What is in this article?:
Diversion of a restaurant’s assets for a family member’s personal use, even if done innocently, must be dealt with before it escalates and causes serious damage to the business.
What do you do when you realize a family member is embezzling from the business? Action is obviously required, and taking a cautious, thoughtful, respectful approach is wise. To begin, have a pre-meeting of key leaders, without the suspect family member present, to address the following questions:
1 Do we have clear, hard, verifiable facts before we assume fault and intent?
2. Who will be at the meeting to lay the facts out?
3. Are we going to involve the legal system?
4. If we continue employment with this family member, do we need to change their job position?
5. How or will we message this to the rest of the family? To other employees? To the board of directors, if your restaurant has one?
6. How or did the company contribute to this problem?
7. If the company did, what steps will we take to prevent it in the future?
8. How or did the family contribute to this problem?
9. If the family did, what steps will we take, as a family, to prevent it in the future?
10. Has this family member had chronic, known problems with finances?
11. Generally, how can we protect the company from future misuse of company assets or embezzlement?
12. How do we protect the whistleblower?
13. Do we have a whistleblower program set up internally? Are employees trained annually?
14. 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?
15. Do we have a solid noncompete clause in our employment contracts and/or employee handbook in case we have to release the family member from employment?
16. Do we consistently run a professional background check on applicants?
17. If we need to walk the family member out the door, how do we prepare? Computer security, locks, passwords, current company asset retrieval, bank account access protection, social media tracking, last paycheck, etc.
18. Do we need to involve the corporate attorney, board of directors, outside legal attorney, CPA, business psychologist? If so, when and how?
Once you’re clear on these aspects, it’s time for the second meeting—this one with the suspect family member. When you begin the meeting, keep it at the level of discovery. Lay out the facts and ask the family member their perception of what happened. Really listen to what they say and how they say it. Remember, it’s common for family members not to realize that they are 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 or she was doing and did it anyway, or if the embezzlement is substantial, termination may be the only option.
During the meeting, you need to be vigilant in checking 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 them 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 nonfamily), 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, where she helps organizations become high-performance workplaces. Lang works with clients on management succession readiness, organizational/team strengthening, executive coaching, executive compensation design, wage studies and mediated conflict resolution. For more information, visit www.evolvepartnergroup.com or contact Lang at firstname.lastname@example.org or 209-952-1143.