Jeff Head, owner of Head's Construction, in Evansville, Ind., happened to be in a local pawnshop when he spotted an object familiar to him from long use: one of his ladders. He informed the shop owner, who then insisted that Head prove it was his ladder.

Theft of tools and materials by employees and subcontractors happens. And though a missing tube of caulk or even a power saw won't show up on your bottom line, the long-term effect is poison both to profitability and company culture.

ON THE SIDE Charles Gindele, owner of Dial One Window Replacement Specialists, in Santa Ana, Calif., found that out when an employee reluctantly stepped forward to inform him that other staff were using the company's door shop to produce products for their side jobs.

Gindele gathered his attorney and production manager and “confronted some people.” He now keeps close tabs on the company's inventory and supplies through a warehouse manager.

KEY CONTROLS Experts say that these three steps can help prevent such thefts:

  • Pre-screen prior to hiring. That involves a credit reference check and a criminal record search. Call all listed references.
  • Have a written policy that spells out zero tolerance for stealing and that those who steal will be fired and/or prosecuted.
  • Make someone accountable for inventory, and place materials and equipment where you can control access. Fick Bros. Roofing Co., in Baltimore, warehouses some 500 items that installers might need on their jobs. Every piece of equipment has a company number and must be signed for. Ten years ago, the company began requiring that installers furnish their own hand and power tools. “They last longer when they're theirs, and they don't come up missing,” says director of operations Patrick Fick.

LESSONS LEARNED Texas private investigator Pat Murphy, co-author of Retail Crime, Security and Loss Prevention, points out that a company ID, placed “where it can't be seen, but where the owner or manager knows,” would have helped Head reclaim his ladder. But the important thing, Murphy adds, is to prevent the same loss from happening again. “You got the ladder back; the problem is that they've stolen 15 ladders before that.”

Head recently consolidated all tools, materials, and equipment into a new warehouse, where they're “under lock and key.” He also retains 10% on subcontracted jobs, paid when excess materials have been returned and customer satisfaction indicated.