Christmas: a time when many businesses celebrate the harmony between carols and cash registers. But while Christmas may be a cash cow for some, the combination of temporary staff, increased business activity and financial pressure on staff can move your business from booming to busted.
Employee fraud and theft have fast become a major problem for small businesses in Australia. According to KPMG, workplace fraud more than trebled between 1997 and 2012, costing businesses millions of dollars.
While employee fraud and theft happen all year round, the hectic nature of Christmas produces the perfect environment for staff, both long-standing and new, to become opportunistic.
You see, opportunity is one of the key drivers of employee theft. In a recent global survey by the Association of Certified Fraud Examiners, 85 per cent of respondents admitted that they would commit a fraud if the ‘right’ circumstances existed. The ‘right’ circumstances are a blend of financial stress, lack of processes, increased activity, distracted management and no accountability. Sounds a lot like Christmas, right?
So, what do we mean when we talk about employee dishonesty, and what can you do to prevent it?
Employee dishonesty can take many forms, including theft of cash or property, false invoicing, false inventory, payroll fraud, computer fraud and funds embezzlement. But while the list is long, thankfully there are things you can do as a business owner to prevent these activities and, in the event you’re a victim, to lessen their impact.
1. Lead by example: It’s difficult for employees to take your business for granted if they see you leading by example. When everybody is on the same page and adhering to protocols and processes, the likelihood of seizing on opportunities is lessened dramatically. Be a positive role model and always act with honesty and integrity.
2. Have theft and fraud policies: Speaking of policies – do you have one? The reason so many businesses fall victim to employee theft is the glaring lack of any effective processes. Spread the financial duties in your business – don’t let any one person handle invoices or payments. And, most importantly, make sure the processes are documented and that your staff understand them.
3. Don’t drop the ball with temps: At Christmas you may need to hire temporary staff. As with any new employee, temporary staff will be unfamiliar with your business processes or safety practices. While you may feel you don’t have enough of it, take the time to ensure they understand your processes and, where possible, get a background check done before hiring them. It could save you in the long run.
4. Be aware of warning signs: Always communicate with your staff and be alert to any stress they may be feeling, particularly for those who could be feeling the pinch so close to Christmas. Be on the lookout for any unexplained rises in an employee’s standard of living or spending habits.
5. Create a good work environment: While this may seem like a fluffy, feelgood idea, a positive work environment where employees feel engaged and valued encourages them to follow policies and procedures and to act in the best interests of the business. Workplace fraud is also more likely to be detected by a tip-off, so ensure your staff know they can blow the whistle in confidence and without fear of reprisals.
So, while Christmas is a time for fun and celebration, amidst the tinsel and festivities there are plenty of risks for business owners.
By keeping your eye on the ball, you will go a long way to mitigating some of them – and what could be a better gift for you and your business at Christmas time?
For more information, tips and resources, the Know Risk Network is hosting Risky Business month from December 1-24.
Edward is a content expert at the Know Risk Network. He has enjoyed navigating the risks associated with the twists and turns of a varied career in communications in a number of different industries, including the community sector, government and the finance industry.
Edward uses his unique understanding of the risks associated with life and its vicissitudes to help consumers and small business alike.
The Know Risk Network is a non-profit, entirely independent community education program designed by the Australian and New Zealand Institute of Insurance and Finance to improve our understanding of practical risk management and insurance. It is supported by community and emergency services groups, risk experts, insurers and government.