Are you a retail owner struggling to prevent employee theft? Businesses often implement various security measures to protect against theft from their customers. Yet, many of these organizations fail to realize that the most common and severe sources of theft are actually internal, from their own employees.
Employee theft costs businesses $50 billion each year, with the average company losing around $1.13 million.
And, a startling 75% of workers admit to stealing from their employer or workplace on at least one or two occasions.
If you want to protect yourself from retail employee theft and fraud, then you should follow these 6 practices!
Perform Background Checks And Screen Potential New Hires
In retail, the first line of defense against employee theft is hiring the right, altruistic individuals with clean backgrounds and employment histories, as these people are less likely to commit fraudulent acts.
The more rigorous your hiring process is, and the more thorough you’re are at vetting potential employees, the better protected you’ll be against accidentally hiring an individual with weak morals.
While most organizations perform background checks, these typically only turn up criminal wrongdoings that have been officially charged.
However, a lot of incidents of employee theft and fraud do not result in a prosecution of the culprit. Often, the employee is let go on suspicion.
Thus, it’s essential to investigate the employment history of every new hire and check in with their references.
This can be a time-consuming practice, but it will provide the best insights into an individual’s morals.
References and past employers will be able to share critical details about a person’s attitudes and integrity, which may not come up naturally during the interview process. These details may influence your decision.
It’s also good practice to make sure that their employment timeline is accurate. If there are significant gaps or discrepancies in that timeline, you’ll want to bring this up.
They could be purposefully leaving out past work experience because there was an issue at that particular job, like suspicion of theft.
Draft A Digital Policy To Keep Online Activity Safe And Secure
If your company operates online at all (which is to say the majority of organizations), then you want to draft a digital policy.
This outlines the guidelines and protocols of acceptable and unacceptable behavior when using the company Internet and computers.
This is a valuable practice because it has many benefits. Not only will it keep your employees safer when browsing the Internet, which leads to fewer data leaks and other security issues, but it also gives your network security and IT staff an understanding of what employees can and cannot do on the company network.
From a theft perspective, this is really important because it will allow the people that monitor your network to know what to look for to detect and prevent potential employee theft and fraud cases.
Develop Internal Security Procedures
A digital policy is just one of the many internal security procedures a company can implement to help reduce the risk of employee theft.
There are other steps you can take to help tighten your internal security, such as:
- Update passwords and login credentials regularly.
- Restrict access to sensitive areas/documents and record who accesses, when and why.
- Closely monitor activity on company credit cards and expense accounts.
- Lock up expensive items and valuables.
- Install employee-facing cameras, particularly in areas with valuables or POS systems.
Know Potential Warning Signs For Employee Fraud And Theft
Another step for improving your internal security is to create a company culture that understands the warning signs for employee theft.
Sometimes, employee fraud can be prevented by noticing the behaviors and situations that heighten a person’s likelihood to steal.
These are some of the prevalent attitudes that can make a person more likely to commit employee theft:
- Money problems, particularly if there is an underlying issue like gambling or drug addiction.
- Angry or disgruntled as a result of a recent event at work, like not receiving a large enough raise or being disciplined for performance or recent actions.
- Personal problems are hardest to detect and could be caused by some problems in an employee’s at-home life.
It’s good to encourage your employees to communicate when they notice these types of attitudes and behaviors in their coworkers.
It will yield time to detect troublesome employees and help alleviate their negative attitudes.
The more communicative your company culture is, the easier it will be to share what’s going on in each individual’s life, especially the problems that could lead to employee theft.
Invest In The Latest Point-Of-Sale System Technology
For retail companies that have employees working at POS systems, the temptation for theft can be even higher because they are physically and directly handling money.
If your POS system is out of date, it can be nearly impossible to detect theft, unless you physically see an employee stealing cash or purposefully overcharging a customer.
The best innovators in the POS space understand that combating internal theft is a real issue for businesses.
These newest systems and software are designed to close loopholes that fraudulent individuals can exploit to steal money.
Some systems are sophisticated enough to monitor and track inventory and sales data to detect anomalies that could be the result of malicious behaviors.
A proper POS system will also be able to track inventory coming into and out of a store location.
Remember, employee theft doesn’t have to be money; it could also be inventory.
With advanced inventory management software, you’ll be able to track where every item in the store is, which makes it easier to determine when the product has gone missing and from what location.
If a product is disappearing from the back-of-house, instead of on the sales floor, then it is a clear indication of employee theft.
These types of systems will not just protect you from theft. They include many features and sales reporting techniques that can help you better optimize your business and its ability to drive revenue.
Another potential scenario where your employees could be ripping you off: A customer has an open tab, or even a credit card on file, yet intends to pay with cash.
However, your employee can always pocket the cash, yet processes payment on the credit card. Unfortunately, this situation is all-too-common.
However, with an integrated POS system in place, you as the business owner will be able to trace every transaction or order to the employee managing the sale.
With integrated payments on your POS you effectively prevent employees from pocketing cash while processing credit cards.
If your business is lacking the proper POS features to prevent such fraud, you’re exposing yourself to a potential avenue of employee theft.
It’s a hard idea to swallow. You’ve put a lot of trust and faith in your employees, to be honest, and hardworking, but, sadly, not every person is going to follow the same moral compass. Sometimes, people are negatively influenced to make the wrong decisions, and those bad choices could be costing your business thousands of dollars, possibly even millions. These employee theft prevention tactics will help any retail business reduce losses caused by internal fraud.