In the last YES! Your Human Resources Solution blog, “Is Employee Dishonesty Cheating Your Business,” we talked about what dishonesty looks like in the workplace, and we identified potential causes.  We believe that by knowing the root causes, a business can take a proactive approach to discourage and reduce employee dishonesty.  In this week’s blog, we’ll discuss an unfortunate but inevitable role all businesses must play in employee dishonesty—the reactive approach to dishonest acts that have already occurred.

For many businesses, employee dishonesty hits as hard as a pro slugger on opening day, but comes as much more of a surprise.  And the toll isn’t taken only on cash assets, but also on personal feelings.  After all, if you treat your human resources like your business’ most precious investment, how could they betray you?

Although you may be tempted react emotionally to alleged dishonesty, hold back.  Premature finger-pointing can cost the business in other (potentially legal) ways.  But do take immediate action to investigate claims or suspicions, and the extent of any losses incurred.  You can start with these steps:

1. Get in touch with your company’s legal team.  Tell them that you suspect employee misconduct.  Gather any legal advice about how to conduct the investigation.
2. It may be good form to tell the employee about your intent to perform a thorough investigation.  Provide the employee with any handbook policies that pertain to dishonesty, theft, and misconduct.  Then you can ask the employee for an official, signed statement regarding the activities in question.  In conjunction with obtaining a signed statement, you may…
3. Consider placing the employee on paid administrative leave.  The investigation may go more smoothly if the employee is not on site while you’re scrutinizing their every past move.  Witnesses may also feel more comfortable sharing relevant information.  An added bonus of having the employee off site: you can notice if the suspected behavior stops or continues while the employee no longer has access to company resources.  If cash or merchandise continues to disappear, you may be investigating the wrong person.
4. You did do a pre-employment background screening, right?  Take a look at the suspected employee’s personnel file.  Be sure to note any
   recent disciplinary action, but also review the employee’s background investigation.  Keep an eye out for information that might have been overlooked or explained away.  If your company uses an outside investigator, contact that agency/person to discuss the results.
5. Review the employee’s work records, including attendance, production rates, and anything else that may be relevant.  See if you notice a pattern between unusual employee behavior and suspicious activity in the company.  Check any surveillance tapes that may have captured the employee’s actions.
6. Interview witnesses, particularly those who work closely with the employee.  You may uncover not only information about the suspected employee’s activities, but also holes in your company’s security measures.
7. Document all your findings in a comprehensive report.  Provide a copy of this report to your legal team.  They will recommend instructions for how to proceed, whether it is reinstatement, suspension, termination, or potential prosecution.

Employee dishonesty is a tough blow to any business, but with the right mixture of proactive and reactive measures, the consequences of employee dishonesty can be eased.  And remember, it’s always easier to include more proactive measures, such as background investigations and internal controls, than to suffer an incident that tells you exactly where your business needs to improve its security!