The 5 Most Common Opportunities For Employee Theft

Who do we think of when we think of a “thief?”

Maybe someone dressed in all black, slipping in when the doors are locked to walk away with handfuls of hard-earned cash taken from the back vault, or right out of the register. If this is your image, you might not be that far off – but you might also be missing one of the most common kinds of thieves faced by just about every hospitality business, including Bars, Restaurants, Quick Serve, Casinos, Racetracks, and Concessions: employees themselves.

As easy as it might be to put complete faith in your employees, the truth is that as many as 75% of employees have admitted to stealing at least once in their career – and many can go unreported for years. Far from simply sneaking tips into their pockets when nobody is looking, today’s theft-tempted employees now have a wide range of theft options to choose from, many of which can be difficult to detect and even harder to prove.

But as with many setbacks faced by operators, taking the wind out of the sails of an employee dead set on theft may simply require the right knowledge of how employees steal, and which methods are most common avenues for fraud at the employee level. That way, you can better adjust your theft prevention systems to better capture and record these instances for actionable insights when the cash gets counted.

Here’s a look at some of the most common ways employees steal, and what you can do to make sure these tactics aren’t taken against your business when your back is turned.

1. POS Theft

Your Point-Of-Sale may offer the most tempting opportunity for employees to steal, often because these individual transactions can be particularly difficult to identify as the source of discrepancies between inventory or income and service at the end of the day.

Some of the most common signs of POS theft include a high number of “no-sale” or voided sales recorded in your system, or a high frequency of refunds over a given period. In this case, an employee (or group of employees) may be providing the same level of service to customers, only to “void” the transaction at the register and pocket the difference. This same principle can apply to sales of one high-value item – say, alcohol or a mixed drink – being rung up as a low-value sale, like water, with the employee simply taking the difference.

The best way for an operator to put a stop to POS theft is to closely monitor each sale at the POS System, tied to video surveillance to give a clear picture who may be working at the register when these inconsistencies arise.

2. Sweethearting

Some of the most difficult employee theft methods to identify may be so covert because they appear, at least on the surface, to look like regular customer service. In some instances, however, this can be an elaborate cover for “sweethearting,” or providing “free” drinks, food, or other sale items to customers the employee knows without charging full price for it.

Because many instances of “sweethearting” can look perfectly innocent out of context, some of the key methods of actually detecting this theft may take a bit of research. Inconsistencies in inventory levels, for instance, can be a sign that an employee is doling out inventory without matching it to trackable sales in the POS system.

“Sweethearting” can cost a business significantly over the long run, and can be extremely difficult to identify without the right surveillance tools. By closely aligning your video surveillance with your POS system, you can more easily detect these instances of “sweethearting” as they occur and take action in real-time.

3. “Add the Tip”

Even credit cards are not immune from employees who are looking to make a few extra bucks at their employer’s expense. One of the easiest and most common ways for employees to steal is to add or alter the tips on credit card card slips prior to cashing out.

Many people don’t check their credit card statements very carefully, so this often goes undetected – even though this type of activity can jeopardize an entire business. This can happen in bars and restaurants, but occurs all too often on hotel room service bills as well.

In many systems, this type of theft can appear perfectly innocuous at first glance – after all, credit card tipping is a regular part of the payment process, and many customers simply sign their receipts without filling in the “Tip” or “Total” lines before walking out the door. This can make identifying “Tip Adding” theft as it occurs extremely difficult.

By identifying suspicious checks with excessive tips, an owner or operator can put an end to this activity, but it requires the right systems and analytical tools to do so.

4. “Buddy Punching”

Time is money – and for business owners, that becomes especially true when it comes to payroll. Time theft by employees can present a big problem for businesses, and can be a serious drain on an operation’s bottom line. Furthermore, time theft can be incredibly difficult to track, especially if an operator ar manager does not have the opportunity to personally check in on each employee at all times.

Time theft becomes especially problematic when employees bind together to make it easier – and a system called “buddy punching” may be one of the most common methods. Essentially, one employee punches in for another employee without that second employee actually being present, allowing them to continue to earn wages despite not being present for work. Sometimes, these two employees may team up and operate together, doubling the loss for the operator paying out paycheck for work not really done.

One key to stopping “buddy punching” is to supplement your existing time tracking system with an automated video capture system, which can visually record each punch in to later match up with the employee represented. This can provide clear evidence of “buddy punching” and help employers stop bad behavior long before it becomes an engrained practice.

5. Inventory theft

When employees are left to manage finer details of a business’s operation, they may find themselves open to a wide variety of theft opportunities. Case in point: inventory theft, which relies on easy access to inventory and lack of auditing accountability to take medium- to high-value items without actually making a purchase.

Operators may first notice inventory theft because of discrepancies between end of day inventory and sales records. If, for instance, a business receives 20 bottles of wine in the morning, sells 10 to customers, but only has 9 left over at the end of the day, there is clearly one bottle missing – and it may just be in the possession of an employee looking to walk away with it.

For operators or employers dealing with millions of dollars of inventory and hundreds of employees at a time, the best way to identify and stop inventory theft may be to closely tie your POS system with your overall video surveillance system. By being able to carefully assign each sale to a particular item of inventory in real-time, you can significantly improve your ability to pinpoint when an item was taken and by whom.

Don’t Let Employee Theft Go Unnoticed

While it might be tempting to give your employees the benefit of the doubt, too many operators, employers, and businesses struggle with employee theft for trust to be the only barrier between your bottom line and a theft-prone employee.

Our POSConnect Suite provides one integrated system to tie your POS System with your existing video surveillance system – as well as real-time monitoring, optical recognition, and advanced analytics – to quickly and reliably identify points of employee theft in real-time. That way, you can prevent major losses long before they build up over time and create a more clear understanding among employees as to the overarching risks of attempting employee theft.

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