Internal Theft and the Small Retail Business Owner

I often hear from the small "Mom & Pop" retailers, “I don’t think any of my employees would ever steal from me.” If you think that statement is accurate your business is on a direct pathway to failure. The first time I heard that a retailer wanted me to look at their operation to identify possible areas that were ripe for shoplifters. What I ended up finding was a longtime trusted employee that had stolen over $55,000 in cash and merchandise over a four year period. After a couple of years of working for this small retailer the employee was given keys to the store and responsibility for making the bank deposits.

As it turned out this trusting employer failed to call past employers, failed to run a background check, failed to reconcile bank deposits and , in general, turned over the business operations to this "trusted" employee. This was a hard lesson for the retailer and they came close to losing their business over it. Consider this, 25 percent of your employees will not steal from you under any conditions - they are completely honest. Another 25 percent will look for or create opportunities to steal. The remaining 50% will only steal from you if the right conditions present themselves. Most people who fall into this percentage are young, first time, employees. Some tips to help you combat employee theft are:

Conduct reference and background checks. If the above retailer had done so they would found the employee who was stealing from them already had been terminated twice for stealing from someone else.

Keep track of who has keys to your business, and change the locks when key carriers leave your employment, - even under the best of circumstances.

Put policies in writing. Even if you only have a one or two employees, put some basic anti-theft policies in writing, making it clear that you will not tolerate theft. This will set the tone and strengthen civil and criminal hearings where the employee may use the lack of unwritten policies as their defense.

Examine your sales floor and stockroom areas frequently. If you find out-of-place merchandise such as a piece of jewelry hidden under an article of clothing, you could have an internal theft issue. An employee might be planning to come back at an opportune moment and steal the merchandise.

Designate a trusted employee to do your merchandise receiving. Make sure they are properly trained. A dishonest employee teamed up with a dishonest vendor can be devastating to your business. If more that one employee is working, designate someone to ring employee purchases. If you have more that one register, designate a single register to be used for all employee sales. Designate one employee to remove trash from the store. If your business uses an Electronic Article System (EAS), make sure the trash bags are passed through to help insure high value merchandise is not being discarded.

 Lack of cash controls is a major factor with retailers. Many store operators fail to exercise proper cash controls by using what I call the “community till” system: Associates operate on one register, and at the end of the day, the owner finds that she is short cash. Was it an honest mistake? Did an employee give a customer too much change back? Did someone take the money? You will never know unless employees are held responsible for their own registers. Employees should be given a fresh register drawer at the start of their shift, and make sure they count it. The register should be counted down just before they leave for the day. This method tells associates you take cash handling seriously.

 

Curtis Baillie - Security Consulting Strategies, LLC

 

 

 

 

 

 

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