"Keep the Hay in the Barn!" Keep More Profits-You've Earned Them, Now Keep Them!
Thieves are everywhere.
Some of them work for you.
Most of them for too long...
Reducing employee theft is the fastest way to increase profit because the dollars saved flow straight through to the bottom line.
Why worry about it? Only 2 percent of all employees who steal in a year are caught. And that low total does not even include theft by vendors, guests and scam artists.
Are small businesses truly more vulnerable? Security experts advise that small business enterprises may be particularly vulnerable to internal theft. Smaller firms often include employees with multiple responsibilities that provide greater opportunity to commit theft and greater means to conceal such actions.
What is the "real" rate of employee theft? Approximately 40 percent of employees steal at least one item per year. Inventory loss through theft exceeds 5 percent of the cost of goods sold. Seventy-five percent of business losses are a result of employees. The average dollar loss per employee theft case is $1,762. Employee theft losses, passed on to the consumer, cost each American $400 annually. The U.S. Chamber of Commerce reports that an employee is fifteen times more likely than a non employee to steal from a business.
Why such a focus on employee theft? Internal theft of money or goods from employees is a primary cause of a significant percentage of small business failures. The Department of Commerce estimates that employee theft and embezzlement activities accounted for one out of five business failures, many of which were smaller firms that were unable to weather the erosion that those activities brought to their bottom lines.
"We have never had an employee theft!" Really? Don't bet on it: 75 percent of employee-related crimes go unnoticed. Sixty percent of all employee theft is for non-cash items. There are over 400 known ways that employees can steal from their employers, and new ways are constantly being discovered.
Again: reducing employee theft is the fastest way to increase profit because the dollars saved flow straight through to the bottom line.
The "numbers" and "data" around internal theft are almost incomprehensible:
* An overwhelming 79 percent of workers admit they have or would consider stealing from their employers.
* 43 percent of thieves said they do it to get back at their employer.
* Cameras are unlikely to pick up on theft since would-be thieves can stay out of their range.
* 75 percent of all employees steal from their employers at least once throughout their careers.
* At least half of these 75 percent steal multiple times.
* Employee theft is estimated to be responsible for 47 percent of store inventory shrinkage.
* The average dollar loss per employee theft case is $1,762 compared to $265 for the average robbery incident.
* Twenty percent of your employees will steal from you no matter how well you treat them.
* In most cases, employees fail to report thefts by their fellow workers. Most workers who do report illegal activity do so after the suspect is no longer an employee.
* Seventy five percent of lost small business profits are a result of employees.
* Small business losses due to theft are equal to 3 percent of total sales.
* Less than 10 percent of the employee population is responsible for more than 95 percent of total losses from theft.
* Nearly every business experiences some degree of employee theft.
* Nearly one-third of all bankruptcies are caused by employee theft.
Help keep the money your business makes by keying in on five areas of immediate impact:
First: "Forewarned is forearmed."
Focus mainly on "internal" theft and loss, as opposed to robbery, for a simple reason: it's the most common and most costly. According to a University of Florida 2005 survey, the average dollar loss per internal theft case was $1,762 compared to $265 for the average robbery incident.
There are many classic examples of theft types: employee, vendor, guests, invoicing, scams. Some examples you may have seen or heard of before. Others are so unexpected and brazen, they will shock you.
Second: "The help."
Employees who steal from their bosses share a few traits. Ironically, one suspect trait is overzealous work habits. Sometimes someone who seems like a fantastic, almost over cooperative, worker is really just putting on a good show. They are stealing from you.
It frequently happens in smaller operations. They have fewer managers. Often, just one very overworked owner. Their security systems (not just the "cameras"; this mean systems and habits...), are not as developed.
Trust in long term, high output employees helps the day-to-day operations. It also tempts honest people into dishonesty. Set responsibility limits that work for your operation.
Also review hiring. They can't steal your hay from you if you don't hire them.
Third: "Systems and Habits"
Systems are great. Habits are better.
"Keep the safe locked unless you are in it." "Never leave the office door open." Great systems, right? Common sense, right?
Case Scenario, and be honest, here: What will you do, or your managers and supervisors do, when you are in the back office, counting the safe and the office is 95 degrees, so the door is open and you hear shouting coming from the front? You (or your manager) dash up front to quell the commotion. Did you remember to close the safe door? Is the money back inside of it? Did you spin the dial? The office door did close behind you, right? Be honest with yourself.
The unexpected is the rule of small business life. If you make a habit of turning around and checking that the office door closed properly, you would know the answer. It's sort of like getting into the habit of putting on your seat belt. You just "do it".
Keep the barn door locked.
Fourth: "Spending to Save"
A husband came home proud of his purchase of the newest iPod on the market. He was so excited to show it to his wife and to tell her how he saved $40. It cost $349 with accessories. He only paid $309. Perhaps it is a different kind of math.
Look up "small business security" on the internet. You'll see software, cameras, security systems, alarms, cash registers, consulting firms, IT groups, and that doesn't include the sidebar ads. There's almost no practical advice to help you keep the hay in the barn. And they all want your money. The point is to keep the hay in the barn, not give it out for what you don't need. Review the benefits versus costs of various theft deterrents. From video systems to a $9.67 sign, you will have to decide what is right for your business and what you can afford.
Fifth: "Tools, Tips and Tricks"
Arm yourself with the tools to keep the hay in the barn. Remember, the difference between the owner or manager who loses his shirt and the one who doesn't will be one thing: action. For an example of what is available at low or no cost to small business owners, visit http://www.KeepMoreProfits.com. You will be shown how to take immediate action with what you've learned. The book and worksheets are on CD in "pdf" format. The DVD includes some revealing footage of real crimes as they happened. Forms, checklists, posters, reminders and everything you need to plan and implement new security habits will be provided. Use what works best for you and your business. Keep the rest "just in case". No sense going out next year and buying something similar to what you just threw out.
Keep more profits.
Keep the hay in the barn.
Sources:
Delaney, Joan. "Handcuffing Employee Theft." Small Business Reports. July 1993.
Fishman, Neil H. "Signs of Fraud." CPA Journal. December 2000.
"Hints that an Employee may be Stealing from You." Profit-Building Strategies for Business Owners. May 1992.
Ingram, Bob. "Honesty: Just a Policy?" Supermarket Business. April 1994.
Kinni, Theodore B. "Lock the Door Before the Horse is Stolen." Industry Week. May 4, 1992.
Niehoff, Brian P., and Robert J. Paul. "Causes of Employee Theft and Strategies that HR Managers Can Use for Prevention." Human Resource Management. Spring 2000.
Schierhorn, Carolyn. "A Breach of Trust." Building Supply Home Centers. March 1992.
Snyder, Neil H., O. Whitfield Broome, and Karen Zimmerman. "Using Internal Controls to Reduce Employee Theft in Small Businesses." Journal of Small Business Management. July 1989.
Ward, Gary. Developing and Enforcing a Code of Business Ethics. Pilot Industries, 1992.
"Ways to Control Employee Theft." The Business Owner. September-October 1997.
Case, John. "How to Identify Dishonesty Within Your Business- The 97 Early warning Signs of Internal Theft" 2000.
CNNfn online. "Arresting Employee Theft" November 13, 1997.
Jocoby, Nicole. "Battling Workplace Theft"."
Walsh, Justin A. "Employee Theft" 2000.