Service Industry Chronicles -3 - When Staff steal

We were settling in well in our London wall branch. I had come with a team from Liverpool street and hired more. Our sales were meeting the budget and everything was going well.

She was my best cashier, I had chosen her as part of my team to open the new store. I had used her as an example when training the other team members, then she stole.

This was my first experience with a staff under me stealing. I was devastated. It was such a confusing time. the best way to explain it is like when your partner cheats and is caught publicly. They are the ones on the wrong but you (the victim) still feel so violated. People ask you questions, you ask yourself questions — Did I not love them enough? Didn’t I give them everything they asked for? why was I so blind? could I have caught it earlier?

As the manager, you ask yourself all these questions (the auditors and insurance investigator will also ask you these questions) and more.

But I digress. How we caught the thief. We were having stock differences. We checked our wastage, we checked our promo recording but everything checked out. So the next day during rush hour I went to the office and opened the back end of the point of sale system. As a manager, my rights allowed me to see real-time the sales being made. I checked all the cashiers then stopped dead her machines. It was winter and she was selling lots of 20p ice cream cones????. I went to the restaurant floor and no one was holding or walking out with ice cream cones. I went to the office again and as sure as the snow falling outside, she was still selling 20p ice cream cones. I went behind the counter shut her down and asked the rest of the cashiers to take over. She closed her till then with the assistant manager went to the office to total her sales. She had over 200pounds excess cash in her till.

What she had been doing was keying in ice cream cones into the system but in real sense selling meals. She knew how much change to give and she knew during rush hour most clients didn't ask for their receipts. (this was before the POS had a kitchen component) The price for a meal was 2.80, she gave the company 20p and kept the rest.

Why do staff steal?

Employees have been stealing from employers from the days of Jesus. Judas Iscariot who was the keeper of the purse in the Ministry of Jesus was pinching from the purse. This explains his reaction when the woman broke the alabaster jar full of perfume and washed Jesus’ feet. Judas quipped that it would have been better for the perfume to be sold and the money put in the purse.

Here are a few facts from the Association of Certified Fraud Examiners:

• Occupational fraud costs $3.5 trillion each year worldwide.
• The smallest firms suffer the largest median losses.
• Perpetrators with more authority cause higher losses: $573,000 for an executive versus $60,000 for an employee.
• Most occupational fraudsters are first-time offenders.
• The most common way that fraud is discovered is through a tip, usually provided by other employees

The main reason (In my experience) employees steal can be lumped up into three:

1. Pressure — A pressing need (real or imagined) the need here could be anything from a loan repayment to the latest phone. Need is in the eye of the beholder.
2. Opportunity — One day you receive payment, don’t log it in, no one notices and voila extra income for the next proverbial 40 days.
3. Rationalization — The employee feels that the business or company has wronged or mistreated them in some way. They feel underpaid [and under-appreciated] for the “hard” work they do, and anyway if caught all will happen is a dismissal.

In the service/hospitality industry, the means, opportunity, and motive to commit fraud are almost always present. These factors can be reduced with the following controls:

1. Management controls

These controls promote honesty, integrity, and leadership by example. Play Big Brother watching and Manage by walking about, you will hear something or see something that will trigger something. listen and act.

2. Outside controls

These controls provide checks and balances to maintain a low risk-fraud environment. Purchase accounting and POS systems that cross-check each other and require minimal manual entering of data. these systems should store all altered data for future reference and produce reports. Occasionally run external audits.

3. Personnel controls

Personnel controls are critical in limiting motive and opportunity. Examples include mandatory leave and rotating duties to disrupt fraud. Since tips are important in fraud detection, an anonymous way of passing information to the Manager / Director should always be introduced. Rarely will staff walk up to their supervisors and give these tips and when tips are given they should be acted on immediately.

Back to my story. You live and learn but the sting of employee theft is always sharp. You learn that when it happens it’s not about you it’s about them.