Wednesday, 8 August 2012

Employee theft, the real cost center...

For those in the industry the facts on employee theft aren't all that alarming, for those not in the industry you will be shocked...

On average, employee theft and fraud account for almost 50% of losses in business today.  No matter what the industry and no matter where the location these numbers are enough to bankrupt a business very quickly.

Employee theft and fraud doesn't always take the form of what we all see on the news where the company exec is walked out in handcuffs after making off with millions.  More often then not the theft and fraud is small at first, can be spread out over a long period of time or be a one time event, and can be conducted by anyone given the opportunity.

The reasons why employees commit theft and fraud are numerous and can lead down to some very basic causes such as drug or alcohol dependency issues, resentment over any number of workplace situations, financial problems at home or school or with friends or family, or simply plain old greed.  There are a few things that employers can do to protect themselves.

1 - In any business where financial transactions are handled implement even the most basic CCTV surveillance system and as a rule of thumb cover any area where cash is handled / counted including the front desk or back office.

2 - Implement a policy where clear garbage bags are used to avoid the temptation of removing merchandise in the garbage for pickup later and if possible ensure that the garbage is inspected prior to removal from building.

3 - If law permits, implement a bag check policy and inform your staff in advance of this policy.  The policy should be fair yet thorough to ensure you don't violate anyone's privacy yet you still take reasonable steps to protect your product.

4 - If possible, have employees work from their own cash drawers as opposed to taking over the cash drawer of another employee.  If not possible, at the minimum if possible have the cash drawer verified at the end of shift and before another employee starts working from the drawer.

5 - Develop an open and sharing workplace mentality where employees are comfortable sharing information with management.  If possible implement a simple reward program where Loss Prevention tips are rewarded.  If doing this put the emphasis on employee theft and fraud affecting everyone and everyone working together to stop the problem, not employees tattling on each other.

6 - Trust your instincts.  If you think something may be wrong look into it.  This may be a change in employee or management behavior, rumors, or activities out of the ordinary.

7 - Pay attention to non employees coming to visit.  Keep an eye on how often your employees friends and family stop by to visit either for breaks or at the end of the work day as this could be an opportunity for collusion.

8 - Pay attention to customer activities.  Are certain customers only looking to deal with one employee, and do they make odd excuses why or simply refuse to deal with anyone else?  This could also be an indicator of collusion.

9 - Keep an accurate product inventory and immediately investigate losses that can't be readily accounted for.

10 - Don't be scared to act.  A lot of business owners or managers will shy away from their suspicions or won't act on information as they don't want to rock the boat.  If handled correctly in a non accusatory manner there is nothing wrong with taking steps to protect your investment.  Most importantly don't be scared to call in professional help.  You wouldn't try and mend your own broken leg would you?  Much like the Dr in the emergency room a true Loss Prevention professional is trained and experienced to handle situations like this.

Having been in operation for over 25 years ILPS has the experience to work with any type of business and help them find a solution to their employee theft or fraud problem whether it be integrity / mystery shoppers, undercover employees, covert cameras and surveillance, or forensic auditing of accounts.

For more information please contact ILPS.