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When An Employee Steals
Combating Internal Theft in the Small Retail Environment

The fact is undeniable. The reasons are endless. Whether driven by greed, anger over a failed promotion, or an uncontrollable urge to create excitement or thrill that goes beyond reasoning, internal theft remains a lucrative business that produces financial loss exceeding any other form of retail shrinkage.

With retail crime on the rise, symptoms of a staggering economy knocking on everyone’s door, and record high unemployment, internal theft has become a costly proposition that can no longer be ignored. As difficult as it may be to detect and control for the small retailer, maintaining a positive “Zero Tolerance” work environment that promotes education and shows a deep commitment to preventing loss, sends a strong message to company personnel that criminal conduct will not be tolerated.

You may be telling yourself all is well. The bottom line might be that you don’t have the resources for a full time Loss Prevention staff, but in reality, protection for your business does not have to be costly. Not everyone has all of the answers, and it should come as no surprise that even large retailers with the most sophisticated anti-theft systems in place will continue to suffer loss at the hands of a dishonest employee.

Many experts estimate that employee theft can account for up to 48% of total shrink. While many of your workers and seasoned staff personnel may decide to “look the other way” when a theft occurs in their presence, recent studies show that at least 3 out of 10 will steal, while another 3 out of 10 will steal if lax policies and a careless mindset on the part of management allows them to do so.

The $50 billion yearly blight on the American Business Culture will affect 95% of retailers, eroding performance, loyalty and the very foundation that these companies were built upon. Whether you are a small family run business, or a national retailer that employs thousands, the basics of employee dishonesty are fundamental. Prevention is a shared responsibility. Taking the time to stop and analyze your day to day business operations and adhering to some cost effective guidelines, will go a long way in safeguarding your assets and improving efficiency within your organization.

Signs of Internal Theft
Identifying the Dishonest Employee

Rule #1
Understand the motivational factors, and look for underlying reasons for theft.

Motivations are real in the mind of the dishonest employee. Anyone who has ever conducted a preliminary interview during the final stages of an internal theft investigation will usually find that the act will coincide with some type of unacceptable behavior either at home or in the workplace. Even though theories of why employees steal are abundant, many of the contributing factors leading to the theft remain the same.

We will probably never fully understand the need to steal. Factors could surround a financial need to support a lavish standard of living, or to feed an addictive behavior such as drugs or gambling. Many times both spontaneous and unexplained, the action could also involve a deep seated hatred, need for revenge, either real or imaginary...or just plain greed.

Rule #2
Observe…….Observe……Observe

1. Do not get lulled into the mindset that it can’t happen to you, or that it cannot be controlled. Seniority with the company has no boundaries when it comes to dishonesty.
   
   
2. Watch for signs that employee theft has taken a foothold in your company. Unexplained shortages of merchandise and cash need to be investigated thoroughly. Act quickly and decisively to protect your interests.
   
   
3. Review all cash office errors such as missing cash, payroll discrepancies, unauthorized IOU’s, or advances in pay by hourly workers and staff personnel.
   
   
4. Monitor customer satisfaction reports and complaints, overcharges or missing receiving and shipping bills, or any unauthorized changes
   
   
5. Monitor employee purchases, especially with a company discount in place. Drastic changes may indicate a pattern of theft.
   
   
6. Theft of company checks, or forgery of checks for personal use.
   
   
7. Monitor self ringing or discounting of merchandise for friends/family members.
   
   
8. A dramatic lifestyle change that does not fit the employees compensation profile. New cars, clothes or a bragging about new found money may coincide with a violation of employee policy.
   
   
9. Constant complaining or bickering about store management, policies, or poor work performance. Complaining about unfair treatment.
   
   
10. Listen for talk or conversations about a prior criminal record or theft from another employer.
    
    
11. Signs of drug and/or alcohol abuse, gambling, or extramarital affairs.
    
    
12. Unable to explain errors or policy violations, or offering inconsistencies on shortage issues.
    
    
13. Look for signs of information or identity theft from company computers or personnel files, such as credit card or social security numbers.
    
    
14. Excessive under ringing of sales, or constant violation of cash drawer policy or refunds.
    
    
15. Utilizing another employee’s password or authorization code to gain register or computer entry.

Rule #3
Address the Problem

• Utilize proper hiring methods. Do not shortcut preliminary interviews. Do background checks and check employment applications for misleading or false entries.
  
  
• Formulate a written policy on theft, citing disciplinary action. Also include those areas pertaining to bag and package checks upon entry and exit of the premises.
  
  
• Do a monthly security audit, citing lapses that could result in shrink, and always maintain strict inventory control.
  
  
• Implement a strong orientation program that addresses responsibilities, policies for cash handling, and including the company’s stance on shrink and theft.
  
  
• Formulate an anonymous tip hotline for theft reporting. Listen to your staff and take advice and suggestions on how to reduce theft opportunities.
  
  
• Utilize a secret shopper or shrink awareness program that will help you evaluate policies and employee conduct.

In conclusion, creating a positive proactive work environment that promotes, plus rewards and recognizes professional work ethic, will go a long way in protecting your assets and reducing the losses attributed to internal theft.

Editorial provided by William M. Pokeda. William has over 35 years of law enforcement and loss prevention experience, and is currently employed as a Asset Protection Specialist with a national retailer in upstate New York, specializing in Internal Theft investigations. Mr. Pokeda can be reached at tactrainer47@yahoo.com.