HOW TO MANAGE, REDUCE, EMPLOYEE THEFT

Yes, theft is something to be managed in your business.

You will be stolen from. Good management is about reducing the opportunity for and instances of theft.

1. Trust no one. Awful as it is, trust, blind trust, can get in the way of you seeing what is actually happening. Employee relationships in your shops are employee relationships first and friendship second.
2. Scan everything you sell. Do not use department keys as this makes it easier for employees to steal since they know there is no trackback to stock on hand. Using department keys is an invitation to steal. Using a cash register instead of a barcode based software package is stupid.
3. Do your end of shift through your software and have a zero-tolerance policy on being over or under. Reconcile banking to your computer software end of shift. 
4. Do spot cash balancing. Unexpected checks can uncover surprises. One retailer needing to do a banking during the day uncovered a $350 discrepancy that lead to discovery of systematic theft.
5. Change your roster. Sometimes people work together to steal. One newsagent found a family friend senior and their teenage daughter stealing consistently.
6. Check your Audit Log monthly. Look at cancelled sales, deleted sales and items deleted from a sale. Leaving a cash drawer open from the previous sale, scanning items, taking the cash and cancelling the sale is the most common process used by employees to accrue cash they then take from you. Good software tracks cancelled sales and what was in them. This can be matched with video footage.
7. Do spot stock takes. Look for regular discrepancies. Review video footage of the area where stock discrepancies are an happening.
8. Look at your magazine returns discrepancies. Each returns form you submit using your software indicates return counts that are lower than what you expect. These are magazines you have either lost or had stolen by customers or employees.
9. Check GP by department. If GP is outside what you expect, research it further.
10. Setup a theft policy. Put this on a noticeboard in the back room. Get staff to read it and sign up to it. See the last page of this advice.
11. Keep the counter clean. A better organised counter reduces the opportunity for theft as it makes detection easier.
12. Have a no employee bags at the counter policy. This makes it harder for them to hide your cash.
13. Beware employees who carry folded paper or small notepads. These can be used for them to keep track of how much cash is in the register that is theirs – i.e. not rung up in the software.
14. Beware of calculators with memories at the counter. One newsagency employee used the memory function to track how much cash had to be stolen prior to balancing for the day – cash from sales not rung up.
15. Do not let employees sell to themselves. If they want to purchase something make them purchase it from the other side of the counter.
16. Be professional in your management of the business. The more professional your approach they less likely your employees will steal as they will see the risk of being caught as high.
17. Advise all job applicants that you will require their permission for a police check. From the outset this indicates that you take your business seriously. In many situations applicants who have been asked for permission to do a police check advise they have found a job elsewhere.
18. Do not take cash out for your own use in front of employees. If they see you take cash for a coffee or lunch some will see this as an invitation.

These steps work – based on decades of helping newsagents to reduce and manage employee theft.

Theft, employee and customer, costs a typical newsagency between 3% and 5% of non agency sales revenue.  Management attention can cut this dramatically.  It does not take much time. No, it is more about having professional processes in place which everyone in the business follows.

Discovering theft by an employee can be debilitating and destabilising. To help you through this, we provide here our advice on what to do once you discover employee theft. The goal is to offer straightforward steps to help you get through as it is on the other side of this where you can find the opportunity to move on from the feeling of violation that often accompanies employee theft in small business.

1. Be sure of the facts, gather the evidence. Evidence could include, video footage of cash being take from the business, business records being modified to cover tracks, stock being stolen and more. Evidence does not include gossip, feelings and opinions. Without evidence you have nothing to proceed with. Involve the Police.
2. Once you have all available evidence and if this clearly implicates one or more employee, quickly work out what you want.
   1. If you involve the police, they and, subsequently, the courts, will control the process including getting your money or goods back, an apology and more.
   2. If you don’t involve them, think about if you want the money or goods back, an apology, the person to stop working for you without negative impact on you – or a mixture of these.
   3. Check your insurance policy. Be sure you understand what you might be able to claim and in what circumstances. For example, your policy may require a police report. This could determine your next steps. If you are not sure what your insurance policy says, call the insurance company for advice. Knowing your insurance situation early is vital.
3. If the person committing the crime is a minor:
   1. Advise their parents or guardian by phone. Invite them to the shop or an independent location to see what you have. Have someone else there with you, as an observer. This meeting needs to happen quickly.
   2. Present the evidence.
   3. Listen for their response.
   4. If they (their parents) ask what you want, be clear.
   5. If agreement is reached, put it in writing there and then and all involved sign it, so there is clear understanding.
   6. If agreement is not reached you need to decide your next steps and engage them with haste.
   7. A return of the money, likely by the parents, should be in a lump sum, immediately. I have seen a parent pay $22,000 where a uni student studying psychology stole and out their career at risk by being caught. I have seen another situation where a 75-year-old mum repaid the $12,000 stolen by her adult daughter so the daughter did not have to tell her husband about her gambling problem.
4. If the person committing the crime is not a minor:
   1. Get an opportunity to speak with them face to face, ideally with another person there as a witness.
   2. Tell them you have evidence of them stealing from the business.
   3. Ask if they would like to see it. If they say no, ask what they propose.
   4. If they do want to see the evidence, show it and ask what they propose.
   5. If there is an offer of a full refund, an immediate resignation and never entering the business again it could be a good practical outcome. The challenge is you may not know the value of what has been stolen. Experience indicates that someone stealing cash will understate the amount considerably. I was involved in one case where they said they stole $10,000. The irrefutable evidence showed it was $75,000.
   6. Get any agreement in writing. If there is an offer to repay, our advice is to only accept an immediate lump sum. If the proposal is payment of, say, more than $10,000 over time, involve the police.
   7. If the person denies any wrongdoing, go to the police immediately.
5. If you have suspicions and do not have the evidence, put in place opportunities to gather the evidence without entrapping the target, without setting them up. I have seen situations where local police have provided advice and support for this. It could be worth asking them if you are in a regional or rural situation.

If you are nervous about meeting the person or their family, write down what you plan to say. Keep it short. To the facts. No emotion. Having a script prepared can be useful even if you do not read it.

If there is any risk of violence, do not have a meeting. Go straight to the police.

Time is of the essence here. The longer you know about the situation and the longer you do not act the less useful the outcome is likely to be.

If you are not sure what to do, call any time. I have been involved directly in many employee theft situations, with all sorts of retailers, and engaged with police and prosecutors.

Protect the business by having a theft policy posted on a wall where all employees see it. Attached to this advice is a suggested Theft Policy.

Now, here is our suggested Theft Policy. 

THEFT POLICY

1. Theft, any theft, is a crime against this business, its owners, employees and others who rely on us for their income.
2. If you discover any evidence or have any suspicion of theft, please report it to the business owner or most senior manager possible immediately. Doing so could save a considerable cost to the business.
3. We have a zero tolerance policy on theft. All claims will be reported to law enforcement authorities for their investigation.
4. From time to time we have the business under surveillance in an effort to reduce theft. This may mean that you are photographed or recorded in some other way. By working here you accept this as a condition of employment.
5. New employees are to provide permission for a police check prior to commencement of employment. Undertaking the police check will be at our discretion.
6. Cash is never to be left unattended outside the cash drawer or a safe within the business.
7. Credit and banking card payments are not to be accepted unless the physical card is presented and all required processes are followed for processing these.
8. Employees caught stealing with irrefutable evidence face immediate dismissal to the extent permitted by local labour laws.
9. Employees are not permitted to remove inventory from the store without permission.
10. Employees are not permitted to provide a refund to a customer without appropriate management permission.
11. Employees are not permitted to complete sales to themselves.
12. Every dollar stolen from the business by customers and or employees can cost us up to four dollars to recover. This is why vigilance on theft is mission critical for our retail store.

PLEASE SIGN AND DATE YOUR ACKNOWLEDGEMENT OF THIS POLICY: