There are several steps involved in implementing a loss management system aimed at preventing internal theft. Each step is equally important and interdependent.

The first step in preventing employee theft starts with human resources. The best way to prevent an employee from stealing is not to hire them at all. This means that better attention and focus should be paid when hiring an employee. The average interview in the retail industry lasts only about 20 minutes. Companies need to develop an effective pre-employment screening process. This should include doing extensive background checks that include examining of criminal records and checking references. The new applicant process should be completed with due-diligence. Most embezzlers have stolen from the their last four employers prior to discovery. Therefore, it is important to detect anything questionable, because internal thieves maintain their illegal activity from job to job. If time is an issue, you can outsource the service of performing background checks.
Human resources should also discuss internal theft and loss prevention during the hiring process. The employee should be told during orientation how important loss management is to the company. Human resources should also let new employees know that the company's theft prevention measures are tools to protect employees. If prevention measures are too lax, then everyone becomes a suspect when something is missing. Understanding a company's reasoning will help employees feel less threatened and more like a member of the team.

In order to maintain a workforce that resists stealing from the company, a "culture of honesty" must be created. This is included in the second step to preventing internal theft, building awareness. To build awareness within a company, the organization must communicate with employees about inventory shrinkage and theft issues. Creating a culture of honesty also involves creating performance measures based on ethical behaviour. In order to generate ethical behaviour, management must first clarify the company's code of conduct and identify unacceptable behaviour. Then the company can implement more specific requirements. These include holding managers and supervisors responsible for maintaining performance management issues. Another way to keep employees align with the company's conduct code is to give them a greater sense of authority. When employees are given more control, they are more likely to do what is in the best interest of the company.

Another way of creating a more truthful culture within an organization is to provide a means for employees who observe illegal or inappropriate behaviour a way to report them. KPMG performed a recent survey of 2,390 employees from a variety of industries on Organizational Integrity. The survey found that over 80% of the employees had observed a high level of illegal or unethical conduct over the past 12 months. One solution to this problem is for a company to provide a confidential 1-800 or 0800 in the UK number hotline where employees can report observed theft. Offering a hotline number is another service that can be outsourced to another company. One such company, EthicsLine, states "organizations having fraud hotlines in place cut their fraud losses by more than 50%." Providing this outlet helps to maintain an honest workforce. some employees steal when they are aware of other employees' embezzlement activity and ask to become temporarily involved.

The last piece of the puzzle to building an honest culture involves building the overall attitude of the employees. Employees who have a respectful attitude are less likely to steal because it is hard to violate the trust of a good boss. Creating a company culture that is happy and satisfied will reduce the revenge factor in internal theft. One way to build employee attitudes is to share in the ownership of the company. Employees who own stock will act in the best interests of the organization because they are now acting in their own best interests. Even with the best company attitude, it still takes deterrents to prevent internal theft.

The fourth step in developing an effective loss management system involves the act of targeting. Targeting in the context of preventing internal theft has two meanings. The first consists of focusing on high-risk merchandise and locations. Often, 10% of a store's inventory accounts for as much as 40% of the total store's inventory loss. Attention and prevention measures should be centred on items that are the most expensive and easiest to steal. Such items include jewellery, leather, and small consumer electronics. The most important item a company should direct its focus on is its most liquid asset: cash. Managing theft of money is particularly important for banks. In 2000, embezzlement contributed to the failure of the \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$88.8 million-asset Bank of Falkner and the \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$113 million-asset Hartford-Carlisle Savings Bank.

Targeting also means being aware of the potential warning signs of internal thieves. There are several behaviours that can cause a company that a problem exists. According to this statistic, more attention should be focused on higher-level employees because they cause the most loss. In fact, on average, managers steal \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$250,000 and officers and owners take on average \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$1 million. There are several other warning signs exhibited by internal thieves. The important thing is management needs to be more aware of employee's conduct and actions because they can be excellent indicators of fowl play.

Targeting also means being aware of the potential warning signs of internal thieves. There are several behaviours that can cause a company that a problem exists. According to this statistic, more attention should be focused on higher-level employees because they cause the most loss. In fact, on average, managers steal \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$250,000 and officers and owners take on average \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\$1 million. There are several other warning signs exhibited by internal thieves. The important thing is management needs to be more aware of employee's conduct and actions because they can be excellent indicators of fowl play.

In order to establish an effective loss management system, managers needs to better understand the problem of employee theft, the sixth step of the process.

Major merchants, such as Wal-Mart, Kmart, and Target, have already developed complex loss prevention departments. Several trade organizations, like the Association of Certified Fraud Examiners and the International Mass Merchants Association, help companies who are starting to implement internal theft prevention measures. These organizations provide facts and background information about employee theft and introduce ways to help reduce the problem.