There are unique challenges that come with running a business. Competition is stiff, keeping clients happy is tough, and finding and keeping good employees is a daily challenge. But there is another risk you may not be thinking about — theft committed by employees.
Employee theft can present a significant risk, even more so than external theft. Cash, beauty products, personal property and equipment are all at risk of theft by your employees. According to the U.S. Chamber of Commerce, as many as three out of four employees steal from their workplace at least once.
Without preventative action, you could lose thousands of dollars each year in sales, and in some cases, you may face a claim due to a large-scale fraud. However, loss prevention technologies have evolved to help businesses quickly identify theft by employees, reducing losses and minimizing business risk. Here are 6 tips on reducing employee theft at your business.
1. Focus on Your Point of Sale
Many cases of employee theft happen at the point of sale. It makes sense to focus your attention first on the register, because this is where you must trust your employees to tender sales, handle cash and enter transactions accurately and honestly. Theft through sales adjustments such as discounts, returns, voids and over- and under-rings can really add up. And while some employees may steal noticeable amounts that get discovered quickly, others may steal amounts so small that they can go undetected for months or even years.
2. Invest in POS Monitoring Software
Investing in POS software can help you detect unusual transaction patterns quickly and determine which register and which employee is involved. The tools available can help you monitor adjustments, track trends and alert you to suspicious activity, often automatically. According to one study, businesses lose more than $16 billion annually to dishonest employees at the point of sale.
3. Pair Software with Video Surveillance
Cameras have been a part of loss prevention for a long time. Video surveillance has been shown to lead to fewer thefts and even better productivity. When theft does occur, video surveillance offers hard proof of the wrongdoing. However, one problem with traditional video surveillance is that business owners often only review tapes after a theft has been discovered. When you are unaware that a theft is occurring, you are not likely to review the tapes and discover the evidence of the crime. Yet by pairing monitoring software and video surveillance, you have a better chance of discovering problems. The software can alert you to a problem and you can review the footage to see whether a customer is present or whether the employee is alone at the POS.
4. Review Suspicious Transactions
It is important to know what to look for when it comes to employee theft at the register. Some of the most common sales adjustments you should watch out for include:
- Discounts—Employee discounts are a common perk but can be abused, with employees giving worker discounts outside of regular hours, extending discounts to family and friends, or adding free items to discounted transactions.
- Returns and Voids—Employees can use fake refunds and voids to steal from the register. A customer may approach the counter and pay for their purchase, yet the employee can void the transaction and pocket the cash tendered.
- Over- and Under-Rings—Another tactic is when an employee charges a customer for a different item or a different number of items than they receive. The employee may give away items or pocket a customer’s excess change.
With security technology, you can monitor for unusual transactions and compare surveillance footage with an employee’s explanations, if necessary, to find out what happened.
5. Monitor for Missing Inventory
Some employee theft occurs away from the register. Employees taking home products or supplies can have a significant impact on your sales and inventory. Modern security systems can help you detect these thefts even though they do not occur directly at the register. Systems that monitor sales can help you pinpoint inventory losses, even down to the length of time product stock should last, the number of client uses and the number of sales. Reviewing video surveillance can help confirm when inventory theft is occurring and who is doing it.
6. Stay Alert for Fluctuating Theft Risk
Theft risk can increase at certain times of year and during longer economic downturns. There is usually an uptick in employee theft during the holidays. Employees may be desperate for extra money, offering discounts and incentives for a bigger tip and under-ringing sales to skim the register. Missing funds may show up as cash variances. In some cases, safes and back offices are also targeted by dishonest employees. Holiday theft by your employees can significantly impact business operations, resulting in thousands of dollars of losses and potentially even leading to property insurance claims.
Reducing Employee Theft: A Summary
Unfortunately, employee theft remains a challenge for businesses in all industries. Studios that don’t take the risk seriously may lose thousands in sales, inventory and equipment, and could face a claim due to undetected fraud. But you can protect your business by investing in a security system that monitors POS transactions and records video surveillance. Businesses that take theft seriously often see a reduction in losses, increased sales and higher client satisfaction.
Find more risk management tips by visiting Lockton Affinity’s WellBiz Insurance Program website.