The Fraud Triangle

Motive

There are many reasons why an employee might begin embezzling. These are the most common:

• Addiction. A drug or gambling habit is expensive. If your employee is in the grip of compulsive behavior, loyalty will always come last.
• Extraordinary need. The incentive to pilfer may derive from exorbitant medical bills, a home in danger of foreclosure, or a sick child or aging parents who require care. Whatever the motive, the end result is still theft.
• Expensive tastes. Sociopaths who have developed a taste for the finer things in life will put lifestyle maintenance ahead of moral considerations.
• Anger or jealousy. If an employee want’s to hurt you or your business for whatever reason, there’s no better way than damaging your income.

Don’t trust your instincts when it comes to ferreting out employees with a motive to steal. Research has shown that most people have trouble detecting a lie, and embezzlers are highly motivated to cover their tracks.

Rationalization

Good people don’t steal, right? In order to clear that moral hurdle and justify theft, employees have to convince themselves that they’re doing the right thing. As is true for any business, employees in a clinic are more likely to embezzle if they feel underpaid, mistreated, or if their boss sets a bad example. Business owners who don’t pay overtime to their overworked employees, who overcharge their customers, engage in shady business practices, or perform back flips to avoid paying taxes are setting themselves up for a karma boomerang in the form of employee theft.

Nevertheless, employers may set a fine example and treat their staff perfectly well, yet still become victims of fraud. If the motive is strong and a tempting opportunity presents itself, even a minor scolding can become the foundation for whopping rationalizations.

This can be especially true in cosmetic clinics where there is high-volume, high-dollar transactions. It’s very easy for a laser tech, esthetician or even a physician employee who knows that they’re performing $40-$50k in laser or Botox treatments a month to feel that they’re underpaid and rationalize that they ‘deserve’ more.

Opportunity

Employees may have a compelling personal reason to steal and a convenient internal monologue telling them it’s for the greater good, but unless they feel they can get away with it, chances are they’ll keep their hands out of the till. If you have lax internal controls, you’re practically begging to get ripped off.

Of the three factors on the Fraud Triangle, opportunity is the easiest to control. This report will show you tried and true methods for stopping theft before it begins, how to detect it before it ruins your business, and what to do about it if it’s happening to you.