The retail business sector in Australia loses an estimated 2.7 billion AUD a year due to theft, negligence, and fraud. While a majority of these losses are caused by shoplifters (39%), a significant portion comes from employee theft in retail business (25-40%).
Retail business is especially vulnerable to employee theft because the merchandise is often readily accessible and the payments for sold items change hands several times before ending up in the store’s money vaults. Dealing with suspected – and sometimes, even proven – employee theft can be a tricky endeavour because of the implications on litigation, company reputation and morale of other personnel.
While there is no fool-proof method of preventing employee theft, there are a number of key elements to minimize the risks of such events. One of the most important steps in prevention is to be mindful of whom the business hires. Managers are advised to implement a strict employee screening process, with a particular focus on background checks and previous transgression records. Character evaluation can be a tedious process, but the long-term benefit of being able to hire personnel that the management feels secure with is well worth the effort.
Equally important in preventing employee theft is creating a positive and nurturing work environment. Employees must feel like they are “part of the family” instead of “hired help”. This includes the appropriate salary and benefits (including bonuses when applicable), and reasonable working hours and working conditions. Paid leaves, and open, transparent and constructive avenues of communication with co-workers, managers, and executives should also be covered. Often times, employees steal out of necessity or resentment towards management, and minimizing the probability of these instances can go a long way towards curbing employee theft.
Detecting employee theft is often not as simple as catching them red-handed with their hands in the proverbial cookie jar. Since video surveillance is now in widespread use, employees with dishonest inclinations will often find ways to “fly under the radar”, looking for weak points in the video surveillance system and sometimes, even bribing other employees to let them off the hook. Other forms of theft can include punching items at unauthorized discounted prices (but charging the full price and pocketing the excess) and ringing up false refunds.
Detecting these subtle forms of employee theft requires detailed – and if possible, daily audits, with a sharp eye towards unexplained losses or drop in sales, checking records for issued receipts and a suspicious increase in voided transactions. Transactions made must be connected to a central database and accessible to managers and executives at a moment’s notice
Video surveillance is still one of the most effective deterrents to theft, both from within and without. A high-performance surveillance system with multiple functionalities like motion sensors, low-light/IR detection, (UHD, if at all possible) capabilities and video analytics protocols will increase the probability of detecting illegal activity within the store premises. A means of anonymous reporting by other employees can also increase the chances that these events will be flagged and will reach the proper channels for further investigation and possible corrective action.
Once a potential employee theft event is detected, employers can decide whether to gather more evidence by discreetly monitoring the perpetrator’s activities or take immediate corrective and preventive action to address the situation. Once the employer deems there is enough evidence to proceed with legal investigative and corrective action, official letters of communication to the involved parties must be sent out, detailing the allegations, investigation process and actions that management will carry out while investigations are on-going, such as preventive suspensions (with or without pay, depending on company protocols). Face-to-face meetings and discussions among the involved parties must ensure fairness and the opportunity for all parties to explain their perspectives.
In the event of a clear-cut case of employee theft, the ultimate question is whether the employee will be terminated or given reprieve. Most employers will almost always go the route of summary dismissal, although these decisions are still affected by several factors. Making a public (company-wide or broader) announcement in the event of dismissal is also something that should be considered. The aim of such announcements should be more to inform the public that the dismissed employee is no longer connected to the establishment, and that future transactions with the said ex-employee will not be honoured by the establishment.
It’s never easy for business owners and managers to know that their own staff is the one stealing from them. Based on industry trends and statistics, incidents of employee theft are here to stay. These quick reference aims to guide you in the actions you’ll take to prevent, detect, and take action to avoid costly implications to your business.
Our team at Prosek Security is always abreast with retail crime trends and potential hazards across Australia. Contact us and let us help you ensure your business is safe, secure, and thriving by developing and implementing loss prevention strategies that are custom-made for your establishment.