In this article we are going to take a closer look into the issue of Dishonest Employees. What caused the rise in Dishonest Employee apprehensions and recovery dollars in 2013, and what companies can do to reduce their vulnerability to internal theft.
Dishonest Employee Survey Stats
. Apprehensions: 78,085 dishonest employees were apprehended in 2013, up 6.5% from 2012.
. Recovery Dollars: Over $55 million was recovered from employee apprehensions in 2013, up 2.5% from 2012.
. One out of every 39.5 employees was apprehended for theft from their employer in 2013. (Based on over 3.0 million employees.)
. Case Value: The average dishonest employee case value in 2013 was $706.21, which was a decrease of 3.8% from 2012’s average case value ($733.87).
. On a per case average, dishonest employees steal approximately 5.4 times the amount stolen by shoplifters ($706.21 vs $130.89).
We asked our survey participants what they thought was the cause(s) behind the continued increase in employee theft apprehensions and recovery dollars in 2013, and they contributed the following to increased employee theft activity:
– Lackluster economy
– More diligent review and follow-up on dishonest employee cases
– Increased focus and resources by Loss Prevention staff
– Increased exception reporting capabilities
– Less supervision and more part-time associates
– Abuse of Loyalty Programs is increasing
Hayes International believes the following contributes to the employee theft problem:
. Ineffective Pre-Employment Screening: The first step to controlling internal theft starts at the point-of-hire; do not hire the “bad apple”’. Some retailers, in an effort to reduce their costs, have lowered their pre-screening requirements and are now hiring more ‘questionable’ employees. Anytime statistics show one out of every 39.5 employees is actually caught stealing by their employer, there has to be some type of breakdown in the pre-employment screening process.
. Less Employee Supervision: With lower management levels, there is less supervision of employee activities which results in more opportunities to commit theft.
. Ease in Selling Stolen Merchandise: Merchandise stolen by employees can be more quickly and easily sold, and for a much higher price using internet auction sites. This easy access to a much larger audience for stolen goods has resulted in more theft by those dishonest employees looking for quick cash.
. Decline in Honesty: There are more dishonest people throughout the nation today, and this decline in personal honesty is taking its toll. Almost daily we hear of business, government, law enforcement, celebrities, sports figures, and even church leaders being caught up in questionable activities. Such events make it easier for “borderline” employees to steal and to rationalize their theft acts. In addition, the part-time workforce is growing, and it is not uncommon to find that many such workers have less loyalty to their employer, and are more apt to take advantage of opportune circumstances.
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How can companies reduce their vulnerability to dishonest employees? Listed below are a few suggestions:
. Effective Pre-Employment Screening Process: The first step to controlling employee theft starts at the point-of-hire; do not hire the “bad apple”. A thorough pre-employment screening process including, reference checks, “honesty testing”, SSN trace/verification, criminal background checks, and drug testing is most important. Money spent up-front in the screening process to identify ‘quality’ employees will result in savings from reduced turnover and losses.
. POS Exception Monitoring: Use a POS exception based monitoring program to quickly identify possible fraudulent transactions at the point of sale (ie. excessive refunds or voids; refunds or voids before or after store hours; etc.).
. Auditing for Compliance: Ensure consistent compliance to company policies and procedures by conducting loss prevention/shrink audits on a regular basis. By reducing the opportunity, you reduce the chance of theft/loss.
. Training & Awareness: Invest in loss prevention training and awareness programs for
all employees, and a reward program for employees who report dishonest activities.
. “Back to Basics”: Ensure “LP basics” are in place and adhered to at all times:
– Door controls (OH doors locked and Exit doors alarmed)
– Trash controls (Monitored, supervised and dumpster locked)
– Package/bag checks (conduct whenever an employee exits the location)
– POS controls (2 people witness and verify refunds and voids) $