It might start with some product missing from the shelves, an irregularity in a financial statement or a tip from a coworker. Regardless of the source, you find yourself suspecting an employee is stealing from the practice. It’s a situation that no one wants but one that almost every manager faces at some point. Employee theft is on the rise and accounts for over $40 billion in losses to U.S. businesses each year. The U.S. Chamber of Commerce reports that one of every three business failures is the direct result of employee theft. As a practice manager, one of your most important tasks is protecting your practice from employee fraud and theft.
When faced with suspected theft, your first step should be to inform the practice owner. Together, you should then formulate a plan to investigate and verify your suspicions. It is extremely important to avoid making incorrect or unsubstantiated accusations so you want to have as much information as possible before making a final decision.
Tips for conducting an investigation include:
- Don’t delay. It is important to investigate promptly to make sure evidence is preserved and to limit future losses.
- Be discrete and limit access to information to a need to know basis. You want to avoid alerting the suspected individual(s) to the investigation and protect the practice from claims of defamation if the allegations turn out to be untrue.
- If a tip came from another employee, be sure to consider whether or not the accuser has any reason he or she might want to get the coworker in trouble.
- Make sure to consider all the individuals who might have had access or motive to steal. While it might be easy to suspect a new employee, some of the worst reported cases of employee theft have involved long term employees who were able to get away with theft for long periods because everyone thought the individual was above suspicion.
- Be sure to completely document all your findings and securely retain evidence.
- In cases involving controlled substances or large sums of money, consider bringing in an impartial third party such as an attorney, the DEA, or law enforcement to conduct the investigation.
Once you have confirmed the theft, the final step is to decide what actions are warranted. While there may be good reasons for not prosecuting (such as legal costs or a lack of hard evidence), one good justification for criminal charges is to attempt to prevent the involved individual from repeating the same pattern with the clinic down the street. Legal prosecution may also be necessary in order to collect damages from your practice’s insurance company.
Of course, the best way to deal with employee theft is to prevent it before it happens. One of the most effective ways to do this is to foster a positive clinic culture. Employees who feel appreciated and have a long term commitment to the practice are much less likely to steal from their employer. Background and reference checks for new hires can help prevent you from repeating someone else’s mistake. Having good internal controls and regular audits in place will also discourage embezzlement and make it more likely that dishonesty is discovered before it can do much damage. To be most effective, internal controls should be readily apparent to everyone on staff.