Fortune Magazine reports that, worldwide, employees account for 28 percent of all inventory theft. In the US, the problem is even worse with employees credited with 43 percent of all revenue losses. With one in 30 employees likely to pilfer, there is no way to completely theft-proof your business, however, cash handling procedures, deposit safes, security cameras, and other measures can make a dramatic difference.
Safe from the Five Fingered Discount
While shoplifting accounts for about a third of revenue losses, most employee theft is subtler. While walking off with inventory certainly is a concern, the majority of employee thefts take place around the register. Transactions are cancelled, discounts added, or credit given for coupons that don’t exist. This makes it important to have a good cash register system in place. This will allow you to track transactions per employee so you can look for suspicious patterns and higher than normal number of discounts or cancelled transactions. Requiring supervisor approval for refunds can also help reduce employee theft.
Having large amounts of cash in the register makes theft easier to hide. Establishing routine practices of removing excess currency from the register can help minimise this risk. Drop deposit safes are a great option since they allow employees to deposit cash and checks into a secure safe without allowing them any access to the interior of the safe and its contents. Separate the cash from each register into labelled envelopes before depositing the envelope into the deposit safe. This makes it easy for supervisors to reconcile receipts with the actual cash deposits from each cashier.
Adding security tags on merchandise and a security camera system can help prevent merchandise from walking away. Just the awareness that there are security cameras has been shown to deter crime. “Greeters” at the door who look out for people trying to exit the building with merchandise can greatly reduce inventory theft, both from customers and employees.
Tracking inventory arrivals and sales is critical when trying to prevent and track employee theft. Often inventory is more likely to disappear from the loading dock and employee areas that out on the sales floor. Without comprehensive inventory, boxes of goods may disappear before ever officially arriving at your business. This leaves you in the unpleasant position of trying to determine if an order was shorted by your supplier or by your employees.
Make it more difficult for employee theft by inventorying materials as soon as they arrive at the loading dock. Keep employee lockers, vehicles, and other places to stash ill-gotten goods away from the warehouse area. Install key card or coded security locks to limit access to inventory and track those who do enter and exit the warehouse.
Employee Theft is a Cultural Problem
High rates of staff turnover and dissatisfaction correspond to higher levels of employee theft. Pre-employment background checks can help identify individuals with a higher propensity for crime. Higher employee wages and opportunities for advancement are also associated with lower employee theft and reduced staff turnover. Both of these problems are costly to businesses. Consider how much you might save by rewarding good employees with a raise or other benefits. Ultimately, increasing your business’s salary expenses could greatly reduce your company’s total operating costs. In addition, happier employees are more likely to provide good customer service. This can also have a direct impact on your company’s profits.
Preventing the Problem
Even if employee theft isn’t a problem for your business at this time, start taking steps now to prevent the issue from developing. If your company is already experiencing mysterious losses of cash, revenue, and/or inventory, make the changes straight away to correct the situation before it becomes an epidemic. The investment in security cameras, security safes, and other measures is a small price to pay for peace of mind and long-term business security.