How to prevent employee theft

Employee theft is any stealing or unauthorized use of an employer’s assets by an employee. Assets can include time, money, inventory, supplies and information.

Employee theft is rampant, costing U.S. businesses $50 billion annually, according to a 2017 Statistic Brain study. The study also reveals that 75 percent of employees admitted to stealing from their employer at least once. So, how can you protect your business from such a widespread and expensive problem?

While no plan is foolproof, you can prevent employee theft by establishing strong processes for managing and monitoring your employees and assets. Following these simple tips can help you get started.

Background checks and references

Preventing employee theft starts at the beginning of the employee life cycle. You can stop internal theft before it starts by hiring the right individuals. Background and reference checks are two easy ways to learn more about your candidates and help identify potential red flags.

Background checks typically give an overview of an applicant’s debt and criminal history, which is especially useful for roles that are finance-based or require handling cash. Some reports cost money, so wait to order one until you find a candidate you’d like to hire.

Additionally, request at least three references from each applicant and follow up with them. A few phone calls might reveal troublesome behavior by the applicant that you otherwise might’ve missed.


Internal theft increases when supervision is lacking, so make sure you’re aware of what’s going on. Security cameras make it easy to monitor your building and employees, and setting them up is much cheaper and easier than it used to be thanks to recent advances in technology.

There are several security companies that will install and maintain a security system for you, but you likely need to enter a contract or pay a monthly fee. A more budget-friendly option is to install your own cameras and connect them to your Wi-Fi network.

In addition to storing the videos for later viewing, almost every security camera lets you view your video feed in real time on your smart phone or other mobile device. A surveillance system also helps deter burglars from breaking into your property.

Auditing and inventory

Internal audits are one of the best ways to detect employee dishonesty. Audit your finances weekly by checking your financial statements against what’s been reported by your employees. Take it a step further by hiring an outside firm to conduct yearly audits. These types of audits can reveal suspicious activities that could uncover long and short term schemes used by employees to steal from you.

Discourage employees from stealing your products and supplies by frequently taking inventory of all stock and performing random inventory checkups. Keeping track of your inventory allows you to know exactly what you have on hand, which makes it easier to identify and source instances of theft. Your employees are far more likely to steal from you if they know you don’t closely monitor your inventory.

Trash removal

Create rules on trash removal for your employees. This will discourage them from stealing things by hiding them in the trash, which is a common tactic. Consider enforcing a “buddy system” for taking out the trash. Randomly pick two employees to handle it daily. While it may seem trivial to use two employees for such a menial task, it decreases the likelihood of employee theft.

As an additional measure of security, consider pointing one of your surveillance cameras at your business’s garbage area or enclosing it with a locked fence. These efforts make it more difficult for employees to access the trash at a later time and prevents outsiders from using your receptacles.


Lastly, develop an employee theft policy that clearly outlines the ramifications should an employee choose to steal from your business. While you ultimately decide how to handle these situations, a zero-tolerance policy is best.

The same Statistic Brain study quoted earlier shows 37.5 percent of employees have stolen at least twice from their employer; once an employee steals, they’re apt to do it again. Be sure to document and save all evidence of theft you have against an employee and enforce the policy strictly with no exceptions.