Employee theft skyrockets during the holiday season. Some retail employees do their holiday shopping at work by dipping into their employers' inventories. Retailers are also at risk after the holidays. When January bills arrive, some employees realize that their holiday shopping sprees have put them in a financial bind. Instead of dipping into inventory, some will dip into their employers' tills to pay the bills.
The mortgage loan crisis and resulting recession have increased the risk of employee theft. Many home owners who have been able to make their mortgage payments are suddenly facing huge mortgage increases. Some will consider any means—legal or illegal—to keep their homes.
Many small independent jewelers limit their staff to family members and trusted friends. An independent jeweler who uncovers an inventory shortage or cash theft may dismiss the notion that an employee who's also a family member could be the culprit.
Successful thieves will steal until the fear of getting caught becomes too intense. Launching an investigation increases a thief's fear of getting caught. A thief often quits soon after an investigation begins.
Following are the steps for conducting an employee theft investigation:
Begin with a thorough inventory. You may have more merchandise missing than you realize. Check your cash, too.
Try to determine when the missing item (or items) disappeared and from which internal locations. Write a detailed description of the missing item.
List all employees who had access to the missing item.
Interview each employee—individually and in private—who had access to the missing item or cash.
More than 80 percent of the time, your honest employees know or strongly suspect who committed the theft. Employees who work together usually know more about each other than any background investigation could reveal. Employees become friends. They confide in each other. They know who's been acting suspiciously since the theft occurred because they know each other's normal behavior patterns. Investigations make thieves nervous. Stress makes them behave out of character in ways their coworkers can observe and identify.
For employees to reveal what they know and who they suspect, follow these steps when conducting your interview:
Begin by explaining to the employee why she should share her knowledge and suspicions about the theft. Explain how her cooperation benefits her. Tell her how employee theft reduces profits and explain that when profits decrease, pay raises and benefit enhancements have to be postponed. Let her know that one-third of all small-business bankruptcies are caused by employee theft, and remind her that when businesses go bankrupt, honest people lose their jobs. Note that the thief has made everyone tense and turned the store into a stressful place to work.
Reassure the employee that everything he shares with you will be kept confidential. None of his coworkers will ever learn what he said about them. When you promise confidentially, be sure you keep your promise. Doing otherwise could destroy employee morale and expose your informants to potential retaliation. If you're perceived as a fair employer who keeps your word, your employees will tell you who they suspect and why.
Review the facts of the theft: what was stolen, when it was discovered missing, and its location when it was taken. Ask if the employee has anything to add to the case facts.
Use the outline on this page to continue the interview [see box]. Ask follow-up questions if the respondent's answer is incomplete, and make written notes of all answers. Better yet, tape record or videotape your interviews.
Review the answers to all of the questions in the outline. Then analyze your employees' answers—particularly to question “i”—as if you were counting the votes for an election. The employee who gets named the most on question “i” is usually the one who committed the theft. However, there are exceptions. A new hire might get the most votes on question “i” simply because the other employees don't know her yet. Another employee might get the most votes merely because he is generally disliked by his coworkers.
When you reach this point, you have taken the investigation as far as an employer can. An experienced polygraph examiner can tell you if you have legal grounds to ask your likeliest suspects to take polygraph examinations in compliance with federal law. Most innocent suspects will take polygraph examinations without hesitation. Most perpetrators will quit their jobs after saying something like, “Since you don't trust me, I quit!”
Some store owners are reluctant to question their own employees about a theft. They have neither the time nor the inclination to assume the role of investigator. In these cases, a theft investigation questionnaire can be administered in written form and analyzed by a professional investigator.