Recently in Loss Prevention Category

Encouraging your employees to get into a loss prevention mindset

By Mike Mershimer on May 5, 2015 10:06 AM | 0 Comments

People steal. There's no surprise there, right?

Well, what are you (the owner/manager) going to do about it?

What's your first line of defense? Awareness.

Creating awareness about loss prevention is a major component to fight the war on shoplifting and internal theft. If you help your employees think more centrally around the concept of loss prevention, then thieves will notice and feel uncomfortable in your store or restaurant.

Awareness can even lead to creating a sense of ownership amongst employees too. You can create a mindset of "Hey, I don't want anyone stealing from my store. Shrink affects my bonuses," which creates a halo effect on others.

Here are 5 tips, plus a bonus tip, on how to create more awareness in your restaurant or retail store.

1. Challenge your employees to know the store stats. If you talk about loss prevention everyday with your employees, they will become more aware of what it is and how it affects business. What is your shrink percentage? What is your shrink goal? Where are the spots in the location where people are most likely to steal? What are recovery statements? Who is your Loss Prevention Manager? In what instance should they be called?

2. Make an LP informational bulletin board in the break room. Keep all the things employees should know here; shrink percentages, facts and information, success stories, incentives, a list of behaviors shoplifters typically exhibit, contests, the loss prevention hotline poster and numbers to call in case of an emergency.

3. Explain the importance of shrink and how it affects each employee. If shrink is too high, someone might not get enough hours they want or the raise they requested may be put on hold. A lot of things depend on the shrink percentage of the store or restaurant.

4. Create incentives/contests to encourage a lower shrink percentage. Sets goals and when you achieve them, reward the employees that made a difference. Nothing motivates people more than an incentive.

5. Role play. Sometimes employees can be aware, but when faced with a real life situation they freeze and don't react as well as they should have. This is where role playing comes in. During a controlled environment role play, have one employee ask another for an extra discount on top of what they're already getting. This give the employees to formulate a statement back to their peer. Ex. "No, I don't think that's allowed. You can always check with the manager to see when the next extra 10% off is though."

Bonus Tip: When you talk sales, talk loss prevention too. Maybe this is only a retail instance, but when coaching employees in the sales environment, coach them on loss prevention as well. This will prove that it's something equally as important as sales.

Ex. "Give me 3 examples of how you would sell this watch. Then give me 2 examples of how you would approach a potential shoplifter if you thought they were trying to steal it."

Again, employee awareness is key.

For the 5 Most Fascinating Stories in Franchising, a weekly report, click here & sign up.

Why Mandatory Paybacks Don't Work

By Libby Libhart on May 5, 2015 12:05 AM | 0 Comments

The high school senior was so excited about her upcoming school dance. Her dress was exquisite, and her shoes and purse matched perfectly. She was saving money from her job at the local fast food restaurant to pay for all she needed to make the event so special.

There were flowers to choose, a limo for her and her date and a few friends, pictures, and a whole lot of extras that would make the evening a long lasting memory. She had all her future earnings planned out for the next few weeks and earmarked for the special occasion.

What she had not planned for was the inexplicable shortage of $20 on her cash till at work. The restaurant had a policy that all cash shortages had to be paid back. "Oh no!" she thought. "I didn't steal any money; what am I going to do? I need every penny I earn to pay for the dance."

Mandatory Payback Policy

When consulting with retailers and restaurant owners, the conversation will generally turn to cash shortages. A few have boasted they simply did not have cash shortages because of the policy they put in place.

The policy required cashiers to pay back shortages in their tills. They further stated that shortages may occur once or twice, but after paying for the shortages, a cashier was not often short again.

The shortages required no investigation, no investment of a manager's valuable time, no disciplinary action, and no complicated cash handling policies.

Policy Repercussions

So having investigated many, many cash shortages and implemented effective cash control programs for retailers and restaurants, paying back cash shortages is not part of the equation unless of course a thorough investigation was conducted, the cashier admitted to cash thefts and restitution was part of the resolution.

Docking pay or having an employee pay the employer for cash shortages could result in the employee making less than minimum wage and jeopardize the employer of violating wage and hour laws.

Unintended Consequences

Making cashiers pay back shortages may also have an opposite effect of its intention. Suppose that the young cashier is making preparations to go to the special dance, as in the scenario above.

She needs money for her gown, matching shoes, tickets, hair and make-up, and perhaps sharing the cost of a limo. It's all a great expense for the young lady, but she is budgeting carefully and every dollar she earns is allotted as she prepares for her special event. She is a very good cashier and even better employee.

But, alas, her cash drawer comes up short. She didn't steal any cash from the till.

A mistake in counting back change or mishandling currency may have been the problem. Perhaps there are other possible explanations.

Maybe there was a mistake by a manager removing excess cash from her cash register.

Maybe another cashier rang transactions on her register while she was on break and mishandled the cash - or stole it.

According to the rules, our cashier has to pay back the shortage. She panics because she envisions her perfect evening will be ruined. She can't afford to pay back the shortage.

Could she ask for permission to not pay back the shortage? Sure.

Could she ask someone to loan her the money? Yes.

But, she is desperate. She decides to get the money back by methods she knew other cashiers were doing. They had been ringing fraudulent transactions and stealing money for longer than she had worked there and not one manager ever questioned them about it. They had bragged often about their "extra" money.

She had always been disgusted with their cavalier attitude about stealing. She makes her decision. She would only take the amounts needed to make her dance special, - and then pay it back. She rings fictitious employee meals, voids, refunds and price reductions and pockets the cash.

She's stealing! It was so easy that she continues to take money far exceeding her intent to replace the money she had to pay back.

The manager can quickly spot register shortages, but neglected the other parts of cash management. The thefts continue long past her dance and her cash drawer is never short - and she never pays it back. She crossed the line, and is now a thief. If caught she could be arrested.

Cash Management

This story is true, and has occurred at many retail stores and restaurants. A sound cash management program does not require cash shortages to be reimbursed.

The incidences of cash shortage should be recorded in the performance history of the cashier.

Cash management programs should include investigations of significant cash variances and implementation of progressive disciplines for each incident that require retraining when needed.

Acceptable tolerance levels should be established for each component of customer transactions such as voids, refunds, price reductions, and no sales. Performance in these areas should be monitored and disciplines established for poor performance.

Each time an exception occurs outside the acceptable level of performance in handling cash transactions the discipline is stronger.

For example, the first time a cashier is short more than $3, a written warning is reviewed with the cashier. The warning includes heavier repercussions with subsequent violations that may lead to suspension and possibly termination. The concept is called progressive discipline.

The warning puts the employee on notice that their performance is being monitored, that proper cash handling is important, and establishes documentation of poor performance. The idea is to change behavior.

Effective loss control programs contain these elements of cash management.

They are fair and equitable, establish the "ground rules" for performance in cash handling, and provide accountability to those employees who may be stealing by manipulating transactions.

Requiring the payback of cash shortages as the foundation of a cash management program does not adequately address proper cash handling. It may even the cash tills, but does little to address exploiting the lack of cash controls.

For the 5 Most Fascinating Stories in Franchising, a weekly report, click here & sign up.

Do You Operate Your Franchise with Extended Hours?

By Libby Libhart on June 30, 2013 7:39 PM | 3 Comments

For over a decade the Fast Casual and Quick Service Restaurant industry has debated extending hours of operation.  

The advantages of staying open later are to cater to the nocturnal crowd that work and play during the wee hours of the night and to gain a competitive advantage in the marketplace.  Many locations extended closing time by an hour or two while others ventured into the arena of staying open 24 hours.

The unknowns were how to generate sales to cover labor and operational expenses and make a profit, and effectively educating the public on the open later concept.  

If locations were staying open 24 hours, another issue was to effectively and efficiently close out sales for the day and prepare for the opening of the next day's business while keeping track of sales during the transition time. 

Claims to Rescind Extended Hours

There have been varying levels of success in extending late night hours. Some corporate mandated extended hours have come under the scrutiny of franchisees.  Labor costs and security and safety of employees working the late night shifts have been cited as reasons to rescind extended hours.  Both are certainly valid reasons.  

Profitability is always a key issue in determining hours of operation.  Citing the security and safety of employees - who can argue with that?  

Loss/Crime Prevention Considerations

Late night operations are particularly challenging.  Adequate staffing can be a problem, and dealing with an increase in "drunks and punks" is particularly unpleasant.  

Let's look at the issues from a security, safety and loss prevention perspective, which unfortunately, is frequently left out of the equation in the decision to extend or cut back on the hours of operation. 

Analyzing Profitability

In analyzing the profitability of extended hours, the handling of cash, counting of deposits, securing funds, auditing of cashier performance including average check, no sales, price reductions, under ringing, and the security of the back door are important factors - as important as transaction counts and sales.  

The supervision of employees must be strong.  Many times the younger, less experienced managers run the late and overnight shifts. Profitability may be adversely affected by internal cash and food thefts, undocumented waste, lesser food quality, and poor customer service.  The overnight shift may not be as effective and efficient as other day segments. 

The late night operations must be routinely reviewed to make certain that sales are rung properly, and managers are upholding the highest standards of employee conduct and food quality.  Monitoring and managing these components may increase profitability during late night hours.

Employee Safety Concerns

The two hours before closing is the "critical period' in robbery prevention. Extending late night hours requires increased efforts in effective security policies and procedures, background checks of applicants, handling cash and deposits, drive-thru window and perimeter door control, entering and exiting the building according to best practices and trash removal. 

Formal training classes should be conducted to educate managers and late night crews in dealing with conflict, cash management, crime prevention, and proper robbery response.  Without this due diligence for those working the late night shifts, the increased vulnerability to crime is not fair to them. 

Claiming that employees working late into the night are in more danger at 2 AM than at 10 PM, while hiring crew with violent criminal pasts, no back door security, poor supervision and providing no training on what to do in the event of a robbery or how to enter or exit safely is a disservice.  The employees are more vulnerable in these conditions, no matter what time of day or night it is.

Validating the Issues

So, the extended hours debate rages on.  Can locations afford it or not? Those questions may be more easily answered with careful analysis and review of late night operations.  Sales are not likely to reach desired results simply by adding hours to the closing time on the hours of operation sign. Are employees exposed to more danger in the extended hours' time frame? 

Maybe - maybe not.  Police reports, analysis and anecdotal information of violent crime in the area occurring during late night may substantiate the claim.  

Playing to emotions by claiming increased danger is not valid without empirical information to support it.  In locations open 24 hours, instituting proper security and safety measures may even make the employees less vulnerable to robbery and other violent crime.

Make your claim in whether to extend late night hours or cut back on them, but do so with accompanying investigation beyond sales and transaction counts.  

Make certain that security and safety policies are in place and the staff is trained in crime prevention procedures.  A thorough analysis will make your decision more relevant.

See How Easily You Prevent Employee Dishonesty & Improve Customer Service

By Perry Shoom on April 22, 2013 10:45 AM | 0 Comments

Strategic placement of a security camera on your cash register or POS terminal provides protection against both fraudulent claims AND dishonest employees.

Many problems can frequently be prevented by directing a security camera on the cash register or POS terminal.  This is the area where business is transacted and where the majority of customer disputes occur.  It only makes sense to focus security on this area where the greatest financial loss can occur.

Theft of funds from a business, if occurring, is most likely at the point where financial transactions occur.  There are many ways for this to happen.  Perhaps a cash transaction occurs which is not being recorded, too much change is returned to a customer or cash is not being placed in a cash drawer. 

These are just are some of the ways in which a financial fraud can occur. 

A lack of security and proper financial controls can result in a theft that is never noticed by management or the owner of a business. 

A security camera presents employees with a visible reminder that the area is being monitored and is likely to discourage theft.  Should the need present itself, a security camera can provide solid documentation of what may or may not have taken place at a particular point in time. 

It can also allow an absentee manager or owner to monitor (in real time if desired) interactions between customer and employee.

Most businesses experience customer service issues that include poor treatment or incorrect change.  These can frequently be verified and resolved through use of security footage from a security camera.

How are We Short?

By Libby Libhart on August 1, 2011 12:53 PM | 0 Comments

“What?  What do you mean we are out of product?  Did you check the cooler and stockroom?  How could we be out?  I know I ordered plenty and checked it all in.  What happened to it?”  

So goes a mysterious disappearance of a food item.  A negative hit on food cost and of course – profitability.  

In effort to track and prevent this type of loss, we start with answering this question:

The main food item that has the most mysterious disappearances or is most often stolen in my restaurant is:

1.  Desert items

2.  Chicken strips/wings

3.  Bacon

4.  Hamburger patties

5.  Cheese

6.  Other


Establishing Norms    

If you answered the question, how do you know?  Are the losses identified by inventory control records, audit processes, anecdotal information, or calculated guesses?  Once you have identified what item or items are most stolen or have very high associated negative food cost, the process to mitigate or prevent the losses can begin.  Establishing the norms of food cost for each item in your restaurant and routinely tracking them will assist in identifying issues when unacceptable variances and shortages occur.  After you know which items are most stolen, you can then do something about it.

Inventory Counts

Effective inventory control involves a systematic approach to counting inventory and ordering properly.  If you know the quantities on hand for each product with routine audit counts, it will greatly assist in ordering effectively and readily identify short or missing items.  Assign a responsible and accountable person to conduct inventory counts and food orders.  Periodically audit the inventory counts and food orders by the assigned person.

 

Security

Inventory control will be enhanced by limiting access to the refrigerated, freezer, and dry goods stock areas.  Secure access to the back door.  The door should be kept locked and openings limited to authorized personnel only.  If the back door is alarmed, it should be turned off before opening by a manager only.  The most effective back door control is the opening of the back door and monitored by a manager.

 

No Answer

If you didn’t know the answer to the above question, initiate establishing normal guidelines for acceptable negative food cost, start an audit process of food items, limit access to food storage areas, and secure the back door.  It will be a start to a more comprehensive loss control program in your restaurant and eliminate the frustrations of mysteriously running out of product.  The profitability of your business depends on it.

 

Do you want further information about Effective Cash Management Programs.

This was a guest post of Libby Libhart.  D.B. “Libby” Libhart has over 30 years of experience in the Loss Prevention industry.  Libby has provided security and safety leadership in a variety of retail settings including Department Stores, Drug Stores, and Quick Serve Restaurants.  Before launching his own company, LL Training and Consultant Group, LLC Libby served as the Senior Director of U.S. Security and Safety for McDonald’s Corporation.  Libby entered the Quick Serve restaurant industry with Taco Bell and subsequently YUM Brands. 

During his career in Loss Prevention, Libby was recognized for moving Loss Prevention programs from reactive responders to pro-active business partners.  He has led teams that were highly recognized for the development and implementation of successful programs in cash and food cost controls, risk management and life safety.

Follow Us

FAQ

About this Archive

This page is an archive of recent entries in the Loss Prevention category.

Leases is the previous category.

Mobile Ordering is the next category.

Find recent content on the main index or look in the archives to find all content.

Recent Entries

Authors

Categories

Archives