How to Prevent Employee Pilferage

Not all crooks roam the streets of the nation's cities. Many spend their time in the manufacturing plants of companies. There, disguised as honest citizens, they shoplift and pilfer whatever comes to hand, often tampering with records to cover up their thefts.

To prevent pilferage, an owner-manager must recognize that some employees cannot be trusted and make all employees aware that he or she is taking steps to thwart dishonest personnel. Such steps include setting up a system of loss prevention (devices and procedures), administering the system rigidly, and auditing it often to discourage dishonest employees who try to bypass the system.

To steal or not to steal? That is the question facing employees in plants. Many employees answer that question almost unconsciously. They see items lying around and pick them up for their own use. They slip small hand tools into their pockets. Or they dip into the bin for a fistful of nuts and bolts or snip off a few feet of wire for a home repair job.

But not all employees who pilfer are nickel-and-dime thieves. Some are professionals who carry off thousands of dollars worth of equipment and materials.

Misplaced Trust

One reason for pilferage is misplaced trust. Many owner-managers of small companies feel close to their employees. Some regard their employees as partners. These owner-managers trust their people with keys, a safe combination, cash, and records.

Thus, these employees have at hand the tools which a thief or embezzler needs for a successful crime.

Unfortunately, some of the "trusted" employees in many small businesses are larger partners than their bosses anticipate. Unless you're taking active steps to prevent loss from in-plant pilferage, some are probably trying to steal your business, little by little, right from under your nose. Few indeed are the businesses in which dishonest employees are not busily at work. Usually, these employees are protected by management's indifference or ineptitude as they steal a little, steal a lot, but nevertheless, steal first the profit, and then the business itself.

One of the first steps in preventing shoplifting and pilferage is for the owner-manager to examine the trust he or she puts in employees. Is it blind trust that grew from close friendships? Or is it trust that is built on an accountability that reduces opportunities for thefts?

A Climate for Dishonesty

In addition to misplacing trust, it is easy for an owner-manager to create an environment in which dishonesty takes root and thrives. Just relax your accounting and inventory control procedures. Nothing deters would-be thieves like the knowledge that inventory is so closely controlled that stolen goods will be missed quickly.

And what about the plant where its common practice for a close relative or two of the boss to help themselves from the stockroom without signing for the items they take? Soon such a plant becomes a place where inventory shrinkage soars as employees get the message that record keeping is loose and controls are lax.

In a manufacturing plant, no materials and no finished goods should be taken without a requisition or a removal record being made. Exceptions? Absolutely none.

Similarly, the owner-manager who does not exercise tight control over invoices, purchase orders, removals (for example, for tools, materials, and finished goods), and credits is asking for embezzlement, fraud, and unbridled theft. Crooked office workers and production and maintenance personnel dream about sloppily kept records and un-watched inventory. Why make their dreams come true?

One shipping platform employee's dream came true to the tune of $30,000 - the amount of goods he stole from his company. When caught, he said, "It was so easy, I really didn't think anyone cared."

Let people know you care. Make them aware of the stress you place on loss-prevention.

This point must be driven home again and again. And with every restatement of It - whether by a security check, a change of locks, the testing of alarms, a systems audit, a notice on the bulletin board - you can be assured that you are influencing that moment of decision when an employee is faced with the choice-to steal or not to steal.

Haphazard Physical Security

Also high on the list of invitations to theft is haphazard physical security. Owner-managers who are casual about issuing keys, locking doors, and changing locks are, in effect, inviting the dishonest employee into the plant or office after work. But intelligent key control and installation of timelocks and alarms are ways of serving notice to crooked workers to play it straight.

Sometimes profits go out the window - literally. For example, one distributor caught "trusted" employees lowering TV sets and tape recorders from a third-story warehouse window to confederates below. Unfortunately they were not caught until they had milked their boss of thousands of dollars worth of merchandise.

But more often, the industrial thief uses a door rather than a window. And the more doors a plant has, the more avenues of theft it offers.

The plant that's designed for maximum security will have a minimum number of active doors and a supervisor or guard, if warranted, stationed near each door. Moreover, a supervisor should be present when materials or finished goods are being received or shipped and when trash is being removed. As long as a door stays open, a responsible employee, a supervisor, or a guard should be there.

Central station alarm systems should be used to protect a plant after hours. Their purpose is to record door openings and closings and to investigate unexpected openings. Timelocks are also designed to record all openings.

"Breaking-out"

A record of door openings can be important because the dishonest employee is often a specialist at "breaking out" (hiding and leaving the plant after closing hours). If your plant is not protected against break-out, you can be hurt badly because this method of operation allows a thief to work pretty much at his or her own speed.

After-hours thieves put out of commission the alarm system that works beautifully against break-in. They can often leave by doors equipped with snap-type locks-doors that do not require keys from the insides. Quickly and easily, they can pass goods outside and then snap doors closed behind them. Thus, they leave no evidence.

A motion detector, electric eye, or central station alarm will deter such thieves. You can also discourage break-outs with locks that need keys on both sides, provided that fire regulations do not prohibit such locks. When goods, materials, or money are missing and evidence of forced entry is lacking, begin to look immediately for the inside thief, the dishonest employee.

Everyone needs To be knowledgeable about the Decision Making Process. We all rely on information, and tools or techniques, to help
us in our everyday lives.

When we go out To eat, the restaurant is the instrument that supplies us with all the information required to choose what to
purchase and how much to spend.

Running a Business also needs making decisions using techniques and information - how much inventory to preserve, what price to
sell it in, what credit arrangements to provide, how many people to employ.

Decision Making Process in business is the systematic process of identifying and solving problems, of asking questions and finding
answers. Decisions are created under conditions of uncertainty. The future isn't known and sometimes even the last is suspect.
This manual opens the door for company owners and managers to find out about the variety of techniques that may be used to boost
your decision making process in a world of uncertainty, change, and uncontrollable circumstances.

A General Approach to Decision Making Procedure. If a scientist, or an executive of a significant company, or a small business
owner you can benefit from improving your decision making abilities. The overall approach to systematically solving problems is
exactly the same. The following 7 step approach to enhance management decision making may be utilized to examine virtually all
issues faced by a business.

State the problem. A issue first must exist and be recognized. What's the problem and why is it a issue. What is ideal and how do
current operations vary from this ideal. Identify why the symptoms (what's going wrong) and also the causes (why is it going
wrong). Attempt to specify all terms, theories, variables, and relationships. Quantify the problem to the extent possible. In case
the issue, not correctly and quickly fulfilling customer orders, then attempt to determine just how many orders were incorrectly
full and how long it took to fulfill them.

Establish the Objectives. What are the goals of the study. Which objectives are the most critical. Objectives are stated by means
of an action verb like to reduce, to grow, or to improve. Returning to the customer order problem, the major objectives is: 1) to
increase the proportion of orders filled properly, and 2) to decrease the time necessary to order and process. A sub-objective
could comprise to simplify and streamline the order filling procedure.

Develop a Diagnostic Framework. Next establish a diagnostic framework, that is, determine what methods will be used, what types of
information are needed, and how and where the info is to be found. Is there likely to be a consumer survey, a review of business
documents, time and motion tests, or something else. What are the assumptions (facts assumed to be correct) of this study. What
would be the criteria used to judge the study. What time, budget, or other limitations are there. What kind of quantitative or
other specific processes will be used to analyze the data. (Some of which will be covered shortly). In other words, the diagnostic
framework establishes the scope and processes of the whole study.

Collect and Assess the Data. The next step is to gather the information (by following the methods established in Step 3. Raw
information is then tabulated and coordinated to facilitate analysis. Tables, charts, graphs, indicators and matrices are some of
the conventional ways to arrange raw data. Analysis is the critical requirement of audio business decision making. What does the
data reveal. What facts, patterns, and trends can be viewed from the data. Many of the qualitative methods covered under can be
used during the step to ascertain facts, patterns, and trends in data. Obviously, computers are used extensively in this measure.

Generate Alternative Solutions. After the analysis has been completed, some specific conclusions about the character of the issue
and its resolution must have been achieved. The next step is to develop alternative solutions to this problem and position them in
order of the net benefits. But how are choices best generated. Again, there are several well established techniques such as the
Nominal Group Method, the Delphi Method and Brainstorming, amongst others. In all these methods that a group is involved, all of
whom have examined the data and analysis. The approach will be to get an informed group suggesting a variety of possible
solutions.

Develop an Action Plan and Implement. Select the best solution to the problem but be sure to understand clearly why it's best,
which is, how it achieves the goals established in Step 2 better than its options. Then develop an effective method (Action Plan)
to implement the solution. At this point an important organizational consideration arises - who is going to be responsible for
seeing the implementation through and what authority does he possess. The selected manager ought to be accountable for seeing that
all deadlines, tasks, and reports have been performed, met, and written. Details are important in this step: schedules, reports,
tasks, and communication will be the key elements of any activity program. There are several techniques available to decision
makers implementing an action plan. The PERT method is a way of setting out an whole interval such as an action plan. PERT is
going to be covered shortly.

Evaluate, Obtain Feedback and Monitor. Following the Action Plan was implemented to Solve a issue, management must evaluate its
own effectiveness. Evaluation Standards must be ascertained, feedback channels developed, and observation performed. This Measure
ought to be done following 3 to 5 weeks and again at 6 weeks. The goal is to answer the main point question. Has the problem been
solved?

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