Employee Theft: Eliminate the Opportunity
Short Drawers and Sticky Fingers
How Cash Control Curbs Losses
The fact that retail employees are responsible for the largest percentage of cash loss — whether due to theft or error — is well documented. The 2010 National Retail Security Survey, as conducted by Dr. Richard Hollinger, professor of criminology at the University of Florida (with support from the NRF and ADT), chalked up 43% of retail losses to employee theft and 14.5% to administrative errors, for combined losses totaling $19.3 billion. The National Shrink Survey from LP consultancy Jack L. Hayes International perennially reveals that dishonest employees steal nearly 7 times more than shoplifters, averaging more than $700 per apprehended associate. Retailers lose anywhere from 1% to 5% of sales to employee theft and error, and much of that loss is attributed to theft of cash at several points in the cash-handling cycle. There are several steps a retailer can take to curb cash losses. Understanding why employees steal is an important part of removing their opportunity to do so, and their reasons are many:
- They “need” the money
- Their friends or family members “need” the money
- They’re lashing out at the company, their boss
- They can - they see opportunites to skim cash where controls are sloppy
These motivations for theft can, and should, be addressed through improved employee communication and management, involving intervention and consultation where necessary. Empowering associates with responsibility and acknowledging their contribution to the company can decrease their propensity to be dishonest. But management practices alone cannot eliminate dishonest behavior, and management policies don’t contribute directly to the recognition of theft and recovery of lost cash. In the U.S., only one apprehension is made for every 28 instances of retail employee theft. Therefore, it’s that last bullet that provides you with the least intrusive and most efficient means of reducing cash loss. Dr. Hollinger’s close associate Read Hayes, Ph.D is a renowned loss prevention researcher in his own right. His work at the Loss Prevention Research Council (lpresearch.org) concurs that removing the perceived opportunity to steal is the most effective way to reduce theft in your stores. Locking down your cash control processes not only deters dishonest and greedy employees from attempting to steal, it drastically reduces the opportunity for honest error, the nearly $5 billion problem mentioned earlier.
Securing Cash From The POS To The Bank
Naturally, the POS is the Achilles’ heel of retail cash control. It’s where cash is handled most, in a fashion that’s often fast and loose. Some retailers have deployed surveillance-based POS monitoring solutions in an effort to identify procedural issues, cash theft, sweet hearting, and other forms of loss at the checkout. These have proven effective, albeit reactive, in some cases. Better still is an approach that combines surveillance with real-time remote till monitoring and spot audits, safe counts, in-store deposits and cash till reconciliations. Combined with reporting, these measures create a real-time view of cash movement across stores, down to the till level.
For till management, a networked, weight-based cash counting machine is an economical place to start, and one that will dramatically increase your accuracy, efficiency, and visibility into cash. The new generation of these machines can count a cash drawer – including coupons and tokens – and prepare a bank in a single operation in under 60 seconds. Faster counts enable more audits and checks to be performed, providing real-time information you can act on quickly to identify and correct fraud and error.
Managers can access till- or store-level data via simple USB connections that enable the transfer of real-time reports from the device to a printer, PC, or network. This also enables the storage of data, which gives managers the ability to monitor trends such as cash level, discrepancy, and store policy adherence over the course of time. Many retailers use the intelligence gained from long-term trend analysis to address chronic problem areas, and to develop comprehensive training and awareness programs that reduce theft and improve store-level operations.
Modern cash counters even count strapped bills and rolled coins on a single platform for the preparation of bank deposits, and alert the user to discrepancies or errors in the process. This eliminates expensive redundancy by ensuring that deposits are correct the first time, and provides an instant view of daily cash takings. When associates are aware that cash is thoroughly accounted for at each step of its journey from the cash register to the bank, the risk associated with stealing greatly outweighs the potential reward.
About the Author
Dave Lunn is the sales & marketing director for Tellermate Group.
Tellermate Group is a leading provider of cash management solutions in retail, banking, QSR, and leisure. Tellermate is trading with a global footprint with its headquarters in Newport, Wales. With more then a decade of experience in leading marketing and sales positions Dave worked as managing director for global companies like GE Lighting and Security and Cooper Security both in the UK and North America.
His work ethics is based on building teams and leading through example, selling across multiple continents and channels. He is a commercial front line leader that builds enduring customer and partner relationships. He joined Tellermate in 2008 and expanded the business globally, without losing the focus of customized solutions and service within the cash management environment.