How POS Technology Can Discourage Internal Theft

About one-third of all small business failures can be traced back to employee theft and other worker crimes, according to the U.S. Department of Commerce. As you might expect, retailers are particularly vulnerable, primarily because of the relatively short-term or part-time tenures of many clerks and cashiers.

How vulnerable? In 2011, the industry lost more than $35.3 billion to theft, 44.2 percent of which was attributed to inside jobs by employees. Although that was a slightly lower percentage than in the previous 12 months, it was substantially more than the losses related to shoplifting and organized crime (about 36 percent of total retail shrinkage) or administrative errors (12 percent), a National Retail Security Survey shows.

How can a small retailer reduce its exposure?

First, an owner or hiring manager can implement numerous measures to avoid hiring a risky employee in the first place and to build awareness about this problem among existing staff. Here are the top eight pre-employment techniques, as ranked by the national survey referenced above:

  • Criminal conviction checks
  • Multiple interviews
  • Verification of past employment history
  • Personal reference checks
  • Drug screening
  • Driving history checks
  • Credit checks
  • Education verification

There are also some very practical steps that retail store owners and managers can take to cut down on losses related to inside jobs. These solutions don’t necessarily require intrusive product tags and sensors that alert you when an item leaves the premises. In fact, they involve features you may already have in your Intuit POS system but haven’t put to use.

Here are two specific ideas:

1. Get on top of inventory. It is difficult to prevent losses if your company can’t properly account for how many items are on store shelves or in storage closets and warehouses. Investing in a POS system that has integrated inventory capabilities helps you track what’s coming in and out of the store, without requiring someone to spend time physically counting it. That way, you’ll be alerted if something goes missing.

2. Keep better tabs on employee hours. Another practice to consider is using your POS system to correlate employee hours with specific sales trends. If items disappear during a certain shift but weren’t rung up as a transaction, the store owner can dig into what happened.

“Most small retailers don’t know it, but they can actually use Intuit POS to map employee hours to sales — by day, by the week, even by the hour,” said Erik Roodsari, product manager for Intuit POS. “If they’re doing regular inventory, they may be able to spot spikes in shrinkage and map that to their employee activity. One retailer did this to quietly confirm her suspicions and ultimately prosecute the employee she fired.”

About Heather Clancy

Heather Clancy is an award-winning journalist with a passion for transformative technology, small business and green business issues. Her articles have appeared in AllBusiness.com, Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. Heather is a regular contributor to CBSi, Forbes & GreenBusiness.com.
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