Four months after we hired 'Sam' as a parts clerk at Reggie's Rentals, shortages began to soar and sales began to plummet. I suspected employee theft and told all the employees there would be an investigation. Sam quit without notice the next day. Immediately, the shortages ceased and sales returned to normal."

Familiar story? Employee theft is one of many personnel problems that are easier to prevent than to solve. To prevent employee problems, you need a thorough screening process that will identify problem employees before they go on your payroll.

Before you interview, here are a few things to consider:

Crisis hiring = a crisis There is a natural temptation to short-circuit the standard screening process and hire a replacement immediately. Applicants you would normally judge unacceptable suddenly seem desirable when the need to hire a body - any body - becomes acute. To avoid crisis hiring, encourage applicants to submit employment applications even when you have no job openings.

A comprehensive employment application is the cornerstone of every successful pre-employment screening program. It will identify undesirable applicants early in the selection process. Applications of the one-page stationery store variety are too brief. They fail to elicit vital information that can be legally requested.

Do not grant applicants an interview until they fill out your company's employment application legibly and completely. Omitting answers is one way applicants conceal negative information. Completing the employment application is your potential employee's first job task.

Keep completed employee applications on file. These days, employees are more likely to quit without notice. Having qualified candidates waiting in the wings is the best way to avoid crisis hiring. Ask your best employees to refer friends who are looking for work. Offer them small rewards for their referrals.

Spot the red flags The applicant's resume is his or her personal advertisement. It highlights assets and hides the shortcomings. Most applicants don't overtly lie on their resumes they just omit negative information.

Unsuccessful short-term jobs, reasons for leaving and employment dates are most frequently omitted from resumes. Interviewing applicants from their resumes can lead you to overvalue assets and ignore liabilities.

History repeats itself The nitty-gritty of the employment application is the work history section. Recent jobs are the best predictors of future job performance and permanency. Your application should provide enough spaces to allow applicants to list every job they have held for at least the past five years. A personal saga of success or failure often is displayed clearly in an unabridged employment record.

Your application form should direct job seekers to list every job held, including part-time, second jobs and volunteer jobs. Beginning and ending dates of each job, including months and years, are also necessary. Precise dates of employment expose gaps between jobs. What did the applicant do during periods of unemployment? Attend school? Work a short-term job? Make license plates for the state?

Can I see some ID please? Checking the applicant's identification upfront establishes his or her identity and can save you headaches later. If the applicant does not have a driver's license, ask for a valid identification. But consider this: If an applicant has no driver's license, how does he or she plan to get to work? Those who depend on others to take them to work frequently have problems getting to work on time.

If a driver's license is suspended, ask why. Also consider the following questions: Is the name on the license or ID the same as the name on the application? Is the address the same? Does the picture resemble the person who sits in front of you, or does it look like someone else? Does the applicant claim to have graduated from high school in 1996 when the driver's license has a birth date in 1981?

Who's the boss? Requesting previous supervisors' names and phone numbers makes reference checking easier. Former supervisors often can be coaxed into providing candid information about a former subordinate even in companies that prohibit releasing reference information. Former supervisors also know the applicant better than their personnel departments do.

Coming clean This is a must for applicants seeking money-handling positions. Ask the applicant, "If I could take a look at your criminal record, what would it show?" The applicant who never has been convicted of a crime will tell you without hesitation. Applicants who hesitate usually have something to hide.

An applicant who admits a recent conviction will be willing to discuss the circumstances in detail and should be asked to do so. If the applicant claims to have a clean record, ask for a copy of his or her record from the local police. Offer reimbursement for the fee. The Freedom of Information Act gives us all the right to obtain a copy of our criminal records for a small fee. Applicants who have criminal records seldom return when sent to obtain copies of them.

Still the best policy The case for written honesty tests is strong. Research shows that honesty tests can drastically reduce employee theft because they uncover applicants' shortcomings in several important areas. Information about work history, substance abuse, work attitudes and customer service attitudes also are provided by many of these tests.

These tests tactfully ask the tough but necessary questions difficult to ask in interviews. These tests also help ensure that no critical information areas are overlooked.

The more you know about employee theft, the less likely your company will be victimized by it. To assess your awareness and vulnerability, decide if each statement below is true or false. Then turn the page to check your answers.

1. Employee theft costs American business about $900 million per year.

2. Once a thief, always a thief.

3. Employee theft costs retail stores more than shoplifting does.

4. About one-third of all small-business failures are caused by employee theft.

5. Most workers who steal stop stealing on their own because they feel guilty.

6. Most workers who steal do so because of need.

7. Employees can be taught not to steal from their employers.

8. Most job applicants answer the questions on employment applications truthfully.

9. Physical measures such as alarms, locks and cameras are the best way to deter employee theft.

10. Criminal record checks are a foolproof method for deterring employee theft.

11. Illegal drug users are more likely to steal from their employers than nonusers are.

12. Employees who steal from their jobs frequently view themselves as victims of unfair treatment.

13. New employees are more likely to steal than long-term employees.

14. An employee caught stealing from work usually won't steal again if given a second chance.

15. The most important theft deterrent is a secure safe.

16. Employees steal more from banks than armed robbers do.

17. A job applicant's likelihood of stealing from your company can be discovered before he or she is hired.

Answers 1. False. Informed estimates place the annual cost of employee theft at $40 billion to $200 billion.

2. False. Children who steal usually stop before they reach adulthood. Adults steal less as they age.

3. True. Employees out-steal shoplifters in almost every instance.

4. True. Employee theft is the second-leading cause of small-business failure.

5. True. Employees who steal continue to steal until they are caught or fear they will be caught. Then they quit without notice.

6. False. Greed is the biggest cause of employee theft.

7. True. Companies that orient new employees about the consequences of stealing report less theft.

8. False. The most common suspicious responses are omitting jobs and falsifying reasons for leaving jobs.

9. False. Pre-employment screening is the most effective (and least expensive) theft deterrent.

10. False. Most employees who steal are never caught. Of those who are caught, few are prosecuted. Of the few prosecuted, many are not convicted.

11. True. Willingness to take risks and disregard for the law characterize drug users and thieves.

12. True. Perceiving oneself as being overworked, underpaid or underappreciated helps rationalize stealing.

13. True. New employees steal more often because they have less to lose if caught. Fewer experienced employees steal, but those who steal take more per capita than their newer counterparts.

14. False. A dishonest employee thinks the employer who gives a second chance is a chump and will prove it by stealing again.

15. False. It's the cash register. The oldest security device is still the best.

16. True. Bank employees - 84 percent. Bank robbers -16 percent.

17. True. Written honesty tests accurately predict an applicant's propensity to steal.