Employee theft is a huge problem for organizations of all sizes. A 2014 report showed that half of all victimized organizations had less than 25 employees. Half of all losses were greater than $280,000, and 19% were $1 million or more.
There are several types of employee theft, but two in particular are most prevalent. Direct theft of cash or misuse of bank deposits and transfers comprised 38% of the cases, and almost 75% of the dollars. Another 34% of the cases involved an employee altering or forging checks or making them payable to himself. Four out of every five of these thefts occurred in organizations with less than 50 employees. These organizations often consider themselves to be "family" and may not have implemented safeguards against theft.
A credit union in Texas had a problem with employee theft. The employee who pled guilty was not a teller who pocketed a few hundred dollar bills here and there. She was the 56 year-old assistant vice-president of teller operations who embezzled $826,000 over a 14-year period.
The other types of theft involve:
While the financial services industry led in employee theft, the real estate/construction, municipal and non-profit sectors collectively accounted for a third of cases. Even the industries with low theft rates had large losses. An executive at a family owned and operated bakery stole $17 million over eight years through check and credit card fraud. An orthopedic practice lost $3.7 million to theft by an office manager.
The employees who steal tend to be middle-aged, finance or accounting professionals, and female. Half of all thieves are over age 50. More than 60% are women. Half of them were employees in senior management positions. They tend to be office managers or bookkeepers.
Organizations can do a variety of things to avoid being victimized:
Employee theft can be financially and emotionally devastating for business owners. However, with the right precautions, the organization can lessen the likelihood that an employee will have an opportunity to commit fraud.