Biometric Identity

Employee Theft: 9 Ways to Manage Shrinkage


No retailer likes to think about their employees stealing from them, but it is a reality you might need to deal with. In 2016, the largest retailers in the US recovered in excess of $40 million from over 50,000 apprehended employees, a rise of 10% on the year before. One in every 27 employees was apprehended for theft, and that’s just the employees who got caught.

The question isn’t “if” an employee is going to steal, but “when” and what you can do to make it as difficult as possible, reduce the impact, and find the culprit. Fortunately, there’s plenty a retailer can do to reduce the risk and impact of employee theft, so let’s explore the options.

1. Track inventory and takings to identify if anything is missing

Understand the scale of the problem before addressing employee theft. Implement rigorous inventory management and check stock levels against actual item counts on a regular basis. Compare stock levels against taking to identify wastage and see what is going missing. It’s not just items that could be stolen, but cash and other payments from registers. Stocktaking and other reporting can help identify theft possibly attributable to employees.

2. Get references and pre-employment checks

One of the best ways to prevent theft is to only hire trustworthy employees. Carry out criminal records checks for every potential employee and get solid references from previous employers.

3. Create clear policies around payment and inventory handling, and disciplinary procedures for theft

Discourage the idea of employee theft as much as possible. Create clear policies and processes for handling cash and other payments. Ensure employees follow the right processes for checking in, counting and selling inventory. Have a clear procedure around employee theft and clearly explain a zero-tolerance approach.

4. Train and educate employees

Talk to employees directly. Put a training program in place to help them understand and identify employee theft, and tell them what to do if they witness someone else stealing. Explain that inventory levels and takings are tracked, including any trends in employee theft, to make it easier to identify employees who might be stealing.

5. Install surveillance systems

Use video recording to identify if employees or others are stealing from your store. Make it clear that people are being recorded. Position cameras to record the most vulnerable areas — the cash registers, warehouse, store exits, etc. Combine video surveillance with smart analytics that can identify and report on suspicious behavior.

6. Use the right point of sale system

Modern point of sale (POS) systems will identify and record everything that a store is selling, immediately. Make sure a POS is barcode enabled so that employees cannot simply enter “incorrect” prices and pocket the difference. Ensure that only authorized employees can override default prices or issue refunds.

7. Randomly audit the cash registers

Don’t just reconcile cash registers at the end of the day. If cash is going missing, carry out random reconciliations during shifts. This will let employees know that the idea of theft is taken seriously.

8. Incentivize accurate employees

In addition to having strict processes to limit employee theft, you might want to reward employees who are consistently accurate.

9. Use biometrics to verify employees

Biometric identification reduces employee theft by holding employees accountable. Requiring employees to identify themselves using a fingerprint means that all transactions are irrefutably linked to their identity. Fingerprint biometrics shows who did what, where and when. A good biometric system has several other advantages too:

  • Biometrics eliminates the overhead of dealing with passwords.
  • Password sharing is eliminated.
  • Employees cannot clock in or out for each other.
  • Employees cannot impersonate their manager to fraudulently approve voids and discounts.
  • Sign-in is quick and easy, as simple as the touch of a finger.
  • Biometrics is already integrated with most modern POS software and hardware systems.
  • Biometrics help comply with PCI DSS and other regulations.

These techniques will help to remove opportunities for employee theft and reduce the impact if it does happen.

Chris Trytten has over two decades of technical and managerial experience in systems and security at leading companies in Silicon Valley, including positions with Crossmatch, DigitalPersona, Interlink Networks, Apple, Siemens and Amdahl. In his current position as Market Solutions Manager at Crossmatch, he is using his experience serving the Financial and Retail markets by guiding the product and market teams to address the security needs of these industries. Chris is the author of multiple security white papers and articles.

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