Dishonest employees (Part 4)

Implement Audit Control Methods

Loss prevention controls and procedures by themselves are not enough to protect your assets. Controls and procedures must be audited from time to time or they will break down. No loss prevention control is stronger that its audit.

An effective auditing method is to omit deliberate errors. What will your people do if, for example, you see that more finished goods than the shipping order calls for reach the platform? Will the shipping clerk return the excess to stock? Will he or she try to divert it for personal use (perhaps in collusion with a truck driver)? Or will the clerk simply ship the order without ever knowing that the excess existed?

If the bookkeeper and the accounts receivable clerk are not dependable, alert and honest, disaster can result. Check them by withholding an invoice from each of them and observing their reaction. Will they miss the invoice? Will they realize that a missing invoice means lost revenue and call it to your attention?

Unannounced inspections are another excellent method of checking your preventive procedures. Such inspections are most effective during overtime periods or when the second or third shift is working. For example, one owner manager popped up on the shipping platform after the second shift left. He noticed a loaded truck parked at the platform and ordered it unloaded. The cartons in the rear were legitimate deliveries, but he found the front half of the truck crammed with stolen goods. The checker, who was hired to see that such stealing did not happen, had gone to sleep and let the accommodating driver load his own truck.

Keep Crooks off Balance

The employees who are the most successful at their second trade are the ones who test the system and are convinced that they can beat it. With every score, their confidence increases and along with it their danger to the company. The best way to stop such crooks is to keep them off balance -- keep them from developing the feeling that they can beat your system.

Here's an example of how one owner manager accomplished this. When inventory shrinkage became a major problem, he made a loss prevention survey. To help keep employees honest, he reduced the number of exits employees could use by half. He performed unscheduled locker inspections at the most unlikely times.

Employees were no longer allowed to take lunch boxes or bags of any kind to their work stations. Package inspection procedures were tightened. To date, this owner manager has caught no thieves. But by simply tightening controls and adding a number of surprise elements to his loss prevention maintenance system, he reduced his inventory loss drastically.

Don't Play Detective

Owner managers who suspect theft should not attempt to solve the crimes themselves. Even the best business owner may botch a criminal investigation because he or she is an amateur. When you suspect a theft, bring the police or a reliable firm of professional security consultants into the picture without delay. Where dishonest employees are bonded by insurance companies, ironclad evidence of theft must be uncovered before you can file a claim to recover your losses. Professional undercover investigation is among the most effective ways to secure such evidence.