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A client, who I’ll call Mary, is the owner of a small natural foods store. A new bookkeeper had been on the job for several months before Mary studied the bank records and realized $15,000 had disappeared. Mary confronted the bookkeeper, who sobbed that she'd "borrowed" the money to pay her mortgage. Mary was touched by this story. She intended to fire the bookkeeper, but should she report the theft to the police? She was concerned about ruining the bookkeeper’s employability in their small town.
Eventually Mary decided to press charges, which were reported in the local paper. At that point, two former employers of the bookkeeper called Mary to apologize for withholding information when she’d called them for references. Apparently this employee had stolen from them too, and told the same compelling story. Also Mary got a call from the bookkeeper's new employer who read the newspaper, checked his bank records, and sure enough, she’d already stolen from him.
In the end, in a court-ordered settlement, the bookkeeper agreed to pay restitution, and eventually did pay back most of what she’d stolen.
This story made me wonder how many small businesses with kind-hearted owners are vulnerable to employee theft because they just can't believe it's possible.
According to the Retail Council of Canada, employees steal an average of $2,500 in cash or goods from their employer before they're caught. On average, customers steal about $175. In addition, the Council estimates 566,000 undetected employee thefts occur across Canada annually.
For insight, I turned to Mike Feiner, loss prevention specialist and my colleague in CDS Consulting Co-op.
In Feiner’s experience, even employers that provide good wages and benefits, opportunities for advancement and great co-workers can still be subject to theft. “People can operate with a split consciousness and find ways to rationalize what they know is wrong. “Address the opportunity first,” he advises. “The motives we can’t control.”
If you’re thinking, “I don’t want to live in fear and suspicion of my staff,” Feiner’s advice may counter that impression. He recommends regular individual check-ins. “Get to know who they are, what’s happening in their lives, any signs of stress. You might find creative ways to help them such as changes in schedule or getting financial counselling.” You are sending the message that you care, but also the message that you’re paying attention to what’s going on in the store.
Focus on your policies and procedures to make sure they are clear and well understood. For example, an overly complicated staff discount system can be open to misinterpretation and abuse. If there are no portion controls, employees could be tempted to put more ingredients in a sandwich made for a friend than for other customers.
Have someone besides the cashier check the cash in the till at closeout. Regularly check your POS reports for line items showing an extraordinary number of voids. If you find them, start paying attention to what’s happening at that till.
Even check the dumpster from time to time. Feiner says, “Hiding stolen goods behind or in the dumpster in a trash bag is one of the most common forms of theft.”
If you don’t do your own books, reconcile the books with the bank statements yourself instead of leaving it to your bookkeeper. Talk to your bank about safeguards such as an alert when deposits seem unusually low.
Would your employees steal from you? Hopefully not. But stay aware. As Feiner says, “If you’re not looking for employee theft, you’re not going to see it, but it’s often right in front of your face.”
To contact Feiner about loss prevention strategies, please go to:
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