The Auto Shop’s Guide to Investigating Employee Theft

While going over inventory, you realize there’s a growing pile of inconsistencies between what you should have and what’s there, with no idea why that could be. If your mind jumps to theft, back up—you’ll need a lot more than a gut feeling before making that assumption.

While not something every business experiences, employee theft is far from unheard of. As a business owner or manager, you have to handle the situation calmly, with a strategy that takes all factors into consideration. 

This month, we’re looking at the telltale signs of employee theft, how to responsibly carry out an investigation, and preventative measures shops can take to prevent it from happening.

Backstory:

Darlene Canfield is the human resources executive at Dynamic Automotive in Frederick, Maryland. Being in the field for 18 years and certified by the Society for Human Resource Management, she has both the experience and training to handle tough situations in the workplace.

Problem:

Discrepancies between actual stock and system records is often where signs of theft begin. The most common and most accessible items taken from an auto repair shop will include inventory stock, along with tools. If a shop is experiencing this, it could potentially be employee theft, but there must be a thorough investigation before jumping to conclusions.

“You should be taking inventory regularly to make sure you have what your inventory says you have in stock. And if not, then that could be a sign—or it could be a sign that somebody’s not entering things into the system correctly,” Canfield explains.

Solution:

There are many steps shops can take if they’re concerned about potential internal theft. Assuming a complete review of inventory documentation has taken place, in which items sold versus received are compared, then the next step is to confidentially question other team members. Ask them if they’ve noticed anything or if they are aware of anything that’s occurred with the shop’s inventory.

“Gather any type of documentation that may show where inventory is going in and out, and see if there are any trends that make sense.”

And having documentation of everything you discover is essential. It helps keep track of what you’ve found and will help back up any conclusion you arrive at. Additionally, any shop surveillance footage should be looked over and kept as well.

“Being in the HR realm, documentation is everything. If you don’t document, it didn’t happen. If you ever have to go to court or something, your documentation is what’s going to support you,” Canfield says.

In the event you’ve gathered enough information that points to a particular employee, find a time to pull them aside privately and share everything you’ve found. Avoid making any sort of accusation unless you have solid evidence. Handle the conversation with great sensitivity, and give them an opportunity to explain themselves. Depending on the reason, it may be possible to find a solution with the employee, but it could also be in your best interest to end the relationship.

Aftermath:

If you’ve faced employee theft, you already know identifying who did it is just the beginning. An overhaul should be conducted of your shop’s internal processes, especially with regard to hiring. 

“I think they would need to rethink their hiring process,” Canfield says. “A lot of that could go back to asking the proper questions during the interview, getting into character questions, doing their due diligence and gaining feedback from previous employers, and conducting background checks.”

If a shop doesn’t have a surveillance system already, that should be a priority—either before an incident takes place and especially if employee theft is suspected. 

Takeaway:

Employee theft can culminate in a number of ways, but there are many preventative measures shops can take—such as setting up security equipment and staying connected with employees. It’s also important to have a standard operating procedure in place if any inventory disputes do arise to go through the proper channels to resolve the issue. While no one wants to think about an employee stealing from them, the reality is that it does happen, so it’s better to be proactive instead of reactive to protect your assets.