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Loss Prevention Manual - Internal Theft
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Prevention
and Control Compiled and written by The
Impact of Theft
Retailers in the United States lose approximately $25 billion
in merchandise annually to theft. Of this, over $11 billion is
attributable to employees. Employee theft, like all crimes, has its victims. The most obvious
victim is the retailer: the loss of merchandise lessens the
availability of product to the consumer. The loss of cash impacts the
capital available for refurbishing, expansion, or promotion while
making the analysis
There are other less obvious victims of retail theft. Vendors
lose sales because stolen merchandise is harder to replenish. The
consumer pays higher prices or receives less service as a result of
retail losses. The government loses tax revenues.
Everybody stands to gain if employee theft can be prevented or
controlled. Identifying
the Problem
Retail loss and shrinkage comes from four areas: shoplifting,
employee or vendor theft, and administrative errors. Shoplifting is
the kind of theft most retailers are familiar with. But employee theft
is just as important to the bottom line. No company wants to believe
their own employees could be stealing from the company—and the good
news is that the vast majority don’t. But the small percentage of
employees who are dishonest affect the livelihood and well-being of
the entire company.
Why Do People Steal?
The causes of dishonesty are not widely understood and
there is no one theory which best explains why employees steal. Most
research indicates that deviant acts are “caused” by a combination
of personal and situational factors. These variables simultaneously
contribute to theft behavior. The three major conditions that need to
Motive: A motive can be real (“I need this extra money for my
child’s surgery”) or imagined (“After the way this company has
treated me, they’re getting what they deserve!”). Motives may form
quickly or over time. Real economic pressure is rarely there, nor is
significant peer pressure from other dishonest employees. Contributing
to motivation are such variables as a view of the company as an
impersonal entity which won’t be harmed by a theft (“This amount
is so small nobody will even notice”). Another contributing factor
is the level of job satisfaction: dissatisfied employees steal more. There are a variety of thought processes designed
to neutralize guilt: “If they leave stuff unguarded, it’s not my
fault things get stolen” or “I’ve done a lot for this company
and never gotten any credit for it.” A good understanding of motives
can help understand the reasons for internal theft.
Opportunity: The probability of a theft attempt is directly
related to the level of security and/or ease of access to the asset.
Employees normally have physical access to goods, cash, or both.
Opportunity also includes having the requisite “skill” to execute
a theft: sensing when the time is right, keeping cool under pressure,
knowing what to do. But you can’t steal something if you never have
the chance.
Perception of Risk: A critical factor influencing an
individual’s decision to steal
Establishing Goals and
Tracking Losses from Theft
Before a company can launch any sort of loss prevention
effort, it has to identify the problems areas, and know what the scope
of dollars and of involved personnel are. This first step is critical
to benchmarking the success or failure of any loss control efforts.
Step 1: You must first know what your overall loss is. If
you’re not already tracking shrinkage and loss at your company, you
need to start. A reputable accounting firm with retail experience can
help you get your books set up to track inventory shrink
Step 2: Next you need to attribute your losses to shoplifting,
employee theft, vendor fraud, or administrative error. This is not an
exact science, and in most cases you will be estimating or making
educated guesses based on a sometimes imprecise audit trail. The
University of Florida reported in 2000 that retail security executives
attributed 44.2% of annual shrinkage to employee theft, making it the
most significant source of financial loss. (Shoplifting ranked second
with 33.5%, administrative error contributed 17.2%, and vendor fraud
was 5.1%.) The important thing is to start tracking your losses in
order to assess the size of your problem, and to continue tracking
losses in order to benchmark your progress. Basic
Principles of Loss Prevention
No single loss prevention program can be expected to work as
well as several
Deterrence
Deterrence programs provide employees with motivation for
keeping company shrink low and instill employees with the belief that
there is a high probability of detection and apprehension plus the
certainty of appropriate punishment. Deterrence frequently can result
in displacement: the theft attempt is shifted to a different time,
location, or technique. A program’s ultimate goal should be to
eventually displace crime away from the company altogether.
Control Strategies
These procedures are designed to reduce the likelihood of theft
by either limiting access to high-risk assets or by requiring certain
activities, like refunds or taking out the trash, be recorded or
verified by a supervisor.
Detection Strategies
These may include security systems, employee hot-lines,
shopping services,
Investigation
Investigation is the necessary step between detection of a
problem and the ultimate resolution of that problem. There can be no
disciplinary action without proper verification of who, what, when,
why, where, and how.
Disciplinary
Action/Civil Recovery
The logical conclusion to a finding of employee theft or
violation of policy should be some sort of disciplinary action that
serves to put teeth in the company’s policies. Recovery, while not
always possible, serves to lessen the bite employee theft takes out
The key to reducing employee deviance is to maintain a strong
“culture of honesty and integrity.” Every employee in the company
should be formally notified of the company’s code of conduct. The
culture develops when employees observe their leaders and their peers
following the rules and those who don’t. The following practices
will help establish and support a culture of honesty in your business.
Pre-Employment Screening
The logical place to begin deterring employee theft is by
hiring good employees. The pre-employment application and interview
process should include information that will help an employer identify
those individuals most likely to steal. (See addendum.) Make sure the
application is completely filled out and follow up on any gaps in
employment or questionable responses. Check references and verify jobs
and education. (The rule of thumb is to go back at least 3 years.)
There are services an employer can use to conduct background checks on
applicants that include information on criminal convictions, credit
histories, worker’s compensation claims, and driving records.
In the interview, open-ended questions will allow the applicant
to be truthful or deceptive: “What would you do if you saw a
co-worker using drugs while on the job?” or “What kind of mistakes could you have been
fired for on your last job?” Be aware that polygraph tests are no
longer allowed in most states as a screening tool. However, many
states allow the use of “pencil-and-paper” tests to determine
honesty. (See Resource Directory.) Many companies have instituted
pre-employment drug testing, which should only be carried out by a
professional. Handwriting analysis is widely used in Europe, and is
starting to be used more frequently in the United States. Check with
legal counsel first if you’re considering it.
Policy and Procedure Manuals
Employees need direction and guidance. The establishment of
sound procedures and policies instructs employees on how to conduct
themselves while on the job. It says in clear language what is
acceptable (“You may offer an employee discount to your immediate
family”) and what is not (“You may not offer an employee discount
to friends”). A good policy should have a specific objective and
should state what the company will do if the policy is disregarded
(“Consumption of illegal drugs while on company property is grounds
for immediate termination”). Policies and procedures should be easy
to understand and widely communicated to employees. The enforcement of
policies should be fair, consistent, and documented. A good employee
manual provides useful protection to the employer by denying the
dishonest employee the opportunity to claim they had no knowledge that
what they were doing was a violation of company policy. Have your
policies and procedures manual reviewed by your legal counsel to
ensure you’re in compliance with the law.
There are a number of policies that companies should consider
including in a policy manual as part of the internal loss prevention
effort:
1. Conflict of Interest: Determine the company’s position
with respect to outside employment and business relationships with
vendors. Ask key employees, like buyers, to sign conflict of interest pledges.
2. Honesty Policy/Code of Conduct: Define acceptable and
unacceptable behavior.
3. Expenses: Define your accepted business expenses and
establish expenditure limits.
4. Pre-employment Screening: Establish criteria which
applicants must meet prior to being hired for any position.
5. Press: Restrict public statements regarding company
activities to authorized individuals.
6. Prosecution and Termination: Clarify the company’s stance
on the detection and handling of suspected theft, including
termination of employment, civil action and/or criminal prosecution.
Store Location and Design
Store location and design can affect the likelihood of both
internal as well as external theft.
Do appropriate research before you decide on a location. Ask
other merchants in the area what their experience is both with
shoplifting and employee theft. Find out what the availability of
security support services are from the landlord and check what the
experience of neighboring merchants with the service are. Stop by the
local police department and inquire about neighborhood crime patterns.
When hiring a design firm, ask about their capabilities and
views on security issues. Many can balance store aesthetics with
security concerns in a way that meets the needs of a particular
location. The ideal store design should factor in a variety of
security issues, including those relating to employee theft. Stores
can be laid out not only to influence shopping behavior, but also to
discourage pilferage and theft. For example,
Ensure that the exterior of the building and parking areas are
well lit and readily observable from inside. Fence off potential
problem areas.
In warehouses, the shipping and receiving areas should be in
full view of supervisory personnel at all times. Offices with one-way
mirrors serve to provide privacy to the supervisors while allowing
constant vigilance of the warehouse.
The commitment to loss prevention must start at the top of the
company. If the owners and senior managers don’t believe that
controlling losses is important to the overall health of the company,
lower level employees won’t believe it either. Once loss prevention
and control is established as a company priority, every department
should be asked to contribute to the success of the program.
Begin by letting employees know how employee theft affects
them. Bonuses, benefits packages, opportunities for promotion can all
suffer if losses become severe. Make sure every employee is familiar with company
policies and procedures. Stress that good training and the following
of correct procedures can help reduce company losses by reducing
administrative error. Following company policies also makes for a
safer workplace.
Next, teach all
employees how to recognize instances of theft. Set up a structure for
reporting suspected theft or dishonesty in the workplace. Some
companies offer incentives for reports. If the company is large, you
may want to create a toll-free hotline to the loss prevention
department. If it’s small you may simply need to create an
atmosphere that makes it comfortable for employees to report
suspicious activity directly to owners or managers. Assure employees
that their reports are confidential and let them know what will happen
as a result of a report getting filed.
How you handle spreading the word is up to you. Some companies
may call a meeting of all employees for breakfast. Others may set up a
series of workshops region by region. Professional presenters may be
employed or videos on the topic might be shown. No matter how you
approach the subject, make sure that your employees are encouraged
Be prepared to reinforce the various messages of loss
prevention on a regular basis. You might want to have posters on
bulletin boards, in break areas or backrooms. You may want to use
paycheck stuffers. If you have a company newsletter, you may want to
run progress reports. If you have a company convention, consider
giving loss prevention some time in your agenda. And don’t forget
that new hires need to have loss prevention training as part of their
orientation program. (See Resource Directory for references.)
Be realistic in your expectations. Loss prevention is competing
with messages about new releases, sales programs, promotions, human
resources, and operations. Don’t hold employees accountable for
problems outside their control. Remember that the biggest part of loss
prevention is simply keeping the majority of your employees honest and
creating an atmosphere in which deviant behavior will be kept to a
minimum.
Lastly, check your progress regularly. This should help you
determine where your efforts are paying off and where you still have
problems. A program that initially seemed too expensive may now be
justified. Conversely, a program that has significantly reduced a
problem could be curtailed. Don’t be afraid to adjust course in
response to your analysis.
Human Resources
Programs
The effects of employee pay, benefit programs, promotion
policies, and profit sharing plans all affect employee loyalty,
turnover, and shrinkage. Data exists which suggests that there is
linkage between store pay levels and retail shrink with slightly lower
shrinkage occurring at companies paying more than the competition.
There is also evidence that companies which offer profit sharing plans
to employees and which promote from within experience lower incidences
of shrinkage. Lastly, companies which experience lower employee
turnover also frequently experience smaller shrink. Asset
Control
The methods employees use to steal are varied, numerous, and
often creative. Different kinds of theft require different kinds of
prevention and control. Most thefts have common elements which are
best deterred by a unified and integrated approach to loss prevention.
Loss prevention ideally involves virtually every department of a
company. This chapter will outline some of the common ways
that employees steal and will provide some suggestions for control.
Bear in mind that every company is different, and loss prevention
programs that are feasible for some companies may not be appropriate
for yours. Review the list of options with an eye toward the scope of
your problem.
Merchandise Theft
Employees, working alone or with others, can steal
substantial amounts of product. Here are just a few of the ways: ·
Merchandise can be hidden in lockers, purses, trash
containers, or other concealed areas for removal from the store or
warehouse during breaks, ·
Unpaid-for merchandise can be passed to friends or
accomplices during what appears to be a routine sale or exchange. ·
Stolen merchandise can be swapped with employees in
other departments or stores. ·
Merchandise can be stolen after hours by maintenance or
security personnel. ·
Merchandise can be stolen from unattended delivery
vehicles or in collusion with delivery personnel. ·
Merchandise can be shipped from the warehouse with a
fake bill of lading ·
Merchandise can be stolen by professional thieves
working in conjunction
Controlling Merchandise Theft ·
Try to have a management presence on the sales floor
throughout the day. ·
Offer employee discounts to facilitate legitimate
purchases by your staff. Keep ·
Discourage employees from bringing purses, packages, or
back-packs onto the selling floor or into the warehouse. Provide a
coat room or lockers if possible. Lockers with clear doors will deter
using the lockers as a “stash.” Post your policy regarding theft
and pilferage prominently in this area. ·
Try to have a manager observe and document all
deliveries to the store; management should try to do the same in the
warehouse. Keep receiving doors secured when not in use. If you have
roll-up doors, make sure they’re locked at the bottom on both sides
and not at the pull chains (merchandise can still slide through the
gap). ·
If you have a designated employee entrance, require
employees to use it and have it monitored by a security guard or by
management personnel. If you don’t have a separate employee
entrance, managers need to monitor employees as they leave the
workplace. Consider a policy which allows management or security
personnel to check employee purses and packages. Post it prominently
and apply it consistently. ·
Try to have two people open and close the store
together. Try not to have just one employee working a shift. ·
Keep stockroom and warehouse merchandise in neat stacks
so that it is easy to spot missing items. Bad housekeeping may be a
tip-off to an impending theft. ·
Try to have managers observe the emptying of trash.
Periodically check trash containers for concealed merchandise. ·
Periodically conduct unannounced store audits. Piece
counts on selected merchandise will both verify inventory counts and
deter potential employee theft. ·
Keep good records on returns and segregate returned
product in a separate area. ·
EAS tags can deter employee theft as well as shoplifters
if activation and deactivation are well monitored. ·
Closed circuit TV and roaming security agents are
expensive solutions whose application is usually primarily
shoplifting, but can play a role in employee theft as well. ·
If you have burglar alarms, make sure they are working
and are used. Consider giving codes only to managers and supervisors.
Periodically change all codes, passwords, and keys.
Cash Theft ·
An employee can fail to ring up a sale or open the cash
register with a “no sale” and pocket the cash. Sometimes the cash
will be put into the register at the time of the sale and removed
later in the day. ·
An employee can enter less than the full sale amount
(“under-ringing”) or more than the full amount (“over
charging”) in the cash register and pocket the difference. ·
A cashier can deliberately short customer change and
pocket the difference. ·
A transaction can be voided after the customer leaves
the store and the cash pocketed. Portions of a transaction can be
voided and the price “corrected” ·
An employee purchase may be refunded at full value with
the discount difference being pocketed. The purchase can be voided,
but the merchandise kept. ·
Fraudulent refunds can be issued to accomplices and the
cash pocketed. ·
Fraudulent gift certificates can be issued to
accomplices who redeem them ·
Credit card information from store customers can be
fraudulently used by employees to make purchases or customer credit
card payments may be credited to a friend’s account. ·
In stores that accept “lay-aways,” employees can
fraudulently cancel or alter ·
Bills can be stolen from currency bundles. ·
Errors can deliberately be created in bank deposits in
order to pocket ·
Fraudulent receipts can be submitted to “petty cash”
for reimbursement. ·
Accounting department employees can issue duplicate
checks for the same invoice and embezzle the funds with an accomplice
from the company issuing the invoice. ·
Invoices can be falsified with an employee pocketing the
cash from the payment. ·
Payroll records can be altered to include fictitious
names with the fraudulent paychecks going to the dishonest employee or
an accomplice. ·
Employees who are authorized to travel may pad expenses
or submit fictitious receipts. ·
Try not to assign too many employees to the same cash
register. Try to have each transaction identified by employee (either
by initial or by an employee number). ·
Have sales associates log out and keep their own till
drawers during breaks. ·
Tell customers to expect a receipt with your signage.
Ask them to count their change. ·
Prepare bank deposits daily. Establish detailed
procedures for the counting ·
Retain the cash register and adding machine tapes and
secure them to bank deposit slips. Use adding machines with a
“non-add” capability to include the date, register number and
money counts by denomination for each deposit. ·
Require money counts, receipt of checks, cash payments,
money orders, ·
Establish detailed procedures for handling voids.
Consider having all voids initialed in ink by a supervisor. Consider
having all post-transaction voids handled only by supervisors. Deface
all charge slips which are voided. ·
Establish firm policies regarding returns and refunds
accompanied by detailed procedures on handling return transactions.
Use numbered refund slips. If you accept returns without a receipt,
obtain the customer’s name, address, phone number, and signature as
part of the return transaction. Keep a refund log on “no receipt”
transactions and periodically verify the refund transactions. Consider
having supervisors approve all refunds over $25.00. ·
Price-variance reports are an excellent tool for
spotting under-rings and over-rings. The report is a spot-check of
prices on the product compared to prices actually rung up. ·
Exception reports help to identify stores and employees
with inordinately high percentages of certain kinds of transactions.
Most retailers typically track cash over-ages and shortages, voids,
cash refunds, bad checks, and price overrides. Computer programmers
can enable most POS systems to generate such reports. ·
Bond key employees for theft. ·
All company checks should be approved by management. Use
pre-numbered checks and periodically inspect the middle and back of
the book to make sure there are no missing checks. Try to separate the
authorization of payment from the preparation of checks. Have
separation of preparation from mailing of checks as well, if possible.
Paid invoices should be marked “Paid” and segregated from current
invoices. Never approve checks made out to “cash.” ·
Keep accounting and personnel files and records in a
secure place. ·
Place spending limits on authorized employees and create
lists of authorized vendors. ·
Payroll should be verified by a supervisor. Bank
statements and canceled checks should be examined by management. ·
Match expense reports to employee travel schedules.
Management should approve all submissions and periodically verify
expenses. ·
Conduct periodic audits which are unannounced.
Loss of Other Assets ·
All kinds of company supplies can be appropriated for
personal use: ·
Employees can steal all kinds of company equipment (from
calculators to computers), sometimes simply by asking to borrow it
without intending ·
Personal mail and packages can be sent through the
postage meter of the company. ·
Company data (including sales records, personnel files,
customer mailing lists, or future plans) can sometimes easily be
stolen from the company or destroyed. ·
Employees who conduct personal affairs while at work are
stealing company time. ·
Disgruntled former employees may return to commit
vandalism or harass current employees. ·
Most companies have some employees who could be offered
bribes or ·
Abuse of employee discount privileges. ·
Long distance or “900” number call abuse.
Controlling Asset Loss ·
Restrict access to supplies to authorized employees or
consider having employees log in all supplies that they take. ·
Conduct frequent inventories of supplies and have them
conducted by members of another department or store. ·
Clearly mark company equipment with the company’s name
and location. Maintain good records of the equipment on all company
property. ·
Develop policies regarding personal use of copy
machines, phones, postage meters, and other company equipment. ·
Escort guests to their appointments at your offices. ·
Restrict access to sensitive company files, both
physically and in your computer systems. Require authorized personnel
to log access to sensitive information. ·
Periodically review phone and postage bills for
excessive charges. ·
Have a code of conduct that describes what gifts from
vendors are acceptable. Make sure both employees and vendors are aware
of the policy. If necessary, ask employees in your purchasing
department to file periodic reports on gifts received from vendors. ·
Require competitive bids for products and services
whenever possible. ·
Keep a log of employee purchases, and spot check
purchases. Suspend the privilege for employees who abuse it.
Handling
the Dishonest Employee
Despite a company’s best efforts, some employees will steal
or otherwise violate company policies. When you’re made aware of an
alleged deviant act, an investigation is called for. The primary
purpose of the investigation is to determine the validity of the
allegations, confirm who’s involved and over what period of time,
and estimate the financial loss.
There are usually very few instances where an employee is
actually “caught in the act” of stealing from the company.
Usually retailers uncover employee dishonesty from a co-worker
tip-off, unannounced audits and through variance reports. Since
you’ll almost never have a “smoking gun,” a suspected theft will
have to be investigated. While there’s no guarantee that you can
successfully uncover the truth in every situation, consider that if
you don’t follow up on reported infractions, you risk an erosion of
employee morale. True employee dishonesty is rarely concealed from
fellow employees for long. Loyal associates will be offended by
company apathy and your company culture will eventually no longer
support loss prevention as a priority.
Conducting an internal investigation will be made a lot easier
if you have first established and published a company policy regarding
the conduct of investigations. A fair and consistently executed policy
will assist in getting at the truth while simultaneously protecting
the rights of employees. Your policy should state the circumstances
under which an investigation will be launched, should specify who is
authorized to conduct an investigation, what conduct the investigative
authority is permitted (i.e. access to personnel files, hiring of
special investigators, installation of video cameras), what the
duration of an investigation will be, who will be made aware of the
investigation, and what records will be kept of its outcome. Have your
policy reviewed by legal counsel before it’s published or
implemented.
Before launching a formal investigation, ask a few important
questions: How strong is the existing evidence? How credible is the
source of the evidence? Is the suspected act actually a violation of
company policy or the law? Is the infraction serious enough to warrant
a formal investigation? If the answer to most of the questions is
negative, you may want to just wait and watch.
The conduct of any investigation should follow some basic
principles:
1. Draw Up a Plan for the investigation that details the
following: what and who is being investigated and why; who will
conduct the investigation; and what budget (if any)
2. Collect and Review the Paperwork. The paper trail will help
you determine if you are dealing with an administrative error or
employee theft. Start a file of the appropriate documents: register
tapes, canceled checks, void slips, refund authorizations, work
schedules, store alarm printouts, charge slips, deposit slips,
handwritten notes, computer printouts, audit reports. Remember that if
the allegations are verified, the documents in this file become
evidence which you may choose to use in court. So keep the file in a
secure place not liable to tampering.
3. Conduct Interviews. Talk to witnesses, suspects, and other
relevant and knowledgeable individuals. A preliminary investigation
will warrant that interviews be informal and involve a few questions
by company personnel during work hours. Later, you may need a more
formal interview conducted in a private setting, with examples of
incriminating evidence available, with an observer sitting in, and
with notes being taken. Make sure interviews are conducted in a
professional manner consistent with the law and the policies of your
company. Remember, employees are innocent until proven guilty, too!
There are several companies that offer courses on the proper conduct
of employee interviews as well as several books on the topic. (See
Resource Directory.)
4. Observe and Record. Sometimes further observation of
employees is necessary to confirm dishonest activity. Observation can
be conducted by company personnel involved in the investigation, by
out-sourced staff (i.e. professional shoppers), or by technological
surveillance (photographs, video, CCTV). The cost of the various
approaches varies tremendously. Pick one commensurate with the
problem. No matter which approach you employ, be vigilant that you
don’t violate people’s rights or endanger company personnel. A
casual observation conducted by company personnel should be followed
up by note-taking of the behavior observed. These notes should become
part of your data file. (See Resource Directory for lists of companies
that can assist you with outsourced observation.)
5. Form a Hypothesis and Test It. You have your facts and your
hypothesis. Do they fit? If not, you need to do more digging.
If they do, you need to determine what course of action on the part of
the company is an appropriate response to the situation.
6. Disciplinary Action. There are a wide range of options
available to companies who have confirmed employee misbehavior. Make
sure that you thoroughly review your options with both legal and human
resource professionals. Depending on the seriousness of the act you
may choose to: ·
verbally reprimand the employee. ·
submit a written reprimand or warning to the
employee’s personnel file. ·
temporarily suspend the employee from the workforce. ·
terminate the individual as an employee. ·
initiate civil or criminal action against the employee.
7. Recovery. If you have insurance coverage for loss from
theft, you may wish to file a claim. Lastly, state and federal tax
laws allow deductions for many types of losses incurred by retail
chains, including losses involving employees. In some instances, you
(or your insurance carrier) may choose to demand restitution of the
loss by instituting a claim in civil court. Establishing
a Loss Prevention Department
As companies grow, loss prevention needs inevitably grow. It
frequently becomes necessary to assign one individual the
responsibility for administering the loss prevention function.
Eventually the company may require a loss prevention department. Some
loss prevention programs are easily administered in-house, and others
are more logically jobbed out. This chapter lists some common options
for handling the various loss prevention responsibilities.
Head of Loss Prevention
This individual has primary responsibility for implementing and
managing company loss prevention programs. In a small company this
function is often handled by the CEO or by a senior level executive in
the area of operations, administration, or finance. In a larger
company, there may be a director or vice-president of loss prevention
who reports to the CEO or to a senior level manager in the area of
operations, administration, or finance. The head of loss prevention is
responsible for ensuring that loss prevention goals mesh with overall
corporate goals and strategies. This person should assess problems,
determine appropriate strategies and budgets, and oversee the
implementation of LP programs.
Loss Prevention
Committee
Companies both large and small sometimes employ loss prevention
committees Each store, district or region may also have a
Loss Prevention Committee.
Loss Prevention
Department
Larger companies may need fully staffed departments to
adequately track shrinkage, review audit reports, assist in
pre-employment screenings, maintain employee awareness programs, and
conduct investigations. The size of the department will vary with the
size
Regional Managers
Mid-to large-size chains generally incorporate loss prevention
duties into the job description of district and regional managers.
Frequently these individuals will have the responsibility for ensuring
that loss prevention programs get implemented at the store level: that
posters get up in the back room, that policies and procedures are
getting followed. If there is no loss prevention department, they
will likely have the responsibility for conducting pre-employment
screenings, reviewing audits, and conducting investigations.
Store Managers
The priorities and culture of a given store are frequently
heavily influenced by the store manager. Therefore, if loss prevention
is important to a store manager it will also be important to his staff. In the small companies,
the store manager will have primary responsibility for implementing
loss prevention programs in the store. The store manager is generally the first to suspect incidents of
employee theft because of supervisory responsibility for daily bank
deposits, deliveries, trash removal, etc. Store managers frequently
respond well to incentive programs designed to reduce store shrink and
theft. It is the store manager who should be accountable
for the shrinkage results at their respective stores.
Store/Warehouse
Employees
This group of employees are the company’s first line of
defense against theft and loss. If these people are trained and
motivated to recognize and report loss incidents within the company,
they can frequently be the cause of tremendous savings. Poorly trained
and poorly motivated employees can do the reverse and encourage a
culture which promotes employee theft.
There are a number of
loss prevention functions which are typically outsourced by
retailers:
Uniformed Guards
Some companies employ uniformed guards at the exits of stores
or distribution centers to both deter shoplifting and employee theft,
and to handle incidents of attempted theft.
Auditors
Outside firms are sometimes engaged to conduct inventories and
audits. The audits may be routine to determine compliance with company
procedures and regulations, or part of an investigation into a
specific incident.
Shopping
Services/Investigators
There are firms which send out investigators posing as shoppers
who submit reports on the cleanliness of the store and the service
provided by the store personnel. These shoppers can also be used to
investigate suspected incidents of employee theft by reporting on
correct change and whether or not they got a receipt. These services
can also be used to conduct a covert surveillance of store, warehouse
or home office employees.
Consultants
There are a number of companies which specialize in analyzing a
company’s loss prevention programs and will provide assistance in
designing programs targeted to a specific problem. These companies
also will help a company design orientation programs and will conduct
seminars on employee theft for retail clients.
Security Systems
Virtually all retailers outsource their security system
requirements, from burglar alarms, to EAS systems, to CCTV, or limited
access cards. JOB APPLICATION ELEMENTS Personal Data Name and address Other names used in prior employment Verification that candidate is at least 18 years
old Verification that candidate is authorized to work
in the United States Driver’s license number (if needed to verify
driving record)
General Data Position being applied for Salary requirement Objection to shift or overtime work Referral source, if applicable Nature of prior convictions, if any Nature of prior involuntary discharge from
previous employers, if any Employment Data List of all prior employers (perhaps with a
10-year limitation) Addresses and telephone numbers of previous
employers Job titles and dates of employment (with
explanations of employment gaps) Duties and responsibilities Salary history Name of immediate supervisor Reason for termination Permission to verify employment data with each
previous employer Education Data List of all schools attended Degrees earned and course specialization Special Skills Data Skills acquired on-the-job Honors received relevant to the position being
sought Proficiency on various types of
equipment/machinery Microcomputer literacy and specific software
familiarity Health Data Agreement to take a pre-employment drug test Agreement to take a post-employment physical
examination An indication about whether the candidate smokes Personal References Names, addresses, telephone numbers Relationships to other employees, if any Certification (to be read, signed and dated by
applicant) Language
similar to the following should be included on the employment
application: “All applicants for employment are judged on the
basis of qualifications and ability without regard to age, sex, race,
creed, color, national origin, marital status or disability. I
understand and agree that employment may be contingent upon reference
checks. I understand that the Company follows an
employment-at-will policy, in that I or the Company may terminate my
employment at any time, or for any reason consistent with applicable
state or federal law. I understand that this application is not a
contract of employment. I understand that to be employed I must be
lawfully authorized to work in the United States, and I must show the
employer documents that will prove this. I authorize an inquiry to investigate my work and
personal history and verify data given on this application, or on
related papers, and in interviews. I authorize all individuals,
schools, and firms named therein, except my current employer if so
noted, to provide any information requested about me, and I release
them from all liability for damage in providing this information. I certify that all the statements herein are true
and understand that any falsification or willful omission shall be
sufficient cause for dismissal or refusal of employment.” Signature: _________________________________
Date: ______________________
Barefoot, J. Kirk. Undercover
Investigation. (Stoneham, Mass: Butterworth, 1983).
Baumer, Terry L., and Dennis P. Rosenbaum, Combatting Retail
Theft: Programs and Strategies. (Stoneham, Mass: Butterworth, 1984).
Carter, R. (1987, July). Employee Theft Often Appears
Legitimate: Accountancy, 100,75-77.
Chuck,
Michael D.K. et al. L.P. Specialists Level 3 Investigations
Training Manual.(Los Angeles, Calif: LPTI Press, 1991).
D’Addario, Francis J. Loss Prevention Through Crime Analysis.
(Stoneham, Mass: Butterworth, 1989).
Gibbs, J. P. (1975). Crime, Punishment and Deterrence. New
York: Elsevier.
Hayes, Read. (1992) National Retail Theft Trends Report. Paper
presented at the Loss Prevention Colloquy II, January 30-31, Ft.
Lauderdale, Florida.
Hayes, Read. Retail Security and Loss Prevention. (Stoneham,
Mass.: Butterworth-Heinneman, 1991.
Hayes, Read. (1993) Employee Theft Control, Orlando: Prevention
Press.
Hollinger, R.C. Dishonesty in the Workplace. (Park Ridge, IL:
London House, 1989)
Hollinger, R.C., Read Hayes and Barton Weitz. (1992) National
Retail Security Survey.
Paper presented at the National Retail Federation 1992
Convention, January 12-15 New York, NY.
Hollinger, R.C., (1991) Neutralizing in the Workplace: An
Empirical Analysis of Property Theft and Production Deviance. Deviant
Behavior: An Interdisciplinary Journal, 12, 169-202.
Hollinger, R.C. and Clark, J.P. (1982a). Employee Deviance: A
response to the perceived quality of the work experience. Work and
Occupations, 9, 97-114.
Hollinger, R.C. and Clark, J.P. (1983). Deterrence in the
Workplace: Perceived severity, perceived certainty, and employee
theft. Social Forces, 62, 398-418.
Inbau, Fred E. Criminal Interrogation and Confessions, Third
Edition. (Baltimore, MD.: Williams and Wilkins, 1985).
Merriam, D. (1977). Employee Theft. Criminal Justice Abstracts,
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