When business owners find out that an employee has been stealing from them, the most common response is surprise. Inside thieves don’t follow a pattern; they may have worked for a company for years and be a trusted and valued member of the team. Demographics such as age and gender are also not relevant measures of honesty.
It would seem that the problem would be more common in larger organizations but in fact smaller companies – with fewer rules and regulations – on average lose four times as much with a dishonest employee. And they can’t absorb those losses as easily. According to the U.S. Department of Commerce, approximately 30% of small company failures are due to employee theft.
So, what do you do to protect yourself and your firm against this problem? Well, start with your hiring process. You want to keep those people from getting in the door. Here are some tools you can use to minimize your risks.
Use an application: Unlike a resume, an application requires a complete work history with dates. Make sure it includes places for their full name and address as well as education and employment record (with years) and references. It’s easier to hide gaps in employment or reasons for leaving a company with a resume. An application form forces complete disclosure. Be sure to state that any inaccuracies are grounds for immediate termination.
Include more than one interviewer: Often people tend to be more comfortable with someone who resembles them demographically or in terms of style. Including another person or two, particularly if they differ from you, helps keep the interview focused on skills and behavior rather than how much you like the person.
Ask probing, behavior-based questions: Avoid the pre-programmed questions such as what are your strengths or weaknesses. Instead, ask for examples from previous positions or situations where the potential employee demonstrated the skills or behavior you desire. For example, instead of asking how they like working with customers, ask them to describe a time when they had a difficult or angry customer and how they handled the situation. It’s a lot harder to lie when talking about an actual event.
Check references: Even though many former employers are gun-shy about giving too much detail with a reference for fear of later lawsuits, you can ask for information that will give you the answers you need.
- Check dates of employment and, if possible, the reason for leaving.
- Check salary history.
- Ask if the former employee is eligible for re-hire.
Any inaccuracies you discover when the answers are checked against an application are automatic red flags. Although it’s hard to believe that a potential employee would not be truthful on a resume or application, in reality very few employers check references.
Do a background and credit check: This enables you to test the accuracy of the information provided by potential employees. Also, a problem credit history can forewarn you about money problems that may lead to embezzlement.
Be sure to follow the processes laid out by the Fair Credit Reporting Act. One of the most important requirements is getting the consent of the potential employee before doing the checks. Here’s the good news: people with problems in their backgrounds will often self-select out of the job process, so just mentioning that you do background and credit checks may eliminate some potential problem employees.
Do drug testing: It may seem silly to you in your line of work, but drug users and abusers once again don’t always fit a certain profile, and drugs can be another reason for stealing as well as other employment problems. This also provides an opportunity to eliminate potential problems as regular drug users may self-select out of your pool of possible employees.
Create a test for any required technical skills: Employers used to have typing tests for secretaries to see if their speed and accuracy matched their claims. One classical-music radio station had an audition sheet that included almost every difficult to pronounce composer or composition name in the field.
Figure out some way of measuring any specific skills needed on the job. If you’re hiring someone to work at an IT help desk, provide a list of common questions and see if they can answer them. Potential customer service reps should be asked to handle several test calls from your other employees posing as customers. This may not seem like a screen for dishonesty, but if they can’t handle the tasks they claim to have mastered, you already know they’ve been less than straightforward about themselves.
Most companies faced with the reality of employee theft never get that money back. It’s been spent on lifestyle decisions or to pay credit card or gambling debts. Your best protection is to avoid hiring them in the first place.
In our next blog, we’ll cover how to discover and protect against theft in the workplace itself.
