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Inside Job

THE PROBLEM: Every year, employee theft costs
Americans more than $15 billion
THE SOLUTION: Retailers are implementing strategies
to deter or catch workers in the act
Tuesday, March 2, 2004 | 12:00 a.m. CST; updated 2:36 p.m. CDT, Tuesday, July 22, 2008

Abercrombie & Fitch’s shrink rate, or level of lost inventory, is usually below three. A few years ago, one store’s rate mysteriously sky-rocketed to 12.

Was it customer shoplifting? A clerical error?

Thaddeus Cooper, a former Abercrombie manager, said it was something far more difficult to prevent: employee theft.

“Basically, managers would steal from the store and sell the merchandise on eBay,” Cooper said.

Eventually, the offenders were caught because the corporation constantly checks the Internet for sales of merchandise, but they got away with a lot of company money first.

This is not a rare occurrence. Employee theft is a problem many businesses across the nation fight every day. Whether it is taking money from the cash register, shoving T-shirts into shopping bags on the way out the door, or simply giving out employee discounts, Columbia businesses agree that employee theft is everywhere.

According to the University of Florida’s 2001 National Retail Security Survey, employee theft accounts for nearly 46 percent of all inventory shrinkage and costs the American public more than $15 billion every year. In ranked order, the stores that report the most difficulty with employee theft are grocery, consumer electronics and appliances, discount, men’s apparel, sporting goods, children’s apparel, and women’s apparel, the study said.

Local retailers respond

Retailers are aware of this problem and are doing what they can to solve it.

Dru Furse, owner of Britches in Columbia, said that in some ways, employee theft is inevitable.

“If employees want to steal from you, they will steal from you,” Furse said. “They spend all their time in the store, and so they have time to figure out how to get away with things.”

Sarah Wilson, a 17-year-old sales clerk at Famous-Barr, reiterates Furse’s theory.

“Since they work here, they have access to everything,” Wilson said.

Stores employ different strategies to prevent employee theft from becoming an issue. Most of Columbia’s large department stores have a special loss prevention team that constantly watches for theft. Wilson said Famous-Barr team’s close attention often leads to employees being caught.

“We are watched more than the customers,” Wilson said.

Smaller businesses have different forms of prevention.

Lance Wood, general manager of Flat Branch, said that the restaurant avoids theft through a variety of measures, including locking up all the liquor and requiring a manager swipe for an employee discount. Also, Flat Branch employees are accountable for the money they handle.

“Bartenders and servers are in charge of their own cash, so if they come up short at the end of the night, it’s on them,” Wood said.

Becky Stone, front-end supervisor at Westlake Ace Hardware, said that the store hasn’t had many problems with employee theft, even though there are few controls in place to prevent the problem.

“We have a good crew,” Stone said.

Just in case something should happen, however, Westlake Ace Hardware has an anonymous hotline for employees to report any internal theft they might witness.

James Smith, a manager at American Eagle, said that it is always the store’s routine to check coats and purses at the door, keep the back door locked, make sure large shipments are sealed, check employees’ bags when they leave, and walk them all the way out to the mall parking lot.

However, Smith said it is important to remember that employees’ ability to steal merchandise pales in comparison to their ability to steal actual money.

“Every employee has cash register duties,” Smith said, “If you trust them with cash, you might as well trust them with merchandise.”

So what is the best way to prevent employee theft?

John Case, security consultant and author of “Employee Theft: The Profit Killer,” said the solution is more complicated than a single magic bullet.

“There is no one thing that cures employee theft,” Case said, “It’s a totality of security measures.”

[photo]

A Buckle’s store money bag sits on the counter, locked, waiting to be taken by no fewer than two employees to the bank drop box in Columbia.

Case said businesses should start by doing background checks on new hires because people who have had problems in the past will often steal again. Also, Case said, a close eye should be kept on employees in a dire financial situation, those who have some vendetta against the store or their managers and those who have many opportunities to steal.

Case stressed the importance of employee theft prevention, mentioning that the losses are five times greater than shoplifting.

“The employee is there every day, so they have a lot of time to steal,” Case said, “Visibility is on shoplifting, but the real cash is in employee theft.”

An ounce of prevention

The University of Florida’s survey also lays out a course of action against employee theft.

The survey also says that prevention begins by researching the histories of potential employees. This includes checking past employment, criminal convictions and personal references.

If businesses want to go a step further, multiple interviews and drug screening can also be utilized.

The survey said that once employees are hired, they often go through loss prevention awareness programs that involve discussions, bulletin boards, hotlines and periodic lectures about theft. After that, asset control policies like refund controls and price changing controls make it more difficult for employees to steal through the cash register. Finally, loss prevention systems and personnel, meaning sensors and special employees who watch for theft, catch whatever might still slip through the cracks.

The Buckle, a clothing store in the Columbia Mall, employs many of the strategies outlined by Case and the University of Florida, and has few problems with employee theft.

Sheldon Johnson, a manager in training at The Buckle, repeats once again the importance of background checks.

“A lot of prevention is accomplished at hiring,” Johnson said.

Once people are on the job, there are several other controls in place.

Bags are checked every time an employee leaves the store, the trash is taken out in pairs, merchandise that employees purchase is kept in clear, sealed bags and everyone walks out to the parking lot together at the end of the night. If all else fails, there is a reward system in place for workers willing to turn in other employees known to be stealing from the store.

Jodie Shuh, a sales clerk at The Buckle for the past two years, said that she doesn’t feel that these controls are a violation of her privacy.

“I think it’s a good idea because it keeps the employees on their toes,” Shuh said.


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