Why Employee Theft Sucks and How to Deal with It

Employee theft sucks. Small business owners all over the world know it. It’s inevitable. But there’s gotta be a way to minimize that, no? Fortunately, yes. Read on to learn what it takes to prevent employee theft.

employee theft prevention

Okay, you might say, “Oh – I know about employees who steal from their employers. But my employees? Nah – they wouldn’t do it.” The truth is – whether you like it or not – most of your employees will steal from you, varies greatly in amount stolen.

Employees – wait, wait, wait… don’t get mad at me, please. I know this is a sensitive issue, but official stats reveal that fact; I’m only revealing what has been found out in some studies.

If you don’t believe me, check these out:

In retailing, employee theft cost companies $34.5 billion in 2011, accounting for 43.9 percent of total losses, says the National Retail Federation (source: Entrepreneur.com) – click to tweet

Employees are behind a third of the annual $4-billion that Canadian retailers are losing to shrinkage, including theft, estimated a recent study by PricewaterhouseCoopers LLP and the Retail Council of Canada (source: TheGlobeAndMail.com) – click to tweet

About $52 billion a year is lost due to employee theft and that approximately 95% of all businesses experience employee theft (source: AllFoodBusiness.com) – click to tweet

Need more stats? Here’s an infographic showing you the big (bleak) picture:

employee theft
Via Visual.ly

The bottom line, employee theft is pretty scary issue. It loses you money and hurts your cash flow – and, eventually, your business continuity; and we all know that many of small businesses are cash-strapped.

I was a franchisee, and I know it sucks to know that a part of your total overheads is caused by employee theft. You know you ought to do something but you don’t have any strong proof.

You just wish you, your customers or someone else you know could do this to the thieves when caught red-handed:

…but again, no proof means you can’t do anything about it. There’s gotta be some preventive actions that will at least reduce the tendencies of “internal thievery.” Fear not, I’ve found some resources I would like to share with you.

One secret in employee theft prevention

The first and foremost thing you can do is to have an internal theft prevention campaign in place. There’s always a good thing in store when you have a set of rules to follow and policies to adhere to, including a set of tools to help ensuring the “enforcement” of the rules and policies.

Asset protection planning

Just like any other business activities, you need a real plan to kick off. Tony Jarana, the Summit Loss Prevention President, reveals the number one secret on how to stop employee theft:

To recap, Tony suggests businesses to have an asset protection program, which includes:

  • Do background checks for your new hires
  • Training sessions to explain the basic procedures and policies every employee should follow
  • Auditing – so that you can inspect what you expect: To know whether the employees are aware of the rules and policies; whether they intentionally violating your rules, etc.

You need to respond to that and set an action plan. THEN you will see the results.

Further reading…

Looking for more resources to help you prevent employee fraud and theft? Use my list here… like it, share it, embed it – your choice 🙂


Frauds and thefts will always happen, and sadly, shoplifters and robbers are often not the main case of your business miseries; often, some your employees you trust so much might very well be the number one cause of your losses.

Should you distrust your employees? No, I don’t think that would be wise; your staffs are your stakeholders, and treating them well can only do good for your business.

However, you do need to have a clear set of rules and policies, along with safety measures (e.g. security cam,) to protect your assets and to ensure everybody in your organization is on the same page.

If you are in doubt, always seek help from a consultant who knows about frauds and thefts inside out.

Have you experienced a case of employee theft? If so, how you deal with the issue? Please share your story…