A thoughtful, well-written employee theft policy will communicate your company's principles and clearly define an atmosphere of integrity
Employee theft is a major concern for every business and organization, regardless of its size. Although employers would like to believe their employees are trustworthy, honest people, the reality can be quite different. According to the Statistic Brain Research Institute, U.S. businesses lose on average 50 billion dollars annually due to employee theft and fraud.
Combating becoming part of the annual statistic is an effort worth taking. The first step is to create an employee theft policy that clearly outlines your company's principles, defines specific violations, and communicates the consequences for such behavior. Although it may be impossible to stop a determined employee from stealing or committing fraud, most people will decide against stealing when they are aware of the consequences.
In this post, we've outlined a guideline to drafting an effective employee theft policy, one that will inspire loyalty within your ranks, while also deterring those who might be thinking about stealing from the business in one way or another. Also, it's important to state that many employees are unaware of what constitutes theft or policy violations, so this exercise should help you define those boundaries and prevent "ignorance of the law."
Creating an employee theft policy that prevents business losses
Before we jump into the main points, let's first establish the importance of taking the time and effort of outlining an in-depth policy that all employees can clearly understand. Too many businesses (especially small businesses) provide only a small explanation of their employee theft policy. Most are included within the employee handbook and don't provide the emphasis necessary to show that the given business takes violations of theft or fraud seriously.
In other words, it's best to outline your policy in full detail to show the importance of adhering to company policies. Taking this first step will communicate your stance as an employer right away so no room for misunderstanding or ignorance is possible.
Provide a clear scope of whom this policy affects
You'll want to communicate that your employee theft policy applies equally to all employees and executive staff members alike. If listing specifically, be sure to include all positions of employment, including temporary staff, interns, contractors, students, and part-time employees. Including uppermost executive level positions, such as the President and CEO, will emphasize the undoubtable importance of the policy and its purpose.
Communicate the company's commitment to investigating all reported or suspected violations
This section provides a good opportunity to explain the company's principles and expectations of its employees. You want to be clear that this policy is put in place to both protect the organization as a whole and its employees, too.
It's also important to establish an "open door" environment, where any employee who suspects theft or fraud can report these claims without fear of exposure or repercussion. Failure to report known violations should be defined as a violation in and of itself, subject to similar consequences.
Outline management responsibilities for loss control
Outline the responsibilities of management staff to maintain effective safeguards and control systems to prevent violations in the workplace. An effective employee theft policy will give the details on how managers are expected to provide the following—or similar—expectations:
- Proper training of employees on specific risks of policy violations and theft awareness.
- Maintaining procedures that safeguard and protect employees from theft.
- Making sure any changes in procedures do not leave opportunities for policy violations.
- Reporting any suspicions of theft or other fraudulent acts.
Clearly define procedural responses to violations of policy
This section will outline how your company will be expected to respond to reports of theft or similar acts. Usually, since every case is different, it would be wise include a statement that each action or response taken will depend on the severity of the issue.
Three very important statements to include in this section are:
- Disciplinary actions will be scaled up to or including termination of employment.
- Possible litigation may also be filed against the individual.
- Restitution of funds or assets will be sought by the employer.
Also, include verbiage stating any employee who intentionally reports false accusations against an individual will be disciplined according to procedures laid out in your employee theft policy.
Definitions and examples of theft or fraud violations
Be sure to provide exact definitions of all key terms, positions, and people mentioned in the policy statement. Defining each key term (such as "theft" and "fraud") will protect your company from any cracks or holes in the language and ensure claims of misinterpreted meanings cannot hold ground in court.
It's also a good idea to list several common examples of what the company considers to be a violation of policy. The more specific examples you provide, the more effective your employee theft policy will be at communicating expectations to employees.
Demonstrate adherence to all federal and state legislation
On a final note, always be sure that your employee theft policy adheres to federal and state legislation, including the Freedom of Information and Protection of Privacy Act and others.
Creating the right policies for your business is the first step toward loss prevention. Take it a step further with our Loss Prevention Program at Pekin Insurance. We can help you eliminate future troubles and protect your bottom line. Call today before a problem occurs tomorrow!
Have you ever written an employee theft policy? What specifically did you include in it? Let us know in the comments section.