What is Employee Theft Costing Your Business?

August 18, 2017

 

As the summer winds down, many retailers are gearing up for the busiest time of the year. According to Ernie Deyle, one of the leading global experts on retail loss prevention, “the four months from October through January are when stores see not just their biggest sales volume of the year” but also “about half of all annual shrinkage”. This shrinkage (which includes shoplifting, employee or supplier fraud, and administrative errors) accounts for a whopping $42 billion a year in losses for U.S. retailers. What’s even more, employee theft outranked shoplifting as the biggest source of shrinkage!

 

"One-third of small business bankruptcies are the result of employee theft"

 

While these numbers primarily reflect the large nationwide retailers of America, they also translate to the small businesses and neighborhood retail stores lining the streets of our local communities. These small businesses are, unfortunately, prime targets for employee theft since most have yet to establish and implement loss prevention strategies. In fact, the United States Chamber of Commerce reports, one-third of small business bankruptcies are the result of employee theft. Most of the thefts discovered did not involve one-time only incidents. Rather, they involved employees who stole over time. Shockingly, these employees were not simply in dire need of life’s necessities, their dishonest course is linked to achieving “lifestyle enhancement”. What’s even more, on average, it takes over 16 months before business owners catch a dishonest employee. As much as we would like to believe our employees are honest trustworthy people, the numbers sadly say otherwise.

 

Employee Theft

the "Cost of Doing Business"?

 

Relationships with our employees are important and many times long-lasting. For this reason, some employers hesitate to take proactive measures to discourage employee theft, since they feel doing so implies a degree of dishonesty among current employees. Perhaps this is why some simply say employee theft is just the “cost of doing business”. While this thinking is common, many are instead taking practical steps to implement an effective plan to discourage employee theft while also preserving a trustworthy relationship with their employees.

 

Taking a proactive approach to combat employee theft is not the popular course, however, it is recognized as one of the most effective. With 75 percent of employees in 2016 admitting to stealing from their employers at least once and 38 percent at least twice, instituting an effective loss prevention plan to combat employee theft is just as important as protecting your business from outside theft. The good news is, many loss prevention strategies are easy to carry out and take effect immediately. While not necessarily an enjoyable task, we urge all our customers to include employee theft in every loss prevention plan. Doing so allows business owners to act quickly, protecting themselves from unnecessary and many times substantial losses due to employee theft.

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