Dealing With The Dishonest Employee

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Author John Towler, Ph.D.
Original Publication Exchange Magazine

What to do about employee theft.

“What do you mean, Theo is a thief?” Do you really expect me to believe that you caught Carrie cooking the books?" When you catch one of your employees stealing from you, it hurts and it makes you mad. However, human nature being what it is, it is almost inevitable that it will happen to you sooner or later, What should you look for in order to catch it as early as possible, and what do you do once you have discovered it?

Perhaps we should back up a little and talk about why theft happens and how you deal with your feelings of anger and resentment, The first thing you will be asking yourself is, "Why did they do it? Didn't they know they would eventually be caught?"

Here you are making your first mistake. You're not thinking like the culprit; you are thinking rationally. Of course, thieves don't think they will be caught. They'd never start down the road to peril and the police if they seriously considered they would be found out, This is the first lesson you must lean, and it may be hard to admit that the bright person you hired wasn’t really so smart after all.

One of my lawyer friends says that there is a little larceny in everyone, that many of us somehow can't resist helping ourselves to things we want, regardless of who actually owns them. For most of us, this stopped at sneaking the last cookie when we were kids or purloining the odd office pencil when we grew up. However, there are others who go too far and let the larceny get grand, Recognizing that this is probably true, you mustn't blame yourself when someone is caught stealing. It only reflects on you if you weren’t careful when you hired the person or if you didn't see the signs that theft was occurring, and there are signs, if you know what to look for.

Of course, hindsight being perfect, these signs will be all too obvious once the thief has been hauled away. But what do you look for beforehand? Here are some of the danger signals:

Small amounts of petty cash missing
Long distance calls that no one will admit making
Disappearing office supplies
Moonlighting on the Job
Unauthorized use of company computers, copiers, or other machines
Using the postage meter for personal mail
Missing parts or equipment
Employees in the firm at the wrong time or in the wrong place.

Oh, sure, I can hear you saying that every company has some of this happening from time to time, Well, that may be, but it probably means that people are indulging their larcenous natures. These are all signs that some one in your firm is ready to take advantage of your trusting nature or inadequate controls.

How can you tell when enough is enough? Have you decided that stealing $3,59 worth of stamps is OK, but that $5 a month is too much? None of the things listed above should be acceptable to you or any of your employees. If you notice these things happening, be on your guard, You may find out that good old Lou has been calling his mother in Montreal every week for the past 15 years and that you have paid for several thousand dollars worth of his personal calls. He may claim it was a simple oversight, but you would be stupid if you accepted that or allowed it to happen in the first place.

So how do you prevent these problems? It's all a matter of controls. You don't have to be mean spirited or distrusting; it's simply a matter of good business practices. Normally, people won't indulge in petty pilfering if they think they might be caught or embarrassed. If you control the minor cases, the major ones won't occur, unless you have an incredibly bold or stupid crook on your staff.

Let's take petty cash, for example.' Keep it under lock and key at all times, make one person accountable for it, and insist that he make up any shortages, when and if they occur. You can be sure this person will guard it for you. Telephone calls are harder to control, but people will be reluctant to abuse the system if you make a practice of checking the long distance calls and requesting payments for personal calls. If no one owns up to the calls, discuss the problem at your regular staff meeting and then post the numbers called. The abusers will be less likely to continue making calls if they thought someone might overhear or report them.

Examine your operation to determine areas of weakness. If parts are disappearing, find out why, figure out a security system, limit access to the area, and make one person responsible. Guarding against fraud is more complex but well worth the time spent establishing a system of checks and balances, It's easy to make honest mistakes, and it's just good sense to have more than one person handling invoicing and the collection of funds, In this way, one will serve as a check on the other, and in order for theft to occur, two people would have to collaborate.

Now, what do you do if you do detect some serious skullduggery? Essentially, it comes down to two choices: you can fire the person or force him to resign. If you elect to fire him, be very careful that you do it by the book and that you guard yourself against a claim for wrongful dismissal, You must have and be able to prove cause if you wish to fire a person. Dismissal based on your gut feeling, rumors, or improvable suspicions will only land you in court.

If you wish to fire someone, proceed cautiously and after consulting your lawyer. Make sure to have all the evidence you need before you make your move. If a crime is involved and you intend to prosecute, contact the police as early as possible and seek their advice. Police have all too much experience with cases of fraud and theft. They will investigate and lay the charges for you.


"Dehiring," or forcing a resignation, can be easier and just as satisfactory for the firm. This involves putting pressure on the guilty party and, while not directly accusing him of anything, letting him know that you are watching and waiting. This is often accompanied by changes in duties, demotions, salaries, posting to deepest Africa, and soon, The idea is to convince the person that it would be in his best interest to leave, However, remember that you must not treat people unjustly, Legal advice is important here. Crime in the workplace is not uncommon but, by taking the right steps, you can remove many of the minor temptations. This will eliminate the minuscule abuses and leave only the major crimes to be discovered, in many ways, these are easier to deal with, and you don’t feel as bad when the guilty party's next job is in the laundry at the penitentiary,

John Towler is a Psychologist and the founder of Creative Organizational Design. Please send comments about this article to jtowler@creativeorgdesign.com. For more information, please contact us.

Re-printable with permission.