DID YOU KNOW.........?

Employee theft and fraud is far more pernicious and widespread than is generally known - costing employers hundreds of millions every year. In the clubs industry, it is reliably estimated that up to 80% of ‘shrinkage' is due to internal dishonesty, and up to 25% of all alcohol sales are lost to theft and ‘give-aways'. As the economic situation worsens, it must be anticipated that internal theft and dishonesty will inevitably increase - in fact, across NZ, employers, trade-industries, and security firms are already reporting a noticeable rise in employee crimes, particularly thefts of cash, stock, and equipment.

In 2006, a Canterbury business survey revealed that 79% of employees anonymously admit that they steal from their employers (or are quite willing to do so, where opportunity exists). Yet, not only are most businesses extremely poor in both the prevention and detection of such crimes, the subsequent prosecution or conviction of offenders is also extremely infrequent. In a ‘sampling' of 12,500 known employee theft cases, only 3.3% were even referred to the Police (with a tiny fraction of these ever actually going to court). Most employee-thieves are just fired, and with a ‘clean' record, simply go on to the next job, and do it again.

Yet ‘hindsight reviews' of such cases almost invariably show how simply those crimes could (and should) have been prevented - or a much earlier ‘warning bell' rung - with improved controls over stock and cash, tighter systems and procedures, raised management awareness and vigilance, and more discerning reviews of POS data.

A huge majority of businesses have little/no idea how much they are losing to theft and fraud, and therefore take few preventative measures, or advice. Yet uncontrolled losses are responsible for one-half of ‘profit stagnation' and one-third of small/medium business failures. As the current recession deepens, one of the best ways of maintaining your profitability is to re-focus on shrinkage issues and risks.

Most businesses simply assume that their ‘security' against theft and losses is effective - until they get ripped off. Any weaknesses in operational security typically become evident only after the criminal act has succeeded. Especially with internal security risks, less than half of 1% of firms ever test their security procedures, or challenge their own protective/procedural systems - to determine if they are truly functional or are merely a ‘cosmetic' veneer (i.e. the place really operates on what amounts to an ‘honour basis').

Independent security ‘appraisals' reveal a great many NZ ‘host industry' businesses are quite ‘soft targets' to any halfway serious or intelligent criminal threat - especially from inside the firm. Yet even when major theft vulnerabilities are demonstrated, many managers still strangely choose to remain largely ‘re-active'. Thus, rather than truly preventing theft-losses, too many chiefly find themselves responding to them -which is always a ‘losing game'.

The usual reasons for ‘security inertia' are: Complacency ("It-can't-happen-to-me"); Over-trust ("I know all my people"); A belief that security ‘costs too much' or that ‘shrinkage' is just an inevitable ‘cost of doing business'; or ‘Security doesn't make money' (actually it does - even moderate loss prevention efforts have helped thousands of businesses lift their profit levels - from 10% on up to 50%).

So Here's A Little ‘Challenge' to Executives- Play a ‘role-game' - Pretend for just a while you are NOT in any position of authority, but only an average employee (waiter, bartender, chef, duty manager, etc. - any job position) working in your own club - and you're not overburdened by any sense of ethics or loyalty. In fact, you don't really like your bosses, and it's ‘just another job' until something better comes along.

Now - knowing all you do about the business, its systems, routines, practices, procedures, etc. - how easily could you steal cash or goods from the place? How might you do it? What would be the best methods, with nil or low risk of detection? How much could you get? - and how often could you do it? Could you rotate various ‘theft styles' so the losses stay ‘below the radar'? Now, suppose you found a like-minded colleague with whom you can collude in different ways - how much more could the two of you get, working together? (Many internal thieves manage to devise means to steal $300-$500 per day, every working day).

If you find that YOU-as-employee could steal substantial amounts, and get away with it - then you are vulnerable. You must ask yourself: If I could do it, what's stopping anyone else from doing the same? Personal honesty? - remember the 79% above. If this all sounds a bit provocative, it is - in hoping to spur you to take a few moments and honestly re-consider your security - and its issues: The probable-reality of crime-related risks; the prevailing attitudes toward security issues; the actual extent/levels of procedural physical/ controls and protections; and their genuine adequacy in the face of real workplace threats.

DID YOU KNOW..... that Clubs NZ provides a FREE Security/Loss Prevention ‘Help Desk' to its Members? This is an extremely useful advisory service, operated in conjunction with Steve Davis - a 24-year professional security consultant. Steve's advice can assist with most security issues in any type of business: Internal theft/fraud vulnerability auditing and prevention (or investigation of known or suspected problems); physical and POS anti-theft controls, security/electronic systems; staff and/or management training; Personnel protections/robbery response training; Computer and confidential information security; and a wide spectrum of other security-related areas. Advice to members involves no charge. Should any on-site services be desired, reasonable and discounted rates will be offered.

Security, in the end, is mainly about profits. Shaving just 1% off your loss-component can equal a 10%-25% boost to the bottom line, making loss prevention the most profitable activity you can focus on!

And if not now, when? Being ‘pro-active' means identifying and resolving potential problems before they result in losses!

To find out more, or to discuss any issues, queries, or concerns, call Steve Davis direct on 0800-12-THEFT (84338).