Employee theft is a chief concern among cellular retailers given the relatively high turnover of employees, their proximity to small yet expensive electronic items and the myriad of steps between distribution, sales and ultimately, the customer.
Even more worrisome are the findings in a recent article published by the National Federation of Independent Business (NFIB): up to 30 percent of the average company’s employees steal and another 60 percent will steal if given a motive and opportunity. “Some estimates indicate that more than $600 billion is stolen annually, or, roughly $4,500 per employee,” reports Marcia Passos Duffy.
“According to the U.S. Department of Commerce, about a third of all business failures each year trace back to employee theft and other employee crime.”
With so much internal shrinkage going on, retailers need to pay close attention to where products and payments come and go. Duffy and the NFIB provide the following tips for preventing employee theft:
· Become familiar with the common ways employees steal.
1. Larceny is the actual stealing of property or cash, writes Duffy. It is often the easiest form of theft to detect because the missing cash or item shows up in the books and adequate controls exist. However, pocketing loose change or stealing goods before they reach the shelves are common forms of larceny.
2. Skimming is the embezzlement of cash before it is even recorded in the company’s books, such as when an employee takes a customer’s payment directly. Receivables’ skimming occurs when the amount owed is reduced on the books by write-off schemes.” Overbilling can also occur, with managers who have expense accounts and may inflate expenses or submit receipts twice for double reimbursement.
3. Fraudulent disbursements can take several forms including billing schemes, payroll schemes, register disbursement schemes, expense reimbursement schemes and check tampering. “In retail, for example, salespersons can charge a customer an inflated sum, ring up a receipt for less, and pocket the difference,” writes Duffy.
· Prevent crime before it happens.
1. Perform background checks on applicants. Contact previous employers, references and schools. Look for signs of any misconduct and consider getting a police report on the applicant.
2. Supervise your employees. Research has proven that low levels of employee supervision are correlated to high rates of employee theft. While you don’t have to be a warden, keep an eye out for telltale signs of theft, like a jump in an employee’s spending habits. But be careful not to jump the gun without evidence.
3. Make it hard to steal. Don’t allow only one person to deal with money. Monitor inventory and bookkeeping in real time, using the right retail management software.
RetailiQ makes it difficult for employees to steal. Our sophisticated, real-time inventory module creates an audit trail that determines an item’s exact location at anytime. Using this technology, supervisors can keep tabs on where products are going and why.
4. Create a fraud avoidance plan and set the rules. Proper planning will inform employees of the consequences of theft and give owners confidence in enforcing established rules.
· Take the right steps if a suspected theft happens.
1. Conduct an investigation to determine if an actual theft occurred.
2. Determine the extent of the theft and the methods used.
3. Inform the authorities.
4. Immediately remove the culprit from, or eliminate his or her access to, the workplace.
5. Try to recover the money or property.
6. Take preventative measures to avoid theft and losses from occurring again.
-allanp@iqmetrix.com
*To read more about Reducing Shrinkage and Inventory Management, check out the following articles from iQmetrix News & Views:
Reducing Shrinkage: Techniques from U.K.'s Carphone Warehouse
Protect Your Bottom Line: Minimize Employee Theft
Reducing Price Markdowns
Minimizing Losses for a Better ROI: It's all about product information
Taking the Guessing Out of Inventory Management