June 17 2016 04:35 PM

There’s no shortage of news stories about landscape companies being hit by thieves. Large, expensive commercial mowers and even whole trailers full of equipment disappear on a regular basis. A few small outfits have lost their entire inventory of working equipment in one felony swoop.

Thefts range from one-person crimes to sophisticated hits carried out by criminal rings. Too often, they’re inside jobs, perpetrated or abetted by current or former employees who know where you keep your stuff and how secure it is—or isn’t.

But a lot of employee theft isn’t quite this dramatic, and because it isn’t, it often goes undetected. However, like a slow leak in a life raft, it can eventually sink the business you’ve worked so hard to build.

Embezzlement

Around 2004, SunCo, an Omaha, Nebraska landscape and irrigation company, started experiencing a lot of growth. President Chris Andersen felt the need for a skilled office manager who could give him the sort of fiscal reporting he needed. He hired a woman who’d worked for several other green industry companies.

“Right away, she implemented some new accounting and scheduling software for us, and started handling all the back-office responsibilities. This allowed me to take a deep breath, and take my foot off the pedal as far as the office stuff went. I was able to concentrate on my vision and strategy for the company.”

He admits that having the free time for big-picture stuff, or thinking that he did, was “intoxicating.”

But the hangover to come was anything but.

Looking through some canceled checks one day, Anderson spotted one made out to Wells Fargo Bank. “I yelled out, ‘What do we have at Wells Fargo?’ and she kind of dismissed it.”

“She could have told me it was a third-party check, or a financing thing for a piece of equipment, and I probably would’ve blown it off. But for some reason, her answer just didn’t feel right.” So, he jotted “Wells Fargo” down on the whiteboard in his office as a reminder to himself to follow up. Logging into QuickBooks that weekend, he saw that this check had been deleted.

The more he dug, the more he kept finding checks made out to vendors he’d never heard of, as well as to credit card companies, gas stations, and the employee herself.

She’d logged them into the ledger as payments to one of SunCo’s bigger vendors. Altogether, his trusted whiz of an office manager had embezzled some $30,000 over the course of four months.

As he tracked the dates of the fraudulent checks, he saw that she’d grown bolder as time went on. The previous Christmas Eve, she’d given herself an unauthorized $2,000 bonus.

Though she was arrested and eventually paid all the money back, the experience was traumatic for Andersen. For a while, he was obsessed and angry. “If I hadn’t written ‘Wells Fargo’ on that board and discovered this, she could have taken us down, bankrupted us.”

But it did teach him some valuable lessons: number one, never give an employee a signature stamp. Realizing that he’d become “too loose” with his financials, he set about changing things.

“Now, we have a true controller who handles all the financial forecasting and accounts payable and receivable. A separate person balances the checkbook, and still another picks up the mail from the P.O. box.” He adds, “You’ve got to be able to delegate, but there have to be checks and balances in place.”

In addition, a consultant goes over his list of vendors every two or three years and makes sure he’s getting the best deals possible from them. This also functions as an audit, as the consultant will ask, “Is this a real company you’re doing business with here?”

Time, tools and gas

Bill Arman at Harvest Landscape Consulting says most employee pilferage isn’t in the form of equipment or cash, but stolen time, often by means of fudged timecards, and even sleeping on the job.

“Employees will make a task last much longer than it’s really supposed to,” he said. “Or, people will be paid overtime for tasks that didn’t require it.”

Fuel theft is another very common way a dishonest worker can boost the octane of his paycheck. Tim Saunders, owner and CEO of Coastal Pacific Landscape Management, Inc., in San Diego, California, said he might never have known that two of his employees, a crew foreman and another man, were regularly stealing gasoline and small hand tools, if not for the conscience of one of the crew members.

He observed the thefts and reported them. While the other members of the crew didn’t participate in the thefts, they kept mum. After reassuring the whistleblower that his report would be kept confidential, and moving him to another arrested on the spot.”

He cited another example of a fraud that took place right under a contractor’s nose. “Landscape companies pile up lots of these plastic cans that plants come in. The ‘Can Man’ comes and collects them, and he’s supposed to give you a rebate check.”

“Well, one day, the Can Man comes in with a brand-new, fancy truck, and hands the keys to the branch manager. The company never saw those rebates, but the branch manager did, in the form of that vehicle.”

Disgruntlement can lead to stealing. Kemmerer said that he thinks when companies experience employee theft, poor morale is often at the root. He noted that instances of it declined significantly at Park West over the last fifteen years, as his company’s leadership and culture improved.

Saunders agrees. The two men that stole at his company were miffed about a raise they never got. It seems a manager had promised it to them, and it had been approved, but he forgot to file the paperwork. He then left the company, so the increase never went through.

“They felt like they were justified in stealing from us, because in a way, we owed them.” Why didn’t they come to the boss? “It’s a cultural thing,” he replied. “A field worker will talk to his foreman, but he won’t go over his head to anyone in management.”

New technology can make things tougher for thieves. Coastal Pacific will soon be going to a fuel pay system that uses cards with embedded chips, which will marry where the card’s being used to where the truck is.

All of Park West’s vehicles have GPS trackers. “I can go into our system, click on a link, and look at any of our 300 vehicles,” said Kemmerer. “It’ll tell me where it is now, give me a report on where it’s been all day, and even show me all the starts, stops, hard turns or hard braking. It also alerts us to service needs and breakdowns, and has helped us recover vehicles that have been stolen.”

GPS technology can also prevent time theft. There are systems available now where an employee checks in, via smartphone, at each jobsite as he arrives. His photo is transmitted, along with the precise time, and the GPS confirms exactly where he is at that moment. This virtually eliminates “buddy punching.”

Richard I. Lehr, Esq., is general counsel for the National Association of Landscape Professionals (NALP, formerly PLANET). He advises doing a criminal history/financial background check (within the bounds of federal and state laws) on every new hire.

He also recommends asking your insurance company about procedures to prevent embezzlement and/or detect it early on. Finally, he suggests requiring surety bonds for any employees with access to finances.

“If an employer believes an employee may have stolen, the employer doesn’t need beyond-a-reasonable-doubt evidence to terminate that person or to notify law enforcement authorities.”

You can find help in theft-proofing your operation (and other things) through NALP’s “Trailblazer” program, which is free to members. Questions are answered by veteran contractors over the phone or in person, at your place of business.

Company owners need to address employee theft. But Arman cautions against becoming paranoid.

“Don’t assume everyone who works for you is trying to steal you blind. It’s a very small minority that screws it up for the majority.”

He says the last thing you want to do is turn into “Mr. Police Guy,” and create a negative atmosphere, as that makes the problem worse. People start thinking, “You already think I’m stealing from you, so why not?” Don’t become that guy, but do take steps to protect yourself from dishonest employees as much as possible.