I began to think that of all the business concerns among HVAC contractors - those expressed to me and found in NEWS’surveys - and I can’t recall any contractors ever saying they were afraid of losing their business to fraud or theft. Yet it does happen all of the time.
I found it amazing that so many businesses are much more likely to be victims of internal theft, for example employee theft, versus external theft, for example shoplifting or poor accounting practices (nonintentional employee theft). The Small Business Administration (SBA) came out with an interesting statistic regarding retail businesses: businesses recover an average of $1,350 from each employee apprehended for stealing, compared to $196 recovered from shoplifters.
If you think your business is immune to employee theft, think again. According to the SBA, as many as 30 percent of all employees do steal, and another 60 percent will steal if given sufficient motive and opportunity.
IT MIGHT HAVE HAPPENED TO YOUI personally know of a few HVAC contractors who fell victim to employee theft. But out of respect for their privacy, I would never reveal who they were. The embarrassment of being a victim is often worse than the crime itself and something that I believe most people would like to keep under wraps.
Suffice it to say that the incidents I am familiar with involve inside and outside employees. One was a trusted office manager who was given the authority to write checks for the company and who wound up writing several checks, on a regular basis, for deposit into her own personal checking account. She was a person with impeccable credentials and good references. But she was a crook.
In many cases, it might be impossible to detect criminal behavior in a person you put so much trust in. Even a background check may not be enough to detect how a person will really behave once given a great deal of responsibility. The best way to avoid being put in that situation is to avoid it altogether in the first place.
Have a system in place where there are two signatures required on company checks or where only you are able to sign checks. I don’t buy the argument that a second person is needed to sign checks if the boss is unavailable. Sorry, in an age of electronic communication, the boss is always available.
WATCH YOUR OUTSIDE PEOPLE, TOOSometimes theft can be of the unintentional nature. Maybe one of your installers loaned a tool to a non-employee and never got it back - or maybe it was a roll of duct tape. It may have been a case of your employee not deliberately trying to steal, but just not using good judgment. But then there are those who choose to use tools and equipment for their own personal gain, either to make some repairs at home or to work on a side job. That is just plain wrong.
To avoid those problems, you need to have an inventory plan in place. Your trucks and vans need to be inventoried on a regular basis, along with your supply room. And yourself or a trusted employee/manager who is not directly tied to the use or distribution of the items being inventoried must do the inventory. Remind me to tell you how a $5 roll of electrical tape can cost you over $10,000 a year in losses - and how tough it is to make enough profit to cover that loss.
While it may not be on your radar screen of business concerns, you might want to review your own policies that are designed to safeguard your business from both internal and external theft. The Dwyer Group seminar was also the source for an interesting handout, which included 25 questions with ‘yes’ and ‘no’ answers dealing with fraud and theft. If you’d like a copy for yourself and your management team, e-mail me and I’ll send it along.