Employee Theft: How Can it Affect Your Business?

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  • Employee theft numbers are increasing, estimated to account for 2% of total revenues in U.S-based companies.
  • Types of employee theft include embezzlement, time theft, fraud, and the theft of supplies or equipment.
  • Business owners should perform background checks and create clear policies to prevent employee theft.
  • Access controls, such as passwords and keypads, should be implemented to protect sensitive data.

As business owners, we would like to believe that our employees are trustworthy and loyal. However, it is not uncommon for an employee to steal from the business they work for. Employee theft can happen in any business and can cause significant damage to the company’s bottom line. Here’s how employee theft can affect your business and what you can do to prevent it.

Employee Theft Statistics

Employee theft numbers are increasing as prices of goods constantly increase. For example, in the U.K., the number of employees stealing from their employers has increased by a thousand in the past two years. This can be attributed to the rising cost of living due to inflation. In addition, employee theft is estimated to account for 2% of annual revenues in U.S-based companies.

Types of Employee Theft

There are various types of employee theft. Here are some of them:


Sometimes, employees directly steal funds from employers. Embezzlement is one of the most severe forms of employee theft. It occurs when an employee steals money or property from their employer. Embezzlement can be challenging to detect, especially if the employee can access financial records. To prevent embezzlement, business owners should implement internal controls. These controls should include regular audits, segregating financial duties, and limiting access to sensitive information.

Sleeping at work and office

Time Theft

Remember that as an employer, you pay your employees by the hour. Time theft occurs when employees receive payment for the time they did not work. This can happen in many ways, including clocking in for a co-worker, taking excessive breaks, or falsifying time records. To prevent time theft, business owners should track employee hours carefully, implement clear policies regarding breaks and overtime, and enforce consequences for employees who violate these policies.


Deception can be a common trait among employees in a bad company. Fraud is another common form of employee theft. It occurs when an employee uses deception to obtain an unauthorized benefit. Fraud can take many forms, such as falsifying expense reports, manipulating inventory records, or writing false invoices. To prevent fraud, business owners should maintain accurate records, conduct background checks on new hires, and consistently communicate expectations regarding ethical behavior.

Theft of Supplies or Equipment

Theft of supplies or equipment can occur when employees take office supplies, company equipment, or even food and beverages without permission. While these items may seem insignificant, the cost can increase over time. To prevent the theft of supplies or equipment, business owners should implement strict inventory controls, lock up valuable items, and address any suspicious behavior immediately.

Stealing data from employer

Data Theft

In today’s digital age, data theft has become more prevalent. Employees can steal sensitive data in many ways, such as copying files, using unauthorized software, or accessing confidential information without permission. Business owners should limit employee access to sensitive data, monitor computer activity, and invest in data security software to prevent data theft.

How to Protect Your Business From Employee Theft

Your employees can steal from you in various ways, and it’s essential to take the necessary steps to protect your business. Here are some tips on how to prevent employee theft:

Perform Background Checks

Conducting background checks is the best way to safeguard your business against thefts. While recruiting, examine every employee’s history and verify their references. Look for any adverse criminal records, especially related to theft, embezzlement, or fraud. Creating a secure work environment for your employees can justify the need for background checks and help protect your business and assets.

Create Clear Policies

Be meticulous in creating clear policies for every element of your business operation. Specify the norms for working conditions and employee data usage, and have a strict procedure in place for disciplinary actions. Share these policies with all your employees during the training period, and have them sign an acknowledgment form. In addition, ensure that your company’s policy is easily accessible to all your employees in the form of a handbook or shared repository. When everyone knows the policies, there is less room for misunderstandings or dishonesty.

Enforce Access Controls

Access Controls prevent unauthorized access to sensitive data, which is particularly important if you regularly deal with money. Implement passwords, PINs, and security checks for each employee, depending on their role in your business.

It might also be wise to install access control points in your business. Specific devices such as keypads, biometric scanners, and ID cards will help you monitor and track who has accessed certain areas of your business. It’s also good to have a smart system like Loxone to monitor these devices. It’s software that manages all sorts of smart systems, including business security systems. A Loxone installation service can help install the software so all your smart devices are connected to the system. Ultimately, this makes monitoring and controlling all sorts of things in your business much easier.

Monitor Employee Behaviour

Keep an eye on the behavior of each employee in the workplace. Monitor any suspicious activities or changes in their habits if needed, as this could be a sign of theft. It’s also essential to ensure that your employees understand the consequences of theft. Make sure they are aware of the penalties for breach of company policy and make them sign an agreement stating this.

Employee theft is a major problem that can significantly damage businesses. It’s essential to take the necessary steps to prevent it. These measures will help ensure that your business remains safe and secure. It can also increase overall profitability and help your business grow.

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