When we think of theft, it’s easy to picture a customer swiping something off the shelf. However, theft can take many forms—and it often comes from more than just customers. While employees are meant to drive business success, they can also be a significant source of loss without proper loss prevention measures in place.
If you suspect employee theft has occurred or want to prevent such incidents, you’re in the right place. This guide will walk you through how to address suspected theft in the workplace and prevent future occurrences.
What is employee theft in retail?
Employee theft, or internal theft, is defined as the unauthorized use, misuse, or theft of an employer’s belongings. According to the 2023 National Retail Federation’s Security Survey, internal theft was the second-highest contributor to shrink, accounting for 29% of total loss, just behind external theft.
Clearly, both external theft and employee theft can lead to significant financial losses for a business. However, employee theft is often harder to detect, as employees have greater access to inventory and a deeper understanding of the company’s operations compared to typical shoplifters. For this reason, it’s crucial to implement a proactive prevention strategy and remain vigilant in monitoring for any signs of internal wrongdoing.
What are the most common types of employee theft to look out for
Employee theft can take various forms, and it’s essential for employers to recognize the most common types. According to the National Retail Federation, these are the key forms of employee theft to watch out for:
- Merchandise Theft: When employees steal items from their workplace, often by hiding them in bags or pockets, or simply walking out with them.
- Refund Fraud: When employees process fake returns or issue refunds for non-purchased items, pocketing the money or giving it to accomplices.
- Cash/Deposit Theft: This involves stealing cash directly from the register or manipulating deposit records to divert funds.
- Sweethearting, Sliding, or Free Bagging: A form of collusion where employees allow friends or accomplices to take merchandise without paying, or pass items through the register without scanning them.
All of this added up can have a significant impact on a businesses financials. To effectively combat this, employers must be proactive by implementing strict policies, monitoring systems, and creating a culture of accountability to deter theft before it occurs.
Strategies for preventing and minimizing employee theft
Implement security measures & policies to prevent theft
Preventing employee theft is crucial, and every effective theft prevention plan should prioritize strategies that stop theft before it happens.
One of the most effective deterrents is the use of physical security measures. For instance, video surveillance plays a vital role. In the 2023 National Retail Security Survey, employers shared that CCTV systems and video was one of their main ways they mitigated employee theft.
Additionally, according to Jack L. Hayes International’s 35th Annual Retail Theft Survey in 2023, retail owners who increased their use of CCTV reported a decrease in employee theft. It appears the mere presence of cameras can make employees think twice before engaging in dishonest behavior.
It is also important to regulate and track movement throughout the store. Access control systems can help restrict access to sensitive areas such as stockrooms and cash-handling zones, but also ensure only authorized employees have access. Not only does this limit opportunities for theft, but it also allows you to monitor who enters these rooms, providing accountability and clarity.
Finally, it’s essential to communicate clear policies and establish firm consequences for theft. When employees understand the serious repercussions, they are less likely to engage in theft, knowing the risks involved. Additionally, it’s important to provide a clear process for reporting suspicious activity. Employers should create an environment where employees feel comfortable speaking up, as even a small tip-off can help your organization stay vigilant and respond swiftly.
Monitor for discrepancies and conduct regular audits
Theft can go under the radar when managers don’t regularly check. According to the Jack L. Hayes International’s 35th Annual Retail Theft Survey in 2023, it was noted that while the typical theft from a shoplifter is around $802, on average employee theft is about $1,1367. Since employees can more easily fly under the radar, they can also end up diverting a lot more money.
Therefore, it is important for managers to monitor key areas where employee theft is most likely to occur, such as the sales floor, storerooms, or other secure areas where valuables are kept. To ensure merchandise and cash remain consistent and theft is minimized, employers should conduct regular audits. These audits can help identify discrepancies in inventory, such as missing items, which could signal potential theft. By catching issues early, technology and policies can be put in place to prevent employee theft from escalating.
Document and gather evidence to support claims
If you suspect employee theft, it is essential to have solid evidence to back up your claims. Without proof, your business may be at risk of wrongful termination, due process violations, or other disputes. Therefore, it is crucial that you document the steps that led to your conclusion.
One of the most straightforward and reliable ways to prove employee theft is through video footage, as it provides clear, visual evidence of the crime. Capturing time-stamped footage of individuals in the act, along with the specific items taken, offers definitive proof. In areas not covered by CCTV, retail owners can rely on body camera footage, ensuring that nothing is concealed from view. It was even noted in a 2021 study by business.org that 35% of business owners were able to catch employee shoplifters using CCTV alone.
Additionally, many retailers have begun testing body cameras worn by employees as an added measure to deter overall theft. According to the National Retail Federation’s 2023 National Retail Security Survey, 35% of U.S. retailers are considering using body cameras for their staff. These cameras not only capture footage that may not be covered by CCTV, but they can also help pinpoint what employees were doing at the time of a theft. Not to mention, by making employees aware that their actions are being monitored, body cameras can help reduce the risk of internal theft.
The main benefit of collecting this evidence is that it can be cross-referenced with other documented signs of theft, such as discrepancies in inventory or missing items. By comparing the video footage with records of inventory changes, you can build a stronger case. This comprehensive approach helps to validate any claims or witness statements, ensuring that your findings are both thorough and reliable when it comes time to confront an employee.
Protect your store today
To combat employee theft, store owners must take proactive steps to safeguard their retail business. Implementing prevention strategies like video surveillance, body cameras, and access control systems can offer vital protection, help you collect evidence, and enhance overall security. To explore how our solutions can benefit your business, contact our sales team today.
