Storeowners don’t want to think their employees will steal from their store. But every day merchants discover that their trusted staff members have done exactly that. According to a retail theft survey conducted by Jack L. Hayes International, a loss prevention consulting firm, one out of every 40 employees was apprehended for theft by their employer in 2012. The survey also found that on average, employees steal 5.5 times more than shoplifters on a per-case average ($715.24 vs $129.12).
Thankfully, there are ways to surround yourself with staff you can trust. Here are six tips from our experts:
1. Weed out bad apples. Run a background screening and a drug test on all potential hires. Employees with drug addictions are at higher risk for stealing to support their habit. “I believe that past behavior is a good predictor of future behavior,” says King Rogers, chief executive officer of the King Rogers Group, a loss prevention and security management consulting company. “If someone has been convicted of theft in the past, then you don’t want them handling your money.”
2. Use the buddy system. Often theft happens when one employee is alone in the store or at the register. Doyle recommends having two employees work for both opening and closing to limit opportunity. Always have refunds and voids witnessed by a second employee or a manager as well, says Mark Doyle, president of Jack L. Hayes International. Rotate the employees paired together and avoid having close friends witness transactions for each other.
3. Keep a virtual eye on employees. People will be less likely to steal if they know that you are always watching. A video surveillance system helps deter employees as well as catch theft after it happens. Be sure to include cameras in storage rooms and loading areas as well as in the store. Use high-definition video so you can clearly identify employees and transactions along with allowing integration with facial recognition software.
Another way to keep an eye on your employees is to use an exception-based reporting system at your point of sale, says Doyle. He says that the systems will flag possible fraudulent transactions, such as excessive refunds or voids, and excessive refunds or voids outside of store hours. Review video daily and POS several times a week to determine if there are any issues that you need to look into further. Limit the access to your surveillance systems to as few people as possible to avoid tampering.
4. Monitor trash removal. Employees often steal merchandise by concealing it in the outgoing trash and then retrieving it later from the outside trashcan or dumpster. “It’s trash. No one wants to deal with trash, so dishonest employees will often take advantage of this opportunity,” says Doyle. He recommends putting controls in place to reduce the opportunities, such as using clear garbage bags, requiring all boxes to be flattened and locking all dumpsters.
5. Have an employee tip line. Set up a confidential way for employees to communicate their co-workers’ suspicious behavior and offer a reward for staff members who provide information to prevent thefts. You could set up an email address for tips as well as a locked-box for tips in the break room. “If people know that their fellow co-workers are watching out for theft, they will think twice before stealing because there are higher odds they will be caught,” says Terrence Shulman, founder of the The Shulman Center for Compulsive Theft, Spending & Hoarding and author of Biting the Hand that Feeds: The Employee Theft Epidemic (Infinity Publishing, 2005).
6. Get to know your employees. It’s much easier to steal from someone you don’t know very well, but it is much harder to steal from someone with whom you have a relationship. Shulman recommends connecting with your employees and being aware if they are going through financial difficulties or experiencing high levels of stress, which can increase the impulse to steal. “You might be able to give them extra work, point them in the direction of a local food bank or help them connect with charitable services in the community,” says Shulman. “A happy employee is a more honest employee. It really does help reduce employee theft when your staff feels that you care.”
Jennifer Goforth Gregory has over 18 years professional writing experience and specializes in writing about small businesses. Her work has been published MSN Money, FOX Business and the Intuit Small Business Blog and American Express OPEN Forum.