Theft comes in many forms and if left unchecked, can become a constant issue.
By Brad Perkins, Contributing Editor
“Theft is one of the oldest crimes in the world,” said Chris McGoey, president of McGoey Security Consulting and an internationally-known security expert. “There has always been shoplifting and theft, and convenience stores are hit particularly hard.”
Battling shoplifting comes in many forms, from greeting customers each time they enter the store to displaying faces on video monitors and using visible security cameras. But what do you do when the employees in charge of the store are the ones stealing?
Jack L. Hayes International’s 28th Annual Retail Theft Survey reported that in 2015, “one out of every 38 employees was apprehended for theft from their employer.” While that number reflects more than just the convenience store industry, it’s a 1% increase from 2014 and a number that has increased nine of the past 10 years, which should serve as a warning to owners and operators.
“Your No. 1 loss comes from your employees,” said Ray McIntosh, president of Ft. Wayne, Ind.-based McIntosh Energy. “I don’t think the customers are the big problem. It’s primarily employee theft and vendors.”
Cigarettes, lottery tickets and cash are most commonly stolen, but employee theft can range from taking food or gas to ignoring transactions to clocking in without working or taking advantage of outside relationships.
“There is a tremendous amount of employee fraud we potentially don’t know about because of the creativity of what they are able to do through relationships with vendors or customers,” said James Schutz of S&W Consulting, which operates the Open Pantry convenience chain in Illinois and Wisconsin. “They’re able to commit these fraudulent actions and they go unnoticed.”
With access to so much merchandise and cash, employees working alone and potentially without management watching can give in to a temptation that is always present.
“Employees see thousands of dollars cross their palms every shift, or think ‘the store could supply all of my food needs for free’ or they pump gas into their own vehicle or let a friend do it,” McGoey said. “If nobody is counting the money, there’s no record. By the time [management finds] out, they might have turned over 10-20 employees and lost money. It’s tragic.”
With registers that record every sale and video cameras that record every interaction, it’s easier than ever to identify employee theft.
“Cash registers now are like computers,” McGoey said. “You can program all the counting into the (point of sale) POS computer and it will tell you what your buildups are on stock items, what sales are, keep track of trends and patterns and sales per shifts.”
Of course, that’s only if management is also paying attention.
“The dishonest people—the ones who do it, do it because there’s no procedure,” McGoey said. “There’s no oversight or supervision, so there’s little chance of them getting caught.”
Also, management should review video and register reports from every shift and set meetings to discuss them with employees. Checking that what’s in the safe matches what employees recorded also ensures that employees know that management is aware of what’s happening in the store and is willing to take action.
“Visit with your employees and have the figures in your hand,” McGoey said. “Let them know you know: ‘For some reason you didn’t ring up $20 in sales’ and ask why.”
Making employees accountable by putting into place systems that ensure management tracks every dollar, sale, item is key. From coffee cups to cartons of cigarettes, if employees know they’re accountable for recording accurate sale and inventory information, theft will decrease and job satisfaction will often increase.
“With the cost of tobacco today associates are highly tempted to take just one pack, [thinking] they’ll never question it,” Schutz said. “But we count cigarettes on each and every shift. One pack short on a shift needs to be reported to leadership immediately. The cash issue is a bigger issue, operating on an open drawer, selling car washes for cash and the old fashioned just putting the money in your pocket. We allow $1 per shift variance, no exceptions.”
HIRE, TRAIN, EMPOWER
McGoey argued technology, while important, is a supplement to proper hiring, training and review practices.
“Lead with basic, low-tech stuff—hiring good people, training them well, counting things, documenting things,” McGoey said. “You do all of those things first because if your technology breaks down, you have none of those things. So you make sure they’re doing all the mechanical things first and then you layer on the technology in a support capacity.”
Ensuring in-depth hiring practices, planning for employee turnover, requiring all lines of an application be filled in and checking references, reasons for termination and performing criminal background checks and credit checks often yield the red flags that could save a store from internal theft.
“If we could do a better job of hiring, then a store would have less theft. It’s a truism that many don’t practice,” McGoey said. “The best way to predict the future is what happened in the past. If you check references and dates are off, then obviously the person is not truthful on the applications. If the person is not truthful on the application, there’s a good chance he might be dishonest once he gets access to store.”
Even with accountability and set responsibilities, getting employees to buy into company policies can still be a challenge. Too much focus on theft could lead to morale issues that push those on the fence over the edge. Too little focus promotes an environment in which it’s accepted.
“When you’re talking about fraud and theft and explaining ramifications and negative impact, everyone is bobbing their heads and agreeing it’s terrible, but they turn around and perform it themselves,” Schutz said.
Open Pantry has one solution—offering incentives for employees to stay honest and turn in those who aren’t.
“We bonus everybody from part-time cashier to store leadership,” Schutz said. “Inventory and cash (loss) numbers over a certain threshold have a negative impact on their bonus, so stores that experience heavy inventory or cash loss know this particular inventory loss cost them in bonus money. It starts to get in their heads because now it’s a personal thing. They could’ve gotten $500 and only received $100 because they knew a guy was stealing but didn’t say anything about it because they didn’t want to get involved. So next time they become that much more willing to alert those in position to stop it.”
Public, positive feedback after management reviews an inventory slip or checks a deposit can also help deter theft.