The end of 2009 is near but, unfortunately for retailers across America, this does not mean the end of employee-related criminal activity. In fact, experts, including Best Buy’s Director of Asset Protection, Tim Fisher, believe that “organized retail crime is a reality” and the worst is yet to come. With the start of 2010 sales just around the corner, this means that top retailers across the country need to protect their revenue and products from attacks both externally and internally.
Large retail outlets such as Target, Wal-Mart, Sam’s Club, Best Bay and Big Y Foods have all felt the crunch of employee theft in the past. Employee theft accounts for ten times the value of street crimes losses in the United States and retailers are often the hardest hit. In fact, the Department of Justice reports that nearly one third of all employees will commit some degree of employee theft during their working time. Furthermore, 75% of those who have stolen or committed a white collar crime will do so again. Of these drastic numbers, only one in 28 employees will be apprehended for employee theft, according to a study done by Jack L. Hayes International.
Large companies, retail and otherwise, take extreme precautions against shoplifting and burglary with locked display cases, bullet proof glass, alarm cords, concave mirrors, security videos and professional guards. But what are they doing to protect their business from theft that occurs from within these closed doors?
Indications of Petty Theft and White Collar Crimes
Minor employee theft includes a wide variety of activity, from stealing old fruit from the back of the store to ‘forgetting’ to scan an item through the grocery till. All of these petty crimes will add up for business owners. The US Chamber of Commerce reports that employee theft will cost businesses over $50 billion annually in losses. Furthermore, the Association of Certified Fraud Examiners reports that the average organization will lose nearly $10 per day, per employee due to employee theft. Often this loss will be passed on to the customers in increased prices and fees. In larger corporations white collar criminal behavior including embezzlement, bribery and insider trading can set companies back hundreds of thousands of dollars every time.
Dr. Richard Hollinger, a professor of criminology at the University of Florida, reports that employee theft acts like “a big faucet that drips day in and day out.” Large companies are often the easiest targets because there are simply too many employees and too many other important issues to deal with on a daily basis, especially during the busy sales season. Boxing Day Sales and January Sales mean more and more people will flock to the larger chain stores to stock up on discounted 2009 items. However, employee theft will continue throughout the year.
Protecting your Business
One of the main ways business owners are protecting their businesses from the inside is through video monitoring. Although video cameras will keep an eye on employees, they also run the risk of causing information overload. Grocery stores and large retail chains will monitor their employees at the checkout and in the back rooms; however, according to Malay Kundu, a security expert and entrepreneur, “less than 1 percent of video ever gets looked at by anyone.” There is simply not enough time to analyze video input day in and day out. Many companies are also investing in security software to catch insider criminals. But is it enough?
Your browser may not support display of this image. Your browser may not support display of this image. Your browser may not support display of this image. Your browser may not support display of this image. Of course, employee theft does not just hit the big retail outlets, even though during the busy shopping seasons they are often more at risk. Employee theft and white collar criminal activities, such as fraud, embezzlement and bribery can take place in all industries from small corner stores to large financial institutions. The banking industry is the hardest hit with $1 billion losses annually due to white collar criminal activity. However, the truth of the matter is, no company, no matter how big or small, is completely safe from employee theft.
The reason is simple – most business owners do not know every single little detail about their employees’ histories. During the hiring process, most business owners will conduct a quick interview discussing employment history, goals, education and reasons for wanting to work, followed by a reference check and then make a decision about hiring a potential employee. The entire process is quick but is it effective? When looking at the rate of white collar activities across the United States, it would appear the answer is ‘no.’
Solutions for 2010 – Employment Background Checks
Many large corporations and small companies are now focusing on a triple attack when it comes to the hiring process – the interview and the reference check, followed by an employment background check. An employment background check is a way for employers to access a person’s criminal record, credit report and social security identification to ensure that he or she is clean. Although conducting an employment background check and discovering that a potential employer is clean as a whistle will not guarantee that he will be the perfect fit for the position, it does add a level of security in knowing that he has not been charged with theft, embezzlement or other crimes that could jeopardize the future of a company.
The biggest problem with employee related crimes is that they usually come as such a shock to the company. No business owner wants to believe that his most trusted employee could be capable of theft. Employment background checks cannot offer 100% security that a company will be protected from employee related criminal behavior but it can drastically reduce this chance. And, with the bad after taste of the recession of 2009 still fresh in our mouths, can any business owner really take this risk for 2010?