WHY EMPLOYEES STEAL FROM YOU

Curb Employee Theft by Building Systems

An Issue of Culture

A 2017 study found that almost 99% of the 159 Nigerian small businesses surveyed had experienced employee fraud, while more than 62% of them had dealt with it multiple times. Most Nigerian employers will at some point have to deal with the malignant problem of workplace theft and fraud. The skimming of funds, direct larceny, fraudulent disbursements, billing fraud, gross time mismanagement—these are just some of the realities of running a business in Nigeria and tackling such employee misconduct is one of the many costs of running a business in Nigeria.

There are several reasons why an employee might steal from their employer—family pressures, job dissatisfaction, overwhelming financial need, gambling and addiction issues, behavioural deficiencies—but one factor is ever-present and can explain, in great part, nearly all employee-related theft in Nigerian small businesses: a culture of graft. Many Nigerians consider ethical misconduct to be deeply ingrained in Nigerian politics and business. Not surprisingly, 57% of respondents in the above study believe the perpetrators of workplace theft and fraud don’t consider either act to be unethical. This culture of graft is not fully to blame, however.

Culture Meets Opportunity

Many employers are guilty of unwittingly fostering an atmosphere of opportunity that encourages misconduct. Small businesses in Nigeria tend to wing it: they run their operations informally, lack vital systems that would discourage theft, and neglect to take meaningful steps to incidents of theft and significantly reduce their reoccurrence. 

Building systems and processes is, however, the most effective solution and deterrent to workplace theft.

Establishing Systems that Work

Structure is as important to minimising employee misconduct as it is to business success and employers can take a number of steps to establish working operational systems:

Create a paper trail: Documentation is the cornerstone of every successful business. Document every aspect of business by instituting electronic and hard-copy processes and repositories for all phases of operations: from project and purchase order approvals to procurement contracts, purchase invoices, and payment receipts to inventory tracking to sale, refund, and other transaction receipts to employee reporting, timesheets, and other activity logs. 

Avoid onerous processes, however, as these will encourage employees to deviate from company protocol.

Introduce security systems and supervision protocols: Video surveillance in retail businesses discourages theft, but employers in all sectors can benefit from close supervision of staff. Require supervisor approval, for instance, for orders, refunds, and other cash transactions and only assign cash-handling responsibilities to established employees. Employers can also benefit from using a “buddy system”, i.e., having employees work together instead of in isolation to reduce the likelihood of misconduct. 

Balance is important, however; avoiding staff micromanagement and encouraging employee feedback will work to build employee-employer trust, while ensuring regular rotation of employees between pairings or groups will help minimise friendship-related issues.

Perform regular internal audits and evaluations: In addition to regular audits performed by external parties, conduct informal and unannounced internal audits using trusted management personnel. Unscheduled inventory checks and software inspections, for instance, will discourage employees from performing electronic fraud, while stress tests, i.e., aggressive simulations of risk scenarios, can identify operational vulnerabilities and yield mitigation strategies that address them. Mystery shoppers and undercover employer agents can also provide valuable insights into employee integrity and performance; some employers have weeded out fraudulent employees who introduce ostensible new hires to their methods of gaming the system.

Screen out bad apples and cultivate good ones: Establishing structure begins before employees join an organisation. A rigorous candidate interview process that includes criminal background checks and closely evaluates work attitudes, personality, and soft skills can help eliminate potential bad actors. Follow up the screening process with a comprehensive on-boarding process that introduces new hires to organisational culture, company values, and workplace ethics. 

A happy employee is a loyal employee. Once employees have been inducted, communicating management’s commitment to employee wellbeing will be important to keeping staff morale high and reducing the temptation to defraud. Build trust and a good rapport between management and staff by creating a conducive work environment, getting to know employees one-on-one, and reinforcing employee on-boarding with ongoing ethics and skills training, all of which will make staff feel more invested in their company and grow employee loyalty.

Together, competitive compensation and a rewards system are an effective tool for maintaining employee loyalty but must be part of a holistic system of staff management.

Deal with misconduct swiftly, decisively, and firmly: In the event of employee theft or fraud, a zero-tolerance policy and immediate action will purge the organisation of perpetrators and discourage remaining staff from misconduct. In addition, establish direct methods for employees to report observed misconduct, paths that are simple and respect the privacy of the whistle-blower in order to encourage employees to help identify issues within the workplace.

Prevention is, of course, the best defence against workplace misconduct. Developing wide-ranging systems and protocols as a first priority and regularly reviewing these processes for efficiency and vulnerabilities will help shift employee behaviour and values to fit within the culture of trust, transparency, and ethics that you establish.