Continuing on our fraud theme, I read an article today on allbusiness.com that reported according to a survey by the US Chamber of Commerce, one in three bankruptcies occur because of employee theft. As noted in my last post, there is a lot a small business can do to prevent fraud. The allbusiness.com article focuses on some of the less tangible precautions a small business owner can take.
The first of eight tips offered to prevent fraud and employee theft is to create a positive workplace. Those procedures put in place to create a checks and balances system, first discussed in other fraud articles, are only followed by happy and accepting employees. The allbusiness article also suggests happy employees act in the best interest of the company. “Fair employment practices, written job descriptions, clear organizational structure, comprehensive policies and procedures, open lines of communication between management and employees, and positive employee recognition will all help reduce the likelihood of internal fraud and theft allbusiness.com).”
It is also important for management to lead by example. “A cavalier attitude toward rules and regulations by management will soon be reflected in the attitude of employees (allbusiness.com).” In other words, enforcement of procedures and rules should be the same across the board, no matter the employee’s station.
These tips, along with adding internal controls, conducting audits,thoroughly checking backgrounds when hiring, and training employees can save many a small business owner from heartbreak. And as the US Chamber’s survey suggests, it may save you from bankruptcy.