The title itself led to one of the largest employee theft cases I have ever taken in a small box electronics retailer. One of the most frustrating things any executive can encounter is when money is spent on tools and training and the employees completely ignore them. One of those tools that many retailers have is the ability to track daily cash shortages. In fact many retailers have the capability to track the shortages to the exact register and employee. This is no easy task; it is a combination of technology and register handling policies that allow a business to track not only the overall daily cash shortages but to also track each employee’s cash shortages. The reason for this is two fold, one it will potentially catch internal theft and two it will pinpoint training opportunities for those having difficulties handling transactions. The company I worked for had a great way to track the cash shortages down to the employee which allowed loss prevention and district sales managers’ easy access to audit any potential employee theft trends.

A disturbing trend I began to notice in several stores was the “give a penny, take a penny” slush fund. I would conduct a loss prevention audit and when I came to the cash handling part of the audit I would review the cash shortages for the past quarter. A red flag would immediately go up when there were no cash shortages or overages at all. At that point I would go on the hunt for the “cup” or “dish” of change that ultimately was being used to cover losses or overages in the store. The management always viewed it as a minor issue saying “what does it matter if we were short a bit of change any way?? What’s a penny?” I would then have to sit down and counsel the staff on the pitfalls of covering even the smallest of losses.

I would start with “the case” example which began with a store bleeding massive amounts of product. Since this retailer’s losses were mostly a result (about 75%) of internal theft we knew it was more than likely an internal job. We began our employee theft investigation by auditing daily and weekly inventory counts as well as the over/short cash logs. We were attempting to narrow the focus of the employee theft investigation to ascertain how the product was leaving the store as well as who was responsible. We had to stop the bleeding as well as pinpoint the thief before they realized we were on to them. One thing this store manager made sure to do was to keep very detailed inventory counts and logs. There was no “slush” fund in this store. A review of the cash over/short log showed a very interesting trend. One employee was having consistent small shortages, a few pennies here, a little change there. This was nothing that an untrained eye would view as anything other than a training opportunity.

Another interesting fact was the inventory losses tended to happen when this employee was working. There were other employees in the store that also worked consistently when the inventory losses occurred. We knew this was a case of internal theft. I also had a very good idea of what was happening but decided to install a pinhole camera over the register to confirm my suspicions. Three days later the employee theft investigation was over. The employee in question was caught red handed doing what is typically called “drop sales”. He would sell an unsuspecting customer product for cash, accept the cash, use a “no sale” to open the cash register drawer issue change then close the cash drawer and never give the customer a receipt. After the customer left the store the employee did another no sale and took the cash the customer had given him for the product.

So I asked the store manager after he saw an example of this on video, “what are we short?” He immediately stated “the product”, I asked “what else?” , he was confused for a bit and then the light bulb went on over his head “We are short the change he gave the customer”. I asked the store manager how we would have been able to narrow the focus of the employee theft investigation to the product leaving via the register area if we had not had the cash over/short log. He had no answer. I assured him we would have been able to figure it out but the investigation would have gone on a heck of a lot longer and the losses would have been piling up while the investigation continued. The employee admitted to several thousand dollars in product theft via the drop sale method. This example of employee theft proved to be a very good training example for the entire company. “What’s a penny?” is a question store management learned NEVER to ask.

For more information on internal theft, employee theft investigation or employee contact us or call 1.770.426.0547 – Atlanta Georgia

Visit the Loss Prevention Store to purchase CCTV Systems that can help you stop Employee Theft and Internal Theft problems and help with your Employee Theft Investigation.

One of the biggest issues a business can encounter is rampant internal theft. Most small businesses do not factor in shrink losses into their business plan when laying out a strategy for hopeful success. These same excited business owners can’t wait to flip on the “open” sign but many do not and have not any idea the problems employee theft can and more likely will cause them.

Having a shoplifter enter your business and steal $50.00 in product on one occasion is a scary enough thought ; imagine when you do the math as to how much you have to actually sell to make up that $50.00 loss. Now hypothetically envision you hired that shoplifter, gave them keys to your business, your stockroom and your registers. Visualize that every shift that “employee” works they steal $50.00. Would you have any idea how to conduct an employee theft investigation? Would you have any idea that it was employee theft? Would you be blind in trust of your employees that you would not even think to consider the losses could be a result of internal theft? Let that soak in a bit because this is what happens to business owners everyday and many never recover. As stated earlier internal theft is the biggest business killer on the block.

So what can you do? Preferably you start your business plan including loss prevention in the initial budget, but what if you didn’t? Can you catch up? Is it too late? The first thing to do is access the controls you currently have in place. Start with your hiring process. Do you have a pre employment screening process? Do you conduct employee/criminal background checks? If not then how do you know you aren’t hiring the “shoplifter” we discussed earlier? Do you ask pertinent questions during the job interview process? Do you take notes and conduct follow up interviews to flesh out any potential issues? Do you have a new hire orientation explaining that your company conducts employee theft investigations and prosecutes anyone caught stealing?

What physical loss prevention tools do you have currently? Do you have cameras? Where are the cameras pointing? Are they set up over the registers to deter employee theft? Are they set up in your stockroom to aid in potential employee theft investigations? Do you have any “pin hole” camera kits to aid in employee theft investigations? Do you have anyone employed who is trained to conduct an employee theft investigation? Do you have daily inventory category counts of product to monitor losses? Do you have daily register audits? Do you ensure employees count in and out on their own registers? Do you conduct bag and pocket checks whenever an employee leaves your business?

It is never to late to take steps to deter internal theft. The key is setting up a strategy that starts with the hiring and orientation, then set up your physical controls (cameras/audits etc). Deterrence does not work on everyone so it is important to ensure that you always consider every loss incurred as being perpetrated by an employee. You should take steps to narrow the focus of when the losses occurred, who was working and who had access to the items stolen. At this point you can utilize your daily reports and cameras to catch the employee who is committing the loss. Once you have gathered the evidence and obtain a confession (I recommend that only a trained interviewer conduct a loss prevention interview). Then it is very important to follow through with conviction and termination. That will also help deter other employees from conducting employee theft.

For more information on internal theft, employee theft investigation or employee contact us or call 1.770.426.0547 – Atlanta Georgia

Visit the Loss Prevention Store to purchase CCTV Systems that can help you stop Employee Theft and Internal Theft problems and help with your Employee Theft Investigation.