Employee theft is a routine cause of shrink. Sometimes the best loss prevention solutions are the most basic.
By Howard Riell, Associate Editor
Employee theft is one of the biggest causes of shrink among c-stores, and retailers are combating it with high-tech solutions like high speed video cameras and online monitoring.
But as is often the case, the most effective tactics are often the low-tech ones: training, consistent monitoring and setting a tone that puts staff members on notice.
Indeed, as security experts and store owners have found, high-tech solutions can sometimes make security problems worse.
“I’m sorry to report that c-store employees are still winning the theft war,” said Chris McGoey, the principal of McGoey Security Consulting, based in Los Angeles. “It’s the nature of the business that one or two employees have full charge of all the store assets, especially on the swing and graveyard shifts. A small business operator or franchisee simply cannot be there all the time, especially with a 24-hour operation. The business owner must rely on others to properly record sales and watch over the inventory in their absence.”
Technology obviously has its place in a c-store operation, especially with monitoring patterns of sales and inventory variations.
“But oftentimes low-tech is best,” McGoey said. “I think it is best to have clearly defined and articulated duties and expectations for each shift so every employee knows that he or she is accountable for the assets of the store.”
The fact that the store operator monitors all these systems puts the employees on notice that things will be missed and the employee on duty is accountable.
“The high-loss stores lack tracking systems and accountability and dishonest employees will take advantage of that failure,” he warned.
LET’S BE HONEST
Randall Atlas, principal of Atlas Safety & Security Design Inc. in Ft. Lauderdale, Fla., said that other than bar codes, he is unaware that the profusion of security technology is helping keep employees honest. His prescription? “Good old-school people supervision and accountability.”
In fact, Atlas goes farther, noting that technology can at times be used against retailers.
“(Stores can prove) less secure due to young employees who have skills to compromise the system.” His preferred approach is decidedly non-technological. Atlas said store owners’ biggest security mistake is not holding employees accountable.
One of the most highly effective tactics for retailers is video surveillance and integrated point-of-sale monitoring systems that allow sales transactions to be overlaid over the video image, so the managers can compare what is being rung up on the register versus what is being passed across the counter, according to Frank Pisciotta, CSC, president of Business Protection Specialists Inc. of Raleigh, N.C. At the same time, Pisciotta added, “managing back doors with proper alarming is important to ensure stock does not go out the back.”
Echoing McGoey and Atlas, Pisciotta is firm that higher tech tools doesn’t translate to being more secure.
“Absolutely not,” Pisciotta said. “When systems are not designed or managed properly, it is very easy to waste a lot of money with little return on investment.”
Such technologies, he added, must also be combined with traditional security practices and good old common sense. Consistent supervision, publicizing illegal conduct and having a firm and consistent process of prosecuting offenders serve as deterrents to other employees.
“Conducting background checks on new hires is important,” Pisciotta said.
Employee training, he added, can prove highly effective in establishing management expectations, identifying how employee behaviors can influence the outcome of potential security incidents, and how to respond to security emergencies, such as robbery.
McGoey was quick to point out that technology has limitations and is subject to failure, corruption and employee circumvention.
“Every employee must be convinced that the store operator is actually viewing or at least spot-checking the recordings of their shifts. Many store operators I speak to never watch video recordings due to the length of time it takes out of their already busy day.”
A critical fact that McGoey has learned from experience is employees learn very quickly that the boss isn’t reviewing the recorded video regularly.
“A significant event will occur in camera-view and the boss never asks about it. If there is a monitor in the back room, employees quickly learn what the camera can see and where the blind-spots are located. Employees will intentionally change a camera angle, or put a sign in front of it. The employee will disconnect a camera and claim it must be defective. The employee will turn off the digital recorder, or unplug it and commit theft.”
To stay a step ahead, McGoey continued, savvy convenience store operators will routinely spot-check recordings and make relevant comments to employees so they know they are being supervised.
Convenience store operators should also:
• Compliment an employee about how efficiently they handled the 1:30 a.m. rush.
• Request that the worker get out from behind the counter when it is slow to clean, dust or front-merchandise.
• Ask about a particular customer or a certain transaction or beer sale ID check.
• Use the video recordings as an opportunity to train employees how to work more efficiently.
• “Smart operators will upgrade equipment when necessary to ensure the highest-quality of video capture,” McGoey added. “Some operators will install an IP camera to allow remote monitoring, and call in to ask about something they just viewed live.”
“Mount cameras to capture the image of every customer that enters and stands at the counter,” said McGoey. “Mount a flat screen from the ceiling so all customers—and robbers—can see that their image was captured upon entry.
“Technology makes monitoring of employees and inventory control systems easier than ever before,” said McGoey. “Video surveillance technology is the most visible and on its face is the most useful to controlling convenience store inventory. Recorded video allows operators to monitor store activity in their absence and literally keep an eye on employees and each transaction they make.”
ALLOW NO SUBSTITUTE
“Technology definitely has its place, especially with monitoring trends and patterns of sales and inventory variation,” McGoey said. “But oftentimes low-tech is best. I think it is best to have clearly defined and articulated duties and expectations for each shift so all employees know that they are accountable for the cash and store inventory.”
The dishonest convenience store employee or manager will want to stray from these systems to avoid accountability. This is when it’s important to rememer that high-loss stores lack accountability, and dishonest employees will take advantage of that failure.
