So, how do you keep employees from ripping you off?

[Felon]

I have a friend who's been an online game retailer for a couple of years now. He's thinking about going brick and mortar, but doesn't want to hire employees because of all the hassles involved. In particular, he's worried about them ripping him off when he's not around.

Personally, I think it's downright impractical for him to think he can man the store at all times. So, how do you keep someone with access to the register from pocketing the profits? It's an issue many small-business owners have to face, so I was wondering how it was typically dealt with. Any thoughts? TIA.

 

[Harmon]

Interesting that a guy called Felon would be asking about theft

Camera over the register.

"The guy your replacing is going to prison for stealing from me. He was a friend, but when I saw the tape of him taking money and stuff- I had to call the police. Feel terrible about it, but I warned him that I would go after him to the full entent of the law. So you ever do any time in prison?"

Don't hire friends, hire people that want to work in the store he wants to run. Drop by often. Tend the till often- if the numbers don't add up it will be obvious. If things look odd, speak up and most of all don't be afraid to fire an employee every other week and never say its for stealing without getting the police involved. Oh, and always arrest thieves in front of other employees- scares the hell out of them.

 

[Felon]

Lots of good advice. This comment stands out:

Don't hire friends, hire people that want to work in the store he wants to run.

I think a lot of small business owners--gaming shops in particular--hire friends of friends and relatives of relatives, which is why gaming shops so often seem to have staff that are so clueless about the industry. The rationale is that these people would be less likely to steal due to their personal connections. I actually agree with you though. If they do steal, it's likewise stickier to fire them due to those personal connections.

 

[stevelabny]

Some people are thieves by nature.
Some are thieves by convenience
And some are thieves by spite.

Those who will rip off any job they work at, one solution is a security camera, or STRICT keeping of money and inventory, but even that will let certain things slip (and its a lot of work) . Plus, employees will try to find the one place that doesnt have a camera. The best real solution is to thoroughly check someone's references. Even if you're a gaming store hiring high school or college students, get references from someone they know.

Thieves by convenience are your borderline types. They might steal pens and stationary, or batteries and the like (in the case of a gaming store...DICE), or other small objects that everyone uses and are inexpensive that they won't consider them theft. The best way around this? Decide what you consider real theft and tell the employees. Is it ok for them to bring home a pad and pens once in a while? And of course, make sure there's a GOOD employee discount. If you can get the inventory at COST, there's no reason to run the risk of stealing. Yes, I said cost. Don't treat the employees like customers, treat them like YOU. Merchandise at cost won't lose you money, and won't gain you money, but will keep your employees happy. And happy employees are good employees.

Thieves by spite are the nice guys who want to rip YOU off specifcally, because they feel that you're ripping them off. The solution to this is fair compensation. Don't pay minimum wage to full-time employees. Make sure that any positon that has more responsibility has more pay. Make sure full-time employees get health coverage AND vacation days. In this day and age, there is no excuse for an employer to not offer these things. Have some way for employees to air their greivances. Bitter and angry employees become spiteful thieves.

Even with these precautions, you're likely to find the occasional person who thinks you're a softy and wants to take advantage. That's when you bust them. HARD. If you do this much, you know that any thief deserves his punishment, and don't have to worry about it.

Some of these solutions are expensive. Health coverage, vacation days, security camera and good pay. The alternative is to not offer some or all of them, and instead accept "some" level of theft. You have to decide which is more important, higher profits or a well-run store with dependable employees. Maybe even start the store with a "middle-ground" with the promise to take care of the employees if the store suceeds.

 

[wingsandsword]

There's some good advice here.

A security camera over the register is the most conventional method. Make them keep careful accounting of the registers (the receipts add up ect.). Having anybody who is caught thieving arrested in front of other employees is another good one, fear and paranoia go a long way.

Paying your employees decently and treating them well is another one, yeah it's expensive, but a happy employee is one who has much less motive to steal.

Realize that nothing is perfect, even with well paid & well monitored employees you're going to get the very occasional wiseguy who thinks he can pull it off without you noticing, or that you're going to be easy on him.

It's next to impossible to run a retail place solo, just because of being able to be there all the time, I've seen people try it, and it doesn't go well. Your friend really will need to hire a few people.

 

[Umbran]

Accurate bookkeeping. In the long term, it's hard to steal from a guy who keeps detailed records. If you know your inventory, and you know what's been sold, you should know what's in the cash register.

 

[WayneLigon]

Accurate bookkeeping. In the long term, it's hard to steal from a guy who keeps detailed records. If you know your inventory, and you know what's been sold, you should know what's in the cash register.

That's the best advice. Know what you should have and know what you do have. I'm sure there is a security primer somewhere for small businesses and the local Chamber of Commerce or businessman's organization should be able to point you to resources.

Some online advice is here or just Google 'Preventing employee theft retail' and see the vast amount of stuff you come up with.

Have him look at some of the ways other places minimize employee theft. They have accounting systems in place to spot when someone is, for instance, ringing up a sale then later voiding the sale and pocketing the cash or filling out a 'return slip' and pocketing the cash. They also do things like surprise audits of the cash drawer. The manager just walks up and temporarily closes the register, takes the tape and drawer, replaces it with a new drawer and goes to do the audit.

Don't hire friends. It's probably not a good idea to hire your customers either.

If you really get paranoid, have two cameras. One they know about, one they don't. I have no idea how you'd arrange that, though.

One of the best ways of preventing theft, though, isn't available to him, which is not giving one person the keys to the kindgom. If the employee is the only guy there, he has to have pretty much total autonomy.

 

[Bryon_Soulweaver]

Background check.

 

[Arnwyn]

Management Accountant mode-on:

Responding to the specific thread title, in order of most successful to less successful:

1) Hire well-educated and well-trained staff. Read - and understand - what is included in those resumes (or whatever application one will use).

2) Pay staff adequately.

3) Accurate bookkeeping.

4) Security measures (camera over the till, etc).

Since retail is often a low-margin industry, #1 and #2 are often not feasible - however, those two are the main reasons why employee theft is so high in that sector. Without #1 and #2, the probability of employee theft skyrockets, and at that point, all you can do is mitigate the worst of it.

 

[BiggusGeekus]

I know nothing about retail. I'm just offering this anecdote as a data point so your friend can be on gaurd.

I was at a game store where the empolyee wasn't stupid or dishonest (to my knowledge). However, he did have his gaming group over to play. They'd use the back room and he'd leave the door open so he could keep an eye on the store. The problem was that he could only keep an eye on about 70% of the store at any given time and that's assuming he was paying attention. I saw the gaming group buy stuff from the store. From what I could see, they were nice guys. But the clerk just wasn't willing to pay attention the entire time.

A camera covering the register would at least show that the clerk wasn't at the counter for most of the time.