Tuesday, May 18, 2010

Never trust your staff too much!

"Trust everyone, but cut the cards." ~Finley Peter Dunne

There is an ongoing story in our local paper about a bookkeeper who allegedly stole over $500 thousand from an organization. When the authorities began investigating the matter, they found that this bookkeeper had been convicted of stealing funds from her former employer. In fact, when she was hired, she was serving her jail time at night while she worked during the day.

Obviously, this organization failed to do any due diligence to verify her background. And while this oversight was bad in and of itself, the real problem here was management's complete trust in this employee.

This employee was able to write checks and make the park's books look great since she was the one who reconciled the bank statements. In our consulting work we run into this often, and I warn every entrepreneur against it. I tell owners that the checks need to be returned to them, and they need to look over them to verify that there has been no impropriety.

Why did all this happen? I believe that as people, we want to trust others and see them in the best light possible. If we looked at every person we know with a suspicious eye, life would not be any fun. Our fundamental belief is that people are basically good, which is a philosophy that I certainly subscribe to.

But while we need to see the good in everyone, particularly employees, we need rules and procedures in place to ensure that dishonesty is caught and punished. Just making staff aware that you are checking on their honesty is frequently enough to prevent theft.

So often, businesses that install video cameras near their cash registers and back doors are surprised to see the incidence of theft decrease. After all, most theft in a business occurs internally. Removing the temptation to steal is the best means of eliminating theft.

While you need to trust your staff, never trust blindly. Have procedures in place to guarantee their honesty. As bad as it may sound, this is the most effective way to deter theft.

Now go out and make sure you have policies and procedures that eliminate the temptation to steal. And never completely trust any staff member, no matter how long they have worked for you.

You can do this!

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