In 2024 and beyond, protecting a business from employee theft and fraud is essential for development and growth. Almost all industries are at risk from payment fraud or theft, but manufacturing, finance, and the pharmaceutical industry are particularly on top. Cybersecurity and information technology leaders, such as managers and IT managers, must keep up with the latest developments in payment fraud and theft. These include being aware of the related expenses and implementing successful preventative techniques that complement current fraud management techniques. This blog post will look at the key tactics for preventing employee fraud and theft in 2024.
Ways to Prevent Employee Theft in 2024
Preventing employee theft is important for the success and integrity of any business. In 2024, business practices continue to evolve several strategies you can implement to minimize the risk of employee theft. Here are some proven ways to do so:
- Conduct a Background Check
- Design a System of Checks And Balances
- Invest in a Point-of-Sale System
- Set Up an Easy Way for Employees to Report Theft
Conduct a Background Check
One of the primary steps you should take is to conduct a background check on each prospective employee before finalizing their hiring process. These services typically offer various pricing tiers based on the depth of information required. Basic packages usually include a Social Security Number trace, address history and scrutiny of criminal and sex offender records. More comprehensive packages may include checking the domestic terrorist watch list, verifying educational credentials, and confirming past employment details. It is necessary to apply the same background check process equally to all potential hires, without any discrimination based on race, sex, national origin, religion, or any other factors.
Design a System of Checks And Balances
One effective approach to ensure organizational integrity is implementing a robust system of checks and balances to facilitate mutual oversight among your employees. Entrusting a single individual with exclusive control over a particular aspect of your business is a significant error. Whether it’s a long-time friend of 30 years or an individual with an impressive recent resume, it’s crucial not to place excessive trust in any one person. Unforeseen life challenges could drive them to desperate actions, potentially jeopardizing your business. To mitigate this risk, it is advisable to distribute primary responsibilities among your team members.
Invest in a Point of Sale System
Many business owners overlook that a point of sale (POS) system can significantly reduce employee theft. By enabling you to define the specific areas within the system that employees can access, a reliable POS system restricts the potential for misconduct. Employees cannot delve into financials, view unauthorized reports, or manipulate inventory levels. Given the prevailing fraud statistics, such control becomes indispensable. A well-designed point-of-sale system also meticulously records the sales transactions executed by your employees. In case of any discrepancies during analysis, each action can be traced back to the responsible employee.
Set Up an Easy Way for Employees to Report Theft
The traditional notion of Don’t be a snitch is no longer relevant when exposing fraudulent activity. Within this group, nearly half (49%) of the tips originated from fellow employees. Many workers, recognizing that theft adversely impacts the company and their job security, are inclined to report fraudulent activities committed by their colleagues. This inclination is particularly pronounced when employees can quickly and anonymously report such behaviors. A practical approach to facilitating this reporting process is creating a straightforward online form. Utilizing tools like Google Forms, which are both accessible and user-friendly, can streamline the implementation of such a reporting system.
Ways to Prevent Employee Fraud in 2024
Uncovering employee fraud demands a meticulous approach to employee management, as the situation necessitates careful handling. Perpetrators frequently take advantage of the intricacies of global payroll systems, rendering traditional audits less and manual checks impactful. Organizations must embrace sophisticated detection methods, potentially incorporating technologically advanced or innovative solutions:
- Digital Security
- Regular Audits
- Educate Employee
- Engage With Employees
- Consider Outsourcing International Payroll
Enhancing the digital security of the payroll system or incorporating additional verification measures, like biometric identifiers like facial recognition, fingerprints, or retina scans, can effectively safeguard access to and modification of HR and payroll information, ensuring that only authorized contractors and employees have the appropriate access. Robust security measures significantly raise the difficulty level for potential fraudsters attempting to manipulate and create employees without detection. Furthermore, implementing heightened security checks also contributes to minimizing inadvertent errors.
Frequent and comprehensive audits play a pivotal role in uncovering employee fraud. While many companies conduct an annual audit to fulfill primary requirements, those undergoing transitions or expansions are advised to increase the frequency to 3 to 4 times a year. It is essential to scrutinize payroll records, comparing them with HR regularly. For international and local payroll, engaging external auditors with expertise in navigating different regulatory landscapes is the optimal strategy for ensuring compliance and preventing potential gaps within the system due to their profound understanding of international and local requirements positions them effectively.
Enhance employees’ understanding of the potential risks and repercussions associated with payroll errors and employee fraud. Foster a culture of awareness and encourage reporting individuals or suspicious activities through designated channels. Providing comprehensive information to internationally or locally transferred employees is crucial, as they may be particularly vulnerable to such risks. Ensure that employees relocating abroad are well-informed about changes in their payroll and familiarize them with the security measures implemented. By cultivating a vigilant culture, employees play a vital role in fortifying the company’s defenses against fraudulent practices.
Consider Outsourcing International Payroll
Entrusting international payroll management to specialized service providers such as INS Global can be a strategic measure to minimize the risks linked to employee fraud. A Professional Employer Organization (PEO) or Employer of Record (EOR) delivers a suite of HR services tailored to assist companies in handling multi-country payroll requirements during their global expansion. By outsourcing these services, companies gain expert guidance in navigating the intricate landscape of diverse global payroll regulations to ensure precision and compliance.
Engage With Employees
Consistently confirm the presence of every staff member, with a particular focus on international expansion. Employ a proactive and positive approach by organizing employee engagement initiatives or meetups. These events enhance engagement and yield valuable data that can be cross-referenced with HR and other pertinent departments, facilitating the establishment of effective communication channels. In case of any uncertainties, managers and supervisors should promptly address discrepancies in the employee roster.
In 2024, preventing employee theft and fraud from firms will require a diverse approach. To effectively reduce the possibility of staff theft, this entails putting in place safeguards including extensive background checks, creating systems of checks and balances, purchasing cutting-edge point-of-sale technology, and encouraging anonymous reporting. Furthermore, preventing employee fraud involves bolstering digital security, conducting routine audits, and maintaining active communication with the staff. By incorporating these measures, businesses can fortify their defenses, fostering a secure environment and ensuring sustained success in the face of evolving challenges in 2024.