Dishonest Employees Can Destroy Your Business

“The line of least resistance makes crooked rivers and crooked men.” Bob Murphy, humorist

It is tough enough to make it in business but even more so if you have employees ripping you off. Employees who help themselves to your money and merchandise are liabilities. They are, as I say, hidden partners- expensive partners with little ethics or morals who can take your business into bankruptcy. And I have witnessed it more than once.

Employees who steal find a reason to justify it. They may feel underpaid, unrecognized, unappreciated, or exploited, but whatever the reason they convince themselves they are entitled to a share of the spoils. Some are amoral. They lack ethics or a sense of morality and steal without guilt or concern. They need no justification to become your partner; they just do so.

Employees with drug or alcohol problems are risky. If addicted, their paycheck will never be enough. If you suspect an employee with a drug or alcohol problem, be on the alert for such telltale signs as frequent sickness, lying, lateness, absenteeism, and shabby appearance. Chemical addiction is a tough taskmaster that usually leaves the employee little choice but to steal.

A troubled marriage with money problems can cause an employee to put aside his or her sense of honesty and give in to the temptation of a little extra cash. As an employer, you cannot be involved in the martial problems of your employees, but you should be alert to changes in their behavior.

Your employees may become jealous of your success and lifestyle. They may feel they have contributed to the success of the firm and be tempted to steal their “share” of the profits. Be considerate of employees less fortunate than you- do not invite trouble by showing off your wealth. If you are denying wage increases, don’t show up in a new Mercedes.

Unfortunately, there are clever and dishonest employees who will try to find ways to steal from you. And, while it is difficult to protect yourself from such people, here are some common practices to watch out for: Not recording a cash sale, and pocketing the money. Selling merchandise to friends, at ‘special’ prices, or giving away your inventory for “under the table” cash. The padding or falsifying of employee expense reports.

If you allow employees to buy services or merchandise for your business, be aware of possible “ employee rebates” or gifts. Surprisingly, some employers look the other way, thinking they are allowing suppliers to subsidize their employees- it is not a harmless practice. It is corruption, it is illegal, and it is at your expense.

And it is widespread, from the shipping carton supplier who throws a few dollars to your shipping clerk to vendors that bribe your purchasing agents or buyers. Shady suppliers that bribe as a sales strategy to get your business, usually do so because the quality of the product is questionable or their prices are too high.

Be sure you are not sending checks to non-existent suppliers. A common scam is to issue checks against phony bills submitted to your company. This is a favorite tactic of dishonest bookkeepers that create fictitious companies to send you fraudulent bills. Be alert for any unusual customer credits, as more than one bookkeeper has made deals with dishonest customers.

I advise you to learn enough about accounting to understand the importance of checks and balances. Learn how to verify your paperwork. You don’t have to spend a lot of time doing so, but you can spot check invoices, bills, etc. alerting employees you are aware. Dishonest employees will quickly sense your ability to spot irregular activity - they will move on.

Here are eight steps you can take to help prevent silent partnerships:

1. Insist on honesty and check references on all employees you hire. 2. Keep accurate business records especially inventory and cash. 3. Verify any "strange" transactions. 4. Set the right example-don't treat your business as your cookie jar. 5. Watch for any change in the behavior of your employees. 6. Be alert to alcohol and drug problems. 7. Be alert to employee credit problems. 8. Watch out for cozy relationships between employees and suppliers.

But, the best way to prevent employees from becoming your partner is to be honest in all your dealings. If you attempt to fudge your books, gouge a customer a little, or cheat a vendor, you are sending a strong message to your employees or associates that you accept such behavior. It is an invitation to steal from you. If your employees know that you demand honesty, they will respect you for it. By doing so, you will find dishonest workers will not hang around. An honest environment will make them uncomfortable-and keep you in business.

Copyright 2004 Dr. Paul E Adams, Professor Emeritus Business Administration Ramapo College of New Jersey Author “ Fail Proof Your Business: Beat the Odds and be Successful.” Available Amazon.Com. If you have questions or comments- contact me: