Preventing Employee Theft- Policies and Management Responsibilities:

Policies and Procedures that Discourage Employee Theft

• State your policies and procedure clearly and make sure every employee has a copy and understands them
• Make loss prevention a part of every job description.
• Schedule more than one employee to open in the morning and close at night. This helps prevent employee theft as well as provide protection from robbery or assault when entering and leaving.
• Have more than one employee count the deposit and use duplicate deposit slips to verify that what was deposited matches the deposit slip.
• Check all bills to be paid. Make sure all are for legitimate vendors. Require that one employee checks in vendor products and a different employee issues the check. Attach an invoice if possible and have two employees sign off on it.
• Keep the amount of cash in the registers as low as possible.
• Require that employees give customers a receipt or slip for ALL purchases. All discarded receipts should be destroyed. Have employees tear receipts that are left behind in half, lengthwise.
• Make sure the customer can see the screen or display of their total. If a cashier’s screen is frequently turned away or covered from the customer’s view, they may be giving the customer a higher total than what was rung in and pocketing the difference.
• Allow only one cashier to use a register per shift. If more than one cashier has access to a register, he or she will be able to pocket money and it will be nearly impossible to pin the theft on him or her. If it is not possible to have one employee per register, adopt a policy that states that all employees will be held equally accountable for any discrepancies.
• Create a clear policy for returns, voids and no sales. Require management approval for all returns and voids. Monitor the number of “no sale” transactions. If possible, require management approval to open register tills.
• Do not allow cashiers to keep register tills open between sales.
• Do not allow employees to conduct sales for themselves, family or close friends to avoid “sweet hearting” (under-ringing) sales.
• Conduct periodic audits on registers. Employees who are often over or under may be taking money or building up money that they will later remove.
• Note any loose change or papers with marks on it that is frequently near a register. These often indicate a running tally of extra money in the till that will later be removed. Loose change may stand for bills (a nickel = $5, a penny = $1 etc.).
• Management should control employee purchases. All purchases should be kept in employee lockers or in a locked office and accompanied by a receipt.
• Merchandise that has already been paid for should be brought home following that shift. Employee purchases should be made at the end of the shift and “bag checks” should be done as the employee leaves exits.
• Do not allow employees to keep their purses, coats or purchases on the sales floor while they are working.
• Limit the number of employees who remove trash from the building and do random checks to make sure nothing is being hidden amongst trash.
• There should be tight control over who has access to areas where cash is counted, or receiving areas. Keys to cash rooms or receiving doors should be given to as few employees as possible. Employees may leave merchandise outside a receiving door where an accomplice will pick it up, or where they can retrieve it themselves later. Do not allow empty containers or boxes to remain immediately outside a receiving door.
• Do not allow cashiers to retrieve change for their drawers themselves. Have a manager approve all change functions.
• Consider employing a “secret shopper” program. This not only assures integrity, but good customer service as well.
• Separate the accounts receivable and accounts payable functions. Have two people perform the two functions.
• Have cashiers reconcile their tills at the end of their shift with a member of management present. Have both the cashier and manager sign off on the final report
• Markdowns, returns to vendors or warehouses, and damage returns should all be controlled by management. Keep track of paperwork regarding what was sent back to the warehouse or marked down, who did the return/markdown and when it was done.
• Give everyone who is able to open and close the store a different alarm code so you can keep track of who disables the alarm and when.

Management’s Responsibilities

Get to know your employees. This not only discourages dishonest behavior by reinforcing the idea that you are paying attention and will catch them if they steal, but it allows you to have an idea what their typical behavior is so you will notice if it changes significantly.

Most employees are generally honest and ethical, but sudden pressures or crises can make them feel they have no other option but to steal or cheat. Be aware of major life changes in your employees’ personal life. A life-threatening illness, disease or injury may force an employee to choose between paying medical bills or providing basic necessities such as food. The arrival of a new baby may create a financial burden they can not overcome.

Although your business is not a charity, there may be something you can do as a supervisor that will ease the burden and reduce the temptation to steal. Pay advances for reliable employees or allowing an employee to work more hours may be enough to relieve the immediate crisis.

Sudden changes in personality or work habits may be indicative of alcohol or drug abuse. If your business has an employee assistance program (EAP) that can provide treatment, let your employees know about it.

Some indicators that an employee may be stealing from you are:

• A poor work ethic- lazy while at work, frequently late or absent.
• Constant complaints about working conditions, management, pay
• Living beyond their means, an extravagant lifestyle that is not in line with their pay
• Catching them in small acts of dishonesty (pocketing change a customer leaves behind) or catching them under-ringing sales and claiming it was just a mistake
• Volunteering to do deposits or take care of accounting duties
• Volunteering to lock up or open each day

If you suspect an employee of dishonesty

• Do not jump to conclusions. Consider all reasonable possibilities.
• Gather facts and circumstances that lead you to believe an employee is dishonest. Document the time, day, and details of each instance that leads you to believe something is amiss.
• For every instance, note all employees who had access to the merchandise, money etc. After multiple instances, a pattern will mostly likely emerge, leading you to a suspect.
• When you have knowledge of an incident, call a meeting of all employees (if practical) and explain that you know of the incident, and if anyone knows any information about the incident, to please inform you, anonymously if they wish. This lets the offender know that you know about the crime, and alerts other employees who may have some knowledge of the incident.
• Remind all employees of company policies and procedures regarding the handling of merchandise or money. Increased attention to detail may resolve the problem if it was accidental, and will discourage a dishonest employee from trying again.
• The use of bait or closed circuit cameras can be used to catch your employee in the act. CCTV is especially useful when confronting the employee. It is fairly hard to deny what is on camera.
• As soon as you have proof that property is being stolen from you, notify the Police Department.
• Always prosecute any employee you find stealing from you. Simply firing them just passes the problem to their next employer, and signals to other employees that there are limited consequences for stealing from you.