Thursday, October 13, 2005

Employee Theft vs. Shoplifters, Guess Which is a Bigger Threat to Your Business?

Ernst & Young has discovered that 66% of firms have been victims of corporate theft. Surprisingly, 55% of the perpetrators in these cases turn out to be management employees. The Retail Council of Canada reports that internal theft is the leading cause of retail losses, not external theft. The National Retail Federation Loss Prevention Council backs up that assertion. It finds that shoplifting now accounts for only 34% of inventory losses, compared with 47% for employee theft.

To protect your business, you'll need to investigate your employees':

-- credit histories;
-- criminal backgrounds;
-- personal references;
-- former employer references (which, naturally, are more accurate than personal references in assessing a future employee's trustworthiness).

You should also explore the options of hiring loss prevention experts, performing routine and unannounced audits, and installing high visibility security cameras as deterrents to employees.

This is a serious threat to your business. If you have a small firm, you can literally be wiped out by employee theft or fraud. And regardless of the size of your firm, an employee-related -- particularly management level -- fraud can have disastrous effects on your share price, your stock holders and your reputation with suppliers.


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