Question

According to a recent article from Forbes, retail operations in the United States are experiencing over $60 billion a year in losses primarily due to employee theft. Imagine you have been hired as a loss prevention specialist for a large retail chain and your first assignment is to identify and address the current problems with inventory shrinkage. Select and discuss one of the following internal controls below you would implement to help prevent future employee fraud/theft? Be sure to provide your rationale. Option A: More stringent background screenings for new hires (i.e. reference checks, criminal record checks, credit record checks) Option B: Tighter security controls (i.e. video surveillance, random inventory/cash audits, computer system audits, segregation of duties)

Answer 1

IMPLEMENTATION TO PREVENT FUTURE EMPLOYEE FRAUD/THEFT

OPTIONS A: More stringent background screenings for new hires

Run background checks on all new employees.

Running a background check is a fairly standard process

i.   Use background checks, don’t use “the box.” That means, don’t ask someone if they have a criminal background on their paper application just to weed people out. Conduct interviews first and get to know someone first to avoid unnecessary discrimination.

ii.   Be consistent and run the same process on each applicant.

iii.   Look for patterns, rather than a single good or bad act.

iv.   Use a professional agency.

Ensuring that all employees are well-trained on policy to prevent accidental loss.

Employees might make mistakes on their jobs. Whether it’s entering the wrong number of inventory or giving the wrong discount, mistakes happen and they can really add up. Work with employees so that they know the policies and check their work.

Counting cash drawers every day.

Count cash drawers every day to keep full tabs on how much cash is in them at all times. Running these counts will deter skimming and help to detect it, as well.

Using a buddy system for the trash.

The trash is a popular method for employee stealing, have employees take the trash out together. Thieves are less likely to try to stuff something in the trash bag when someone is there watching them.
This tip is a doubly good, too, because having two people take out the trash is typically safer than having one person take out the trash.

Having employees check each other’s bags before they leave for the day.

This tip is a bit awkward, I know. I used to have to do it. Whenever an employee left the store, the manager on duty would check their bag before they left. At closing, the employee left with the manager would also check the manager’s bag. It was always a bit awkward to hold your purse out and let someone else go through it, and it was always plenty awkward to be the person going through the bag, but it certainly made it more difficult for anyone wishing to walk out with an item in their bag.

Keeping employees happy.

Happy employees are just better for a business. They’re more productive and less likely to steal. So to make them happy:

i. Eliminating the gender pay gap at stores
ii. Helps pay for employees’ college education
iii Providing Fair pay and happy work environment.

OPTION B: Tighter security controls

Implementing surveillance software.

Surveillance software isn’t just video cameras anymore. Now the cameras are equipped with software that can help them detect such activities as “sweethearting” and alert you to the problem. It’s pretty incredible. These systems are especially good for documenting instances of employee theft.

Institute modern inventory management and POS(Point of Sale) software to make it easier to monitor for discrepancies.

Certainly could audit receipts every day or week or month to try to discover patterns of loss in store. But we could also just implement a modern inventory management and POS system that will pull reports for us every day. These reports will make it easy for us to notice patterns (like if the cash register has been consistently down a few dollars) and will make it noticeable when we do inventory checks what exactly is missing.

Segregation of work

Proper segregation of work and delegation of work can lowering the inventory theft like delegation of work more than one employee for more control checks.