare checks, but do not allow him to draw on your checking account. Carefully review all backup before signing checks; question anything suspicious.

7. Block access to long distance calling and 900 numbers. Your phone company can help you do this. If your employee will need to make long distance calls as a routine part of her job, have her maintain a log with who/what/where/when details so you can later verify against your phone bill.

8. Finally, if you do discover theft, act quickly and without reservation. Terminate immediately and take any other action you feel appropriate (for example, a nurse discovered stealing narcotics off the medication cart had her nursing license revoked). Allowing the thief to stay will only put you at further risk.

Yes, hiring employees can mean opening yourself up to theft. But if you take the necessary precautions, you will not only limit your exposure, you could find reliable, trustworthy people who will help you run your shop while you grow your business.

You might even wonder why you waited so long to hire them.


Diana Pemberton-Sikes is the author of "10 Simple Ways To Boost Your Income," which features dozens of simple ways to start or expand a business using your EXISTING knowledge, skills, and interests. Visit

Copyright © 2000 by Diana Pemberton-Sikes

<< Back to Articles Index

Back To Top

Copyright © 2000-2099