Preventing Employee Theft in Retail and Restaurant Businesses in 2020
Whether you call it employee theft, internal theft, or associate dishonesty, theft by staff is a very real concern for businesses of all sizes. When you’re already trying to reduce overhead and keep your customers satisfied, the loss from employee theft could be the crushing blow for any business. It’s one of the key problems that Solink solves every day, so our team has compiled this guide to get you started on preventing and reducing employee theft in your own business.
What is Employee Theft?
Employee theft is defined as the misappropriation or misuse of company resources by a member of the staff team. Sometimes business owners and managers don’t report or act on employee theft issues because the definition seems less broad: many think employee theft is strictly stealing from the cash register. In reality, there are many ways that a member of your team could be costing the business money unnecessarily.
If you’re in any doubt as to whether or not a situation constitutes employee theft, take a look at this article talking about the top types of employee theft in 2019. You may find that, not only is the action in question a definite case of employee theft, but that you’re not the only business to fall victim to this kind of loss.
Employee theft can take on many forms.
Employee theft costs American businesses $50 billion annually and these internal thefts are frequently perpetrated by the most trusted employees in a company3. If you’ve been defrauded before, you know the sting of finding out that someone you relied upon has been putting your business in peril. The question is, are you sure you’re being vigilant for all types of theft in your business?
Cash theft, likely the easiest to picture, can occur at the POS system, during cash count, en route to make a deposit, or right from the safe. The challenge: narrowing down which employee is involved when daily business requires so many hands to be on the money.
Inventory and product theft is typically the next type that may come to mind. Whether your employee is stealing one item for personal use or a box of items for under-the-table resale, this issue can be difficult to track unless your inventory system is en pointe.
Company property and supply theft is one of the most overlooked types of employee theft in a business. The occasional missing apron, sheet pan, or display prop may not seem like a big deal at the time, but by the end of the year these losses can severely damage your bottom line.
Discount sharing is an increasingly problematic form of theft. It’s difficult to track employee discounts, and determining if staff are allowed to share that discount with, say, their spouses can open up a world of confusion and complexity where it is easy for a dishonest associate to sneak discounts to friends and even strangers.
Time theft, however, is one of the most common and hardest to track forms of associate dishonesty. Coming in late, leaving early, or taking extra breaks often results in a failure to maintain cleanliness and service standards, and can cost you extra staffing dollars in an effort to make up for the staff who are slacking off.
Take a look at our list of this year’s top employee theft types, curated by our frontline customer sales team. They’ve seen it all and deal with it every day while helping Solink customers find ways to prevent further business theft.
Telltale signs that could indicate employee theft
You’re busy every day. Maybe you’re travelling to various locations, or meeting with suppliers. You want to trust that your managers are catching everything, but they’re taking care of a ton of tasks and people, too. Studies show that the worst rates of shrinkage (inventory loss/theft) happen in larger retailers1, but that doesn’t mean the smaller businessman shouldn’t be concerned-their bottom line is often tighter, meaning that a smaller amount of employee theft is still going to hurt. In fact, recent statistics show that 42.7% of inventory shrinkage is the result of employee theft4.
Some signs that you may have employee theft happening on site:
A certain employee avoids spending time with you one-on-one. Avoiding the boss is a pretty concerning behavior-unless that’s typical for your business or team, of course. An easier clue to catch is if an employee has changed from being social with you to cold, avoiding eye contact, or falling silent when managers enter the room.
Your business is easy prey. Is your CCTV camera system woefully out of date or non-existent? Are there dark corners where expensive merchandise is out of view? Are you lacking basic protocols around things like late-night deposits? Is your point of sale (POS) system twenty years old? Creating tantalizing opportunities like these will not do you, nor your employees, any favours-and they can make it very hard to catch the right culprit.
The signs are already there. You’ve noticed a lot of voids, discounts, and register imbalances for a while now. Or maybe there are consistent issues with inventory count, or a massive increase in how often you need to reorder supplies. It’s easy not to notice these signs one by one, and sometimes we don’t realize there’s a real pattern building until it’s too late. In fact, the stats show that most fraud situations carry on for an average of two years before the business discovers what’s happening4!
Your employees are giving you hints. Everyone is avoiding working with this one guy. Why? Many employees find it difficult to report their peers for minor incidents, but they may still avoid working side-by-side with that person to avoid association. What holds back your employees from telling you the real reason they don’t want to work with someone? Ask yourself how approachable you are and try to be someone they feel safe coming to with issues. If you’d like to learn more about talking to staff about employee theft, check out this advice article by loss prevention expert Herbert Melendez
Still not sure if you’ve got all the warning signs of on-site employee theft occurring in your business? Take this quiz we’ve created, and see if the numbers add up.
Who steals from their workplace?
Dissatisfaction is a major factor to be aware of. The research shows that employees who feel undervalued or undercompensated are more likely to steal from their workplace1. Concerns about fair treatment, equality, and morale may also play a factor. So the solutions aren’t always about installing security cameras or locking up store rooms; sometimes the first step can be as simple as retraining managers to make employees feel more engaged and appreciated.
Of course, an employee in financial distress is at a higher risk of internal theft, because even a very ethical individual may come to a crossroads where need outweighs morals. Some employers have found ways around this type of problem by providing access to additional funds: for example, Starbucks’ CUP program allows employees to contribute to a pool of money each paycheck2, and any barista or their manager may request access to some of the communal funds in a personal crisis situation like illness or fire. And of course, quality benefits programs can alleviate financial stressors caused by prescription costs or medical bills.
Gender plays a slight role in the likelihood of theft, with statistics showing that 59% of employee thefts are committed by men. One might think that an employee with a higher level of education is less likely to steal, but the stats show that 44% of thieving employees had a post-secondary degree, and an additional 21% had at least some college4.
Preventing employee theft: simple steps to solve problems proactively
Talk to staff about Employee Theft
There’s a myth that talking about something will somehow be bad for optics. In reality, businesses that address hot topic issues head-on often are perceived as more forward-thinking, proactive, and visionary than their counterparts. Talking about employee theft with your team will break the ice and make it more comfortable for your staff to bring you concerns.
Remember that when you’re talking to staff about a topic this sensitive, it’s important to address it in a way that is engaging and inviting-not threatening or punitive. It would be a real loss if an employee didn’t inform you of suspicious activity because they were afraid they’d be punished for not telling you sooner-better to know later than never!
In-house Solink loss prevention expert Herbert Melendez shared his experience with talking to staff about employee theft and associate dishonesty in this recent article; read it for a deeper dive into this topic, and make use of the downloadable staff room posters included.
An up-to-date employee theft policy is the best policy
Herbert Melendez takes us through what it takes to write a good associate dishonesty policy in this article that includes a downloadable theft policy template. Having policies in place can help your entire team feel more secure about what to expect from the workplace experience. Some employers try to avoid formal policies, figuring they may seem heavy-handed or overly corporate, but it can be reassuring to an employee to know in advance exactly what process will occur if they, for example, report their coworker.
Policies should be short and clear, covering the basics but not so specific that you would be unable to modify your action plan if the situation required a unique approach. Having policies that are signed by each employee can save you a huge headache and legal fees in a situation where a former staff member sues for wrongful dismissal-it’s easier to prove that the employee was aware of regulations if you have proof that they read them.
Identify weaknesses and protect them with good tech
Identifying areas of your business that could be susceptible to internal theft is a key first step. You can spend a ton of money on security systems that don’t meet your needs if you don’t first take stock of your unique issues and problem areas. We’ve produced a shopping checklist you can use when investing in your internal theft prevention hardware and software, along with the first questions you’ll need to answer about your business to establish your initial tech needs.
Of course, you can have the world’s best surveillance cameras and the industry’s best POS system, but without both time and expertise, trying to find that one questionable transaction or a pattern of unusual activity can be a lot like finding a needle in a haystack. This is the very reason we built Solink; Solink is an cloud security system that connects your cameras with your point of sale, syncs the video surveillance data and footage, and looks for all that questionable activity for you. It’s like having an in-house expert who works at beyond-human speed and intelligence. We have a dream: to never again see a business owner or manager surfing through endless hours of video surveillance footage or piles of receipts, looking for that one piece of evidence.
If the idea of getting customized daily activity reports in your inbox, categorized and containing links to specific surveillance video clips is appealing to you, you may want to book a demo where our sales team can show you exactly how Solink’s cloud security system could benefit your particular business.
Summary: employee theft and your business
The stats don’t lie: employee theft and associate dishonesty costs businesses billions of dollars every year. It would be easy to become paranoid, to feel like you could never take a vacation or trust anyone to take the helm while you’re away; but that really negates the purpose of having a team–emphasis on ‘team’. We urge you not to let an occasional bad apple spoil your whole barrel. Swift action will stop the spread of dishonest behavior and keep your team feeling safe and trusted.
If Solink can help you with your employee theft prevention, let us know and we’ll be happy to show you how our platform can transform your day, from ‘working hard’ to ‘working smart’.