I suspect that this is a subject rarely discussed publicly amongst fellow business owners for fear of ‘loss of face’. Other reasons include client security breaches and reputation, but I can tell you that at least 10% of my clients have experienced employee-conducted fraud, amounting to almost a million dollars. One client had a ‘friend’ managing the payroll for them and she siphoned off $180k over 3 years. The issue was the owner trusted her – she was busy and did not take the time to check the details closely. Needless to say, they are not friends anymore! Another client runs a travel agency where an employee was writing dummy invoices and the bank details were – you guessed it – her own!
Most of us are honest individuals and we like to believe that of everyone; but what do you do if you suspect or know that someone may ‘have their fingers in the till?’
- Conduct preliminary investigation – Have enough evidence to pursue a more detailed investigation and arrange to meet with them, asking them to bring a support person along. You should also have someone to make notes of the meeting.
- Conduct meeting – Explain your concerns and that you need to conduct a full investigation and, while this is occurring, that they will be suspended from work on full pay. Remember ‘innocent until proven guilty’.
- Suspension – Look to suspend the employee on full pay while you conduct an investigation. You need to check your Award and also it is good to have a clause in your contract that allows you to do this.
- Response sought – Ask them whether they have any response to the allegations at this point and note these down. Also ask them whether there are any extenuating circumstances in play; for example an illness or relationship breakdown.
- Formal investigation – Conduct a detailed and thorough investigation until you are very comfortable that you can prove or disprove the alleged theft. This may include bank reconciliations and interviews with witnesses. Consider whether you wish to involve the police at this point.
- Outcome meeting – Arrange a meeting to share the findings and suggest that they bring a support person along. Advise the outcome of the investigation; should the investigation confirm that the theft did not occur, return the individual immediately to their role and look to manage any fall out.
- Theft occurred – You can terminate immediately on the grounds of gross misconduct without notice. Provide a letter confirming the situation and termination.
You need to manage this scenario with a high level of discretion and confidentiality before, during and post the investigation and any subsequent termination. Ensure that you draft a communication plan for management, employees, suppliers and clients. You should also consider contacting the police as theft is illegal and too many employers don’t pursue legal action which leaves the culprit without a reference from you yes, but also still with the ability to go onto the next employer and potentially repeat the crime.