The Wall Street Journal has been adapting articles from their forthcoming Small Business Guidebook and publishing them in the paper and on their site. Here’s a powerful paragraph from one of those articles, titled: How to Avoid Hiring a Bad Egg.
Small businesses, unfortunately, are particularly vulnerable to embezzlement and other kinds of employee theft because they lack the checks and balances of big corporations. One report by the Association of Certified Fraud Examiners found that the median loss for small firms with fewer than one hundred employees was $190,000. The most common schemes? Employees fraudulently writing company checks, skimming revenues and processing phony invoices.
Here’s the question for you. If you’re a small business, can you afford to lose almost $200,000?
If the answer is “No,” then start protecting yourself by improving your hiring. The Journal article includes several tips. The idea is to set up a hiring process that catches possible bad actors before you hire them.
Standardize your process. Take the same steps every time. Use the same forms. Use simple checklists to make sure you don’t miss anything.
Ask tough questions. Ask about gaps in work history. Ask about relations with the boss and co-workers. Ask about anything that might be a potential problem.
Check references. It’s amazing how many companies don’t do this.
Use background checks. The Journal puts it this way: “Preemployment checks can screen out applicants who may be unfit (or dangerous) for your workplace because of a criminal record.”
Have your attorney review your process to make sure that you comply with both state and federal laws. Then, make sure that the steps you must take to meet legal and regulatory requirements are part of a hiring checklist.
Hiring may not seem like your “real work,” but it is. Having a good process and following it rigorously is a way to keep from hiring that bad egg. It’s that ounce of prevention you’ve heard about.