Almost any business can suffer from employee theft. Commonly, it results in financial losses and a damaged reputation that could take years to amend.
Businesses can reduce the risk of internal theft through several strategies that focus on prevention. They can reduce the opportunity for theft and make it clear to employees that their actions are being monitored and documented.
When employers implement these strategies, businesses protect their assets and workplace culture, creating an environment where theft is difficult to commit and easier to detect.
What Is Employee Theft?
Employee theft is the unauthorized use, taking, or misuse of a company’s resources. It occurs when employees take something of value, use company assets for personal gain, or fail to perform their responsibilities in a way that harms the business.
Types of Employee Theft
Employee theft can take many forms that could impact a business in different ways. Here are some examples.
- Cash theft: when employees pocket cash from the register, alter or void transactions to take money for themselves, or embezzle funds from deposits and petty cash.
- Merchandise theft: removing items from storage and sneaking products out through back doors.
- Sweethearting: when employees intentionally let accomplices take merchandise without scanning it at the register or bypassing security systems.
- Supplies misuse: taking pens, paper, tools, or other office equipment for personal use, often in bulk or routinely.
- Data theft: when employees copy or download confidential files or intellectual property to use for personal gain or share with unauthorized parties.
- Time theft: employees spending their working hours on personal calls, social media, side jobs, or other non-work-related activities. They may also falsify time sheets or take extended breaks without reporting them.
- Refund fraud: when employees process fake returns, issue unauthorized refunds, or otherwise manipulate transactions to pocket money or return stolen merchandise.
Warning Signs of Employee Theft
It’s not always possible for a business to prevent an employee intending to steal. However, employee theft often comes with warning signs, such as:
- Mismatched numbers or missing inventory that doesn’t match reports
- An employee suddenly showing signs of wealth, such as new clothes or gadgets, that don’t match their salary
- Employees consistently working odd hours without a clear reason may be trying to access cash, inventory, or systems without supervision
- Files or inventory logs often become lost, as an attempt to hide irregularities or cover up theft
- A sudden drop in sales, unexplained losses, or increasing shrinkage
- Employees who ignore policies or fail to follow standard procedures
Although these signals of potential theft may be present, they don’t automatically confirm theft. False accusations can damage employee trust and hurt team morale, so businesses must carefully observe and document evidence before taking action.
How to Prevent and Reduce Employee Theft
Employee theft usually comes down to opportunity. People may face financial pressure or find ways to justify their behavior, but theft tends to occur when procedures and security systems are weak.
Use the following strategies to reduce opportunities for theft and document any unwanted acts.
1. Conduct Thorough Screening
When hiring new employees, the screening process is key.
While prior convictions can sometimes be red flags, they don’t automatically indicate a risk of theft. Individuals shouldn’t be disqualified for unrelated issues, like a minor traffic violation or speeding ticket.
Instead, hiring managers should look for patterns in employment history. For example, frequent short-term roles and unexplained gaps between jobs can signal that a candidate lacks reliability or has a tendency to avoid accountability. Such patterns speak for someone who struggles with consistency or following rules. These employee traits may indicate a high chance of stealing or misusing company resources.
Although this may not always be the case, when there are several indicators like this, hiring managers may decide to prioritize other candidates with more consistent work histories.
Use the onboarding process to ensure employees understand the security systems and policies in place. Inform new hires about monitoring, access controls, inventory checks, reporting procedures, and other operational protocols that keep the workplace secure.
It becomes much harder to rationalize dishonest behavior when you know the company is watching.
2. Create Segregation of Duties
One of the simplest ways to reduce employee theft is to make sure no single person has full control over money, inventory, or sensitive information. This is often referred to as the separation or segregation of duties. When one employee handles everything from start to finish, it’s easier for them to take advantage and steal without being noticed.
Rotating responsibilities and dividing tasks among multiple people prevent an employee from singlehandedly perpetrating and concealing errors or acts of theft and fraud.
Some examples of duties that should be separated include:
- Approving purchases and receiving delivered goods
- Creating vendors and approving vendor payments
- Handling inventory counts and adjusting inventory records
- Issuing refunds and reconciling daily sales reports
- Opening mail with payments and recording those payments
- Preparing deposits and confirming deposit totals
- Approving discounts and processing price overrides
- Managing payroll data and distributing paychecks
- Approving time entries and editing time records
- Granting system access and monitoring user activity
- Managing customer accounts and approving account credits
- Processing expense reports and approving reimbursements
- Creating contracts and approving contract changes
- Handling customer complaints and issuing compensation
3. Implement Access Control Systems
Access control systems restrict who can enter certain areas of your business. This reduces the risk that employees will take advantage of unsupervised areas, such as cash rooms, storage areas, offices with sensitive data, or high-value inventory zones. Approved employees will have PIN codes, keycards, biometric scanners, or mobile credentials to enter the area or zone.
The system also maintains entry logs that show who accessed a space, when they entered, and how long they stayed. In cases of suspected internal theft or other irregular activity, these logs can verify timelines and support internal investigations. When employees are aware of this security measure, they may realize they have a greater chance of being caught and are less likely to engage in theft.
4. Install Surveillance Systems
Video surveillance systems, including fixed and PTZ (pan-tilt-zoom) cameras, should be installed in strategic locations where assets face higher risk. For example, cash handling areas, storage rooms, loading docks, and entry or exit points.
Many businesses already use CCTV, but increasing its deterrent value without creating discomfort among employees requires additional planning.
For instance, a retail store may have cameras focused on customer-facing areas while leaving employee registers or back-of-house cash handling out of view. This could leave an opportunity for skimming or unauthorized refunds.
In an office setting, a business concerned about productivity loss or misuse of company time might place cameras directly over desks, which can lead to distrust, reduced morale, or privacy concerns.
Businesses need to avoid pitfalls like these by using a balanced approach that focuses surveillance on high-risk zones rather than constant monitoring of individual employees. Cameras should be visible enough for employees to understand their actions are monitored, but positioned to avoid creating a sense of constant surveillance in break areas or personal workspaces.
When considering newly implemented camera systems or a redesigned layout, businesses can turn to a security service provider to conduct a site assessment to evaluate risk areas and recommend camera placement that improves oversight and strengthens deterrence without disrupting employees.
5. Provide Regular Employee Training
Businesses should schedule ongoing training sessions that cover company policies, ethical standards, and procedures for handling cash, inventory, and sensitive information. These sessions can include examples of mistakes or theft, so employees understand exactly what behaviors are unacceptable and how to avoid them.
This is especially important for acts of employee theft that may occur without malicious intent, such as improper discounting, failing to scan items, sharing login credentials, misusing company resources, or taking small items under the assumption that they are permitted.
Managers should also teach employees how to identify and report suspicious activity, such as unusual access to restricted areas, repeated errors in inventory, or unusual transactions. All employees should know exactly who to report to and how the reporting process works, whether it’s through a manager, HR, or an anonymous hotline.
Prevent Employee Theft Through Robust Security Systems
When businesses put the strategies above into practice, employee theft becomes far less of a concern. Orientation and ongoing coaching help reduce the inclination to steal, but the most effective way to eliminate opportunities is by deploying comprehensive security systems, including surveillance cameras and access control systems.
At American Security Force, we provide industry-leading security solutions that protect your business from internal and external threats. Our team can help you identify high-risk areas, design tailored surveillance coverage, and implement access controls that limit opportunities for employee theft.
With the right systems in place, employees understand that dishonest behavior will be noticed, making theft much harder and less tempting to attempt. Contact us today to discuss your security needs and see how we can help eliminate internal theft risks within your organization.
