Ellen Rohr
Contributing Writer
Bare Bones Biz

Every couple of months, I hear a horror story from a contractor who was ripped off…by one of his employees.  These are sad, sorry tales.  Tales of lies, misplaced trust and broken hearts.  How does it happen?  And how can you keep it from happening at your small shop?  Let’s take a look…

 

Here are a few popular ways to rip off the boss…

• Moonlighting.
• Pocketing cash tickets.
• Fudging on time cards.
• Charging personal items to your credit card.
• Processing phony payables –  “Pay to the order of Ms. Employee”.
• Taking office supplies or inventory for personal use.
• Depositing sales revenues into own account.

The worst rip off method I’ve heard of?  A friend of mine discovered that his bookkeeper was depositing the payroll tax deposit into her personal account.  She stole over $25,000 before she was found out.  But even worse, my friend was liable for the missed payroll taxes…and the late penalties.

Embezzlement is a nasty subject.  In a small shop it hurts even more than in a large company.  A small shop is like family.  It may even be family!

Now, I am not suggesting that you never delegate responsibility.  Nor would I want you to become paranoid about everyone in your company.  Most folks are hardworking and decent.  But every now and then you’ll hire a bad apple.  Or you’ll employ a good person faced with difficult circumstances, who will cross the line…and rip you off.

How can you keep it from happening?  These guidelines will help.

Maintain the highest personal integrity. Do you tell ‘white lies?’  Do you tell your receptionist to inform the customer on the phone that you are ‘out of the office’ when you are most certainly ‘in?’ Your personal integrity, as demonstrated by your actions, establishes your company’s culture.

Be Fair. Establish a clear and equitable compensation plan that rewards productivity and adherence to behavioral standards.  Fudging hours is the most common form of stealing by employees.

Make sure everyone takes a vacation. Insist that everyone at your company take a vacation now and then.  An embezzler is most effective if no one else ever sits in his seat and does his job.  Share his chair once in a while.

Open the mail. Many forms of embezzling will show up in the mail…on the credit card statements, the bank statements, or a letter from a vendor alerting you to a problem.

Reconcile the bank statement yourself. The bank statement reports all the cash that went in and out of your bank account.  Pay attention and comb through it every month, and check online throughout the month.

Read your financials. It is your job as the owner to keep track of the business.  And your employees will know that you are paying attention.

Operate your company with standard procedures. Work with your team to develop a functional operations manual, covering every aspect of your business. Refer to it daily. Use it to train new employees. Change it when necessary to streamline systems and facilitate sales.  Have a checklist for everything.  Impose accountability on everyone, including you.

Commit to a drug free culture. Work with your insurer to create a sound clean-and-sober workplace program.  Addiction causes a lot of bad behavior.

These guidelines will help you discover an embezzling problem.  But, even better, they will prevent embezzling.  You will feel more comfortable and less vulnerable.  And, you will protect the honest people who work for you.

Ellen’s UN-conventional approach to business makes it easy to be more successful and profitable. Download free biz tips at www.ellenrohr.com, find her blog at HuffPost Small Business and connect @ellenrohr on twitter