Wednesday, May 12, 2010

Stopping Employee Theft

According to the National Retail Federation, 44% of your shrinkage is caused by Employee Theft. Yep, your own staff is stealing you blind!

Quit being in denial and do something about it.

Here's what you should do...

Background Checks - It starts with the people you hire. Did you look up their court records? (They're available online for free.) Did you call references? Did you verify employment? One of the best applicants I ever interviewed had a string of "retail fraud" charges a mile long. If I hadn't checked, I would probably have been added to her list of conquests.

Training - How well trained are they? Are you sure? Have you gone back and tested after the initial training? Sometimes employee error, not theft, is the cause of your shrinkage. The more thoroughly you train them and also evaluate them, the less likely you'll have this problem.

The Golden Rule - How well do you treat them? It is no stretch of the imagination that employees who are treated well will be less likely to steal than disgruntled employees. It also makes sense that the type of behavior you model is the behavior your employees will follow. Are you stealing from your own store in front of them? If you're taking product off the shelf, they'll begin to believe that it's okay for them to do the same.

Supervision - When the cat is away, the mice will play. Who watches the store in your absence? Do you have a trusted supervisor that will keep an eye on the mice? Having that one trusted person who serves as your backup eyes and ears works well as a deterrent.

Checks & Balances - It is vitally important that you have a system of checks and balances for counting your cash drawers, verifying sales receipts, and double checking deposits. Sticky fingers get caught quickly when you have a system to double check your money.

Video - Sure, it's the last line of defense. Yes, it can cause feelings of distrust and suspicion. No, I don't recommend it for everyone. But the bottom line is the bottom line and if all the other methods haven't slowed down your shrinkage, this just might be the ticket.

The key is to hire honest, ethical people in the first place, treat them with respect, and model the behavior you want to see.

Do this and your shrinkage will go down and your staff morale will go up. Win-win!

-Phil

2 comments:

  1. We suffered a business-threatening employee theft of merchandise last year. Although we were unable to prosecute, we and the police believe that this person had an accomplice and that merchandise was carried to the back where the accomplice would then open the door, load up, and leave the key. The employee would then gather up the key and close the store "normally". It was a few pieces at a time, during a time of year (4th quarter) when things are happening so fast, we are so tired, that it is hard to really know what is going on. The thief did grow bolder over time.

    This person passed a background check. There are quite a few lessons learned that I would be happy to talk with you about before your ASTRA presentation. I can't go to ASTRA, and in fact have had to leave for a while as I cannot afford the membership. It's that bad. My NUMBER ONE lesson for other retailers - it CAN happen to you. And when/if it does, the insurance is going to pay you for the merchandise only - nowhere near the true cost of the loss. Do not for a second believe that a great track record means that everything is zipped up. Ebay and similar sites make life very easy for thieves.

    Cash is easy to account for. Cash losses (large ones) are mostly covered by insurance. Merchandise is not counted daily, particularly during the season when things happen very quickly. This terrible theft may well put a nearly 30-year-old business under. If we manage to survive, video WILL be installed before 4th quarter. This has been a tragedy on many levels, and I hope by posting this I may save another business.

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  2. Marilyn,
    Thanks for the posting. We all can learn from these events. I would love to know more of what you learned. Send me an email to phil@philsforum.com.

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