If you suspect that an employee is stealing from you or perpetrating a fraud against you or your company, don’t react immediately or emotionally. Take some time, gather your emotions, consult a trusted outside advisor and make a sound plan. In doing so, consider the following:
- Don’t accuse before you have factual evidence. You don’t want to make matters worse by getting into legal liability for the way you handle the matter. Don’t tell anyone that such and such person did such and such.
You could be sued for slander. Consult an attorney who specializes in employment-related matters.
- Investigate. Begin a thorough investigation. Hire a forensic accountant if necessary. If you can conduct it without others knowing, so much the better. If not, explain that you are looking into certain data and you would appreciate assistance where needed.
- Find hard evidence. Belief and suspicion are not fact. Are there witnesses? Are the witnesses credible? Do you, or they, have factual, indisputable evidence, or is it only circumstantial or interpretive? Are there documents or videotapes that could be obtained that render indisputable evidence?
- Can I have a witness? Have a management witness present at all conversations that you have with any of your employees.
- Suspend before you fire. If an employee behaves suspiciously or if there’s credible evidence that an employee has engaged in or supported fraudulent activity, don’t fire the employee. Place him or her on leave, paid or unpaid. Make your retain-or-fire decision after your investigation is complete.
- Don’t Detain: If an employee refuses to talk or cooperate and attempts to leave, don’t detain him or her against his or her will. Simply explain that if he or she does not provide information, you will have to make a decision without the benefit of his or her input.
- Document, Document, Document. Every step of the way, write down findings, keep notes and retain records. You may need them for evidence.
Keep in mind that you will likely be too emotional to manage the process objectively, professionally and effectively, so think hard about getting someone else to take the lead for you.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2012.
This publication is intended to provide general information on the subject matters covered. It is sold and distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
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