- Did the family contribute to this problem and how? If the family did, what steps will we take to prevent it in the future?
- Has this family member had chronic, known problems with finances?
- Generally, how can we protect the company from future misuse of company assets or embezzlement?
- How do we protect the whistleblower?
- Do we talk openly in family council about our responsibility to financially protect and care for company assets? Do we give specific examples of what is and is not allowed?
- Do we have a solid non-compete clause in our employment contracts and/or employee handbook in case we have to release the family member from employment?
- Do we consistently run a professional background check on applicants?
- If we need to walk the family member out the door, how do we prepare? What will we do about computer security, locks, passwords, current company asset retrieval, bank-account access protection, social media tracking, last paycheck, etc.
- Do we need to involve our attorney, board of directors, accountant or a business psychologist? If so, when and how?
Once you’re clear on these aspects, it’s time for the second meeting—the one with the suspected family member. When you begin the meeting, keep it at the level of discovery. Lay out the facts and ask the family member his perception of what happened. Really listen to what he says and how he says it. Remember, it’s common for family members not to realize they’re indeed embezzling. If this is a first offense, and if the embezzlement is not excessive, some education may be the best course of action. However, if you believe the family member knew what he was doing and did it anyway, or if the embezzlement is substantial, termination may be the only option.
During the meeting, you need to check yourself by asking, “What would I do if this wasn’t a family member?” and “Is this at a level where I will be able to trust him again?” Your answers to these two questions will reveal a lot about your best action plan.
Keep Your Family and Business Strong
Of course, education of all employees (family and non-family), strict policies about how the company’s assets and resources can be used, and enforced controls that can spot any wrongdoing are the best ways to reduce your family business’ chances of falling victim to embezzlement. Acknowledging what could happen, along with some planning to prevent it, will keep your family and business strong, successful and honest.
Lois Lang is a speaker and consultant with Evolve Partner Group LLC, where she helps organizations become high-performance workplaces. She works with clients on management-succession readiness, organizational/team strengthening, executive coaching, executive compensation design, wage studies and mediated conflict resolution. For more information, call 209.952.1143; e-mail email@example.com ; visit www.evolvepartnergroup.com .