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Series: How does employee theft happen? – Part 2

Article Highlights:

  • What steps lead to theft?
  • How does theft happen?

In the previous article in this series, we examined the Fraud Triangle and the why behind employee theft. If you missed that article, you can check it out here.

Employee theft is a prevalent issue and if you google it, you’re bound to find news stories. What else will you find? Ways to help prevent it. But before you can prevent employee theft, you need to understand it.

Even if you know the why behind employee theft (which you do, if you read our first article in the series), you’re still only halfway there. You also need to understand how theft happens. Once an employee has decided to commit theft, the next three steps are how the theft happens.

Let’s take a look at the three parts of the Triangle of Fraud Action to learn more:

  1. Concealment. The employee has crafted a plan to hide the theft from you and their coworkers. One of the biggest red flags for concealing theft? Employees that never take a vacation or sick day. If an employee were out for a day or a week, his back-up could notice some discrepancies, which could cause him big problems. For example, it could be a parts manager who always controls inventory or an office manager who always personally posts expenses to a high-volume account.  To reduce risk, insist employees take vacation or sick days and rotate job responsibilities so no one person has all the power.
  2. Conversion. Next, the employee sets up how he will steal. The parts manager pilfers a couple of expensive parts. The office manager adds a new vendor in the system and links it directly to her bank account. An important step to reducing risk is to have a process all employees must follow. Additionally, it’s a good idea to cross-train employees and do random checks throughout the dealership to make sure everything is running as it should.
  3. Action. The last step is significant: stealing. This is the physical act of taking something from your business. The parts manager takes home the parts he shorted and sells them on eBay. The office manager posts bogus invoices to the new vendor with her account linked. To help combat this, perform random audits periodically to deter the idea of theft.

The third and final part of our series will take a more in-depth look at how you can deter theft at your dealership.

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Director, Product Planning, DMS, Reynolds and Reynolds

With over 26 years of experience with Reynolds, Scott Worthington started as an ERA® trainer in 1991. His other roles included being an original member of the Reynolds Consulting Group, running the Service Readiness organization, Marketing Director, and ERA Solutions Executive. Currently Scott is Director of Product Planning responsible for the ERA-IGNITE and POWER platforms, Business Office applications, Data Archiving, Reporting and Analytic Solutions, and ReyPAY®.

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