Your organizational structure—does it serve you in preventing embezzlement, or is a loaded gun simply waiting to go off? Countless business owners across the US see employee fraud or embezzlement as something that only happens to other people, but in reality, the statistics sing to another tune.
Starkly, research tells us that embezzlement impacts around 95% of businesses. So if it hasn’t touched your company yet, then you are living the exception rather than the rule. The same data reveals that the average embezzler has worked for the organization they attack from the inside for eight years. This means that perpetrators are trusted, core members of the teams they undermine, making implementing preventative measures an essential pursuit.
One aspect of keeping the horror of a hole in your books at bay is conducting comprehensive background checks on everyone entering your team. Why? Because 4% of embezzlers are found to have had prior convictions—red flags that their employer would have spotted if they’d done the appropriate groundwork. But that defense is only a partial salve. A far larger puzzle piece for preventing embezzlement is building staunch safeguards into your corporate structure. So let’s look at why this tactic is so important, and how you can get expert assistance if you feel your current modus operandi is far from bulletproof.
Leaving the Door Open to Embezzlers
Sadly, for those of us in the corporate investigations business, this is a story as old as our profession. Company after company comes to rely upon that one gold-standard employee. They’re the dependable one—the bedrock of daily operations—and as such, their reach and control gradually extends and the checks and measures fall away. Of course, not all trusted managers or C-suite executives will leverage the opportunity to embezzle when they meet it. But the right cocktail of means and motive can lead to a slow-burning crisis with a sizable crescendo.
When asked by researchers, employees who stole from their employers, 24% said that they did so simply because they knew they could get away with it. Of course, factors such as personal financial woes or a build up of resentment at work due to poor corporate culture can all contribute to creating that melting pot-moment, but in essence, no employer can predict with certainty which rock-solid employee may take a turn in a far darker direction.
Not only do these factors justify why thoughtful measures for preventing embezzlement are so vital, but so too does the fact that most embezzlers get away with their crimes over an extended period. Among employees committing fraud, the average window within which they are able to siphon off money undetected is 18-24 months. That’s a mighty long time for your company’s assets to be hemorrhaging, so how can changing corporate structure close that window and lock it down tightly?
Preventing Embezzlement By Changing Corporate Structure
The reality is that an embezzler needs space to work—they need the scope to insert their falsified figures and fraudulent documentation; to paper over the cracks that would reveal their misdeeds. This means that developing systems that ensure all numbers are cross-checked and never the responsibility of one individual alone will certainly create a substantial obstacle to such endeavors.
Rotation of duties, multi-managerial verification, and tightly controlled and monitored access to high-value—or even low-value—assets can serve as guard-rails that protect against entry into embezzlement-friendly territory. And while it might seem that these practices are peppered with mistrust, in practice, they allow the opposite to blossom. When anti-theft measures are taken as gospel and followed to the letter, teams can enjoy an environment of confidence and collaboration that is far healthier and far less vulnerable to crime.
So, is your corporate structure up to the task? If the question gives you cause to pause for thought then the corporate team at Lauth Investigations International can help. We combine expert services such as Corporate Culture Audits and tailored risk assessments to help businesses just like yours avoid leaving the ranks of the graced 5% of businesses unaffected by embezzlement. We can also aid with detailed background checks and workplace investigations if anything doesn’t add up. Turn to a trusted ally by reaching out to our team today and we’ll be happy to talk you through your options.