There’s an old saying about motorcycle riders: there are those who have gone down and those who will go down. Knowing that my love for speed could eventually lead to injury or death, combined with a promise I made to my mom as a kid, is why I don’t ride motorcycles. Unfortunately, having been in business for 23 years, I've come to believe there are only two types of business owners: those who have been stolen from and those who will be stolen from.
The rise in employee dishonesty is alarming. Many of my shop-owner friends and clients have recently experienced theft in various forms. It's a sad reality that companies are increasingly being stolen from by their own employees.
As business owners, we naturally want to see the best in people and believe they have the right intentions. However, greed, selfishness, resentment, and desperation can lead even good people to justify stealing from their employers.
One of the most devastating forms of theft is when a trusted employee decides to start their own business and steals your customer database to do it. An employee with a good rapport with your customers leaves to start their own venture, taking a significant portion of your client base with them. This type of betrayal is financially damaging and emotionally devastating, as it affects the relationship between the business and its customers. They can feel like they’re the kids in an ugly divorce!
Recently, a client discovered that his manager was ordering parts for his personal car without paying for them. Digging deeper, he found that a technician was doing the same, and they were covering for each other. These long-term employees lost six-figure jobs for a few thousand dollars’ worth of parts.
In another case, an employee was running a side business and ordering his parts from the shop’s account. When the audit was complete, it was well over $20,000 in parts that were paid for by the shop owner! When these situations arise, the question often is: should we call the police? My answer is always yes. If they get away with it, they’ll likely do it again until they’re caught. Pressing charges helps protect the rest of us in the industry.
I speak from experience. I once had to put a bookkeeper in jail for 30 days after discovering she had been embezzling for about a year and a half. We will never know exactly how much she stole, but she was convicted of stealing $52,000, but it was probably double that amount. It was devastating to learn that someone I and my employees trusted completely was stealing from me.
Theft isn’t limited to physical goods or money. Poor company policies can also open doors to external threats. For instance, one of my shop owner friends had $500,000 stolen from his bank account by hackers. The breach was traced back to an employee using the same password for everything and when he used it on a website that was compromised, the hackers got it, they used the stolen password to get into his work email, and then they figured out his email allowed the hackers to access the whole companies email admin portal and intercept correspondence between the owner and the bank. While the employee didn’t steal directly, their lack of a strong password policy facilitated the theft.
The emotional impact of discovering that a trusted employee has betrayed you can be devastating. Trust is a fundamental aspect of any relationship, and when it is broken, it can lead to a range of intense emotions, including anger, sadness, disbelief, and even shame. According to psychologists, betrayal can trigger a grief response similar to losing a loved one.
Going through this situation recently, and those who have had it happen, know that this emotional rollercoaster can affect both your personal and professional life.
Psychologist Dr. Karen Lawson states, "Betrayal by a trusted employee can feel like a personal attack. It's not just the financial loss that hurts; it's the breaking of a bond, the realization that someone you valued and relied on has deceived you."
Dealing with the betrayal of a trusted employee is emotionally taxing. It's important to acknowledge and process your feelings rather than suppressing them. This might involve talking to a therapist, a trusted friend, or a mentor. Just being able to vent your frustrations can be a healthy way to begin healing and regain some balance.
It’s also important not to blame yourself for not seeing the signs. Remember, the fault lies with the person who chose to betray your trust, and even the best business owners can be deceived. I found this is easier said than done, but taking this perspective can help you deal with the feelings of self-doubt and guilt.
Taking time to reflect on what happened and why can provide what you need to look at in your business and your approach to protecting what you have worked so hard to build. This reflection might reveal any red flags you missed and help you learn from the experience to protect your business in the future better. It's not about blaming yourself but about understanding the dynamics that led to the betrayal and using that knowledge to improve your business practices.
Trust within your team is essential but should be built gradually. This doesn't mean being cynical but rather implementing checks and balances to ensure such incidents are less likely to happen again. Trust should be given cautiously and built over time, supported by clear policies and accountability.
You can’t completely eliminate the possibility of theft, but you can take steps to protect your business. Ronald Reagan said it best: “Trust, but verify.” Here are some immediate actions you can take:
First, ensure that you conduct deposit audits. Make sure the cash drawer is counted daily, and any excess is deposited. Regularly audit these deposits to catch any discrepancies early.
Next, conduct parts audits to verify that parts purchased land on tickets and are marked up according to your policy. This is how many shop owners have caught employees stealing parts. Regular parts audits help maintain inventory accuracy and identify discrepancies that could indicate theft. Where there is smoke, there is fire!
Deleted ticket checks are also important. Watch for deleted tickets or tickets paid with cash that show a discount. We have caught two service advisors pocketing the cash and deleting the ticket.
Legal audits are another critical step. Have your attorney review job descriptions, pay plans, and legal agreements with employees and contractors to protect your intellectual property and trade secrets. Clear legal documentation can prevent misunderstandings and provide a basis for action if theft occurs.
Implementing strong cybersecurity measures is something to start looking at today. Ensure password policies and regular cybersecurity audits to prevent external attacks. Training employees on cybersecurity and best practices can also minimize risks associated with phishing and other cyber threats. This will be an ongoing battle; scammers and hackers are getting better and better every day.
Finally, maintain awareness, understand human nature, and use common sense. Don’t give up on trusting people but be diligent in protecting your assets. Regularly communicate with your team about the importance of integrity, honesty, and accountability.
Ultimately, your fiduciary responsibility as a business owner is to safeguard your company. It may not be comfortable, but I challenge you to audit your company and take action before you learn the hard way. Being proactive about trust and verification can save your business from significant harm.
Dealing with betrayal is never easy, but it can be a valuable learning experience. You can better protect your business by implementing strong preventive measures, being vigilant, and maintaining a balanced approach to trust. I would love to hear your thoughts:
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