In the book “Business Fraud – From Trust to Betrayal”, by Jack L. Hayes, he states “Multiple-tasking, thoughtlessly applied, may allow one employee to control every stage of a particular work process. Whenever one employee is in such a position, he or she is provided opportunity to conceal dishonesty.” In addition, Jack also states in the book, “Anytime a trusted employee – whether that person is a bookkeeper, accountant, clerk, manager or senior executive – is carrying out two or more high risk functions that involve vendor authorizations, product receipts, payables, receivables, deposits, payroll, or other vulnerable fiduciary responsibilities, the organization is at a significant risk of internal fraud.”
If you read the newspaper or online news content on a regular basis you will find multiple accounts of a “trusted” employee committing theft/fraud. We have documented many of these incidents here in The Hayes Report newsletter. No company (retailer, school, little league, girl scouts, church, non-profit, manufacturer, distributor, doctor office, etc.) is immune to losses when you have an employee performing “multiple tasks” without close supervision.
Within the retail environment, during our consulting work we have found many thefts/frauds perpetrated due to a single associate performing multiple tasks. Some of the more common thefts we have encountered include:
. POS Transactions: Refunds, voids and price overrides are frequently both issued and approved by the same employee. There is no management or ‘second person’ approval/ verification. (Dishonest employee (DE) rings fraudulent refund or post void – no customer present – and pockets the money. DE price overrides products to much lower price for friends/ relatives.)
. Trash Removal: The employee who collects the trash throughout the location, is also the employee who disposes of the trash. There is no management or ‘second employee’ conducting a thorough review of the trash before it is removed from the store. (DE conceals good product in the trash and removes it once outside the store, or at a later time.)
. Hand Transfers: The same employee who pulls the product from stock, also packages it, and then delivers the product with no ‘second employee’ check/verification of the items being transferred. (DE packs ‘extra’ items in transfer and removes them prior to delivery to receiving store.)
. UPS/FedEx Shipments: Same employee who pulls product from stock also prepares, packs and labels carton for shipment. No check/ verification by second person that correct items were pulled/packed for shipment or address label is authorized. (DE fraudulently ships merchandise to friends/family or even own home.)
A few recommendations when addressing “multiple tasks” within your store/location:
. The control over multiple tasks should have nothing to do with the individual employee performing the tasks. You should look at the position, not the person, when evaluating multiple tasks. You must concentrate on the position by depersonalizing the process.
. In those locations with limited staffing which prevents the ‘second person’/verification process from taking place on a consistent basis, unannounced audits or process checks should be implemented. The use of remote CCTV viewing can be very beneficial in these circumstances.
. Never exclude management from your “multiple task” controls. In the event a manager is the one having to perform the refund, prepare the deposit, remove the trash, hand-carry a transfer, prepare items for shipment, etc. a second person should verify the accuracy of the task. No double standards – controls that are good for associates are also good for managers.
The bottom-line is this: If you remove the opportunity, you can prevent the theft! $
