feminist Fight club

Its not often that someone recommends a book for me to read and that they then warn me about the same book. Feminist Fight Club came with the warning: it is not for the “faint of heart” supporter of feminism.

Feminist Fight Club is not for everyone. In fact, I’m sure it will annoy a number of people. Not so much for its content, but for its tone. It sometimes feels like one is reading the Communist Manifesto. Make no mistake, this is a revolutionary guide for the repressed in both tone and content. As with my caveated recommendation; I agree that not everyone is going to agree with Feminist Flight Club’s view of the world.

I am not one of those people.

This is a handbook for women who find themselves sidelined, un-listened to, and the victims of idea theft, by oblivious and clueless male managers and colleagues. The book makes the assumption that the workplace has evolved beyond the blatant sexual harassment of the “Mad Men” era; but that there is still a long way to go. It is a book to dip in an out of rather than read in one sitting; which is where its tone may become wearing over an extended period of time.

However, there is some superb advice, and insight, dressed up as rhetoric in the book. While the section on meetings can be found from many other sources on meeting etiquette; the book has one of the best chapters I have ever read on holding salary negotiations with a manager – regardless of the sex of either party.

If there is a fundamental problem with the book; it is that in its zeal to evangelize one audience it risks alienating another. What is potentially lost due to this zeal is actually some excellent advice on office politics and the way interactions between colleagues should actually take place. That being said there are not a lot of books that are as “in your face” and confrontational as this one is and that makes it all the more interesting.

From this male view point, Feminist Fight Club did make me re-examine how I have interacted in particular circumstances, and made me more aware of subtle and institutional sexism on television, and one assumes in real life.

This is not a book to convert anyone, it is a book to hone one’s skills, to become a better feminist, a call to arms, or to just become a better person.

sick
When Letty Cottin Pogrebin was diagnosed with breast cancer it was a scary and uncertain time. But what did not help, or helped dramatically, was the response of her friends. Some of her friends knew exactly what to do and what to say. Other friends seemed to have no idea, or said or did completely the wrong things but felt they were being helpful. But worst of all, some friends disengaged completely, as if they could not deal with her illness on any level. “How to Be a Friend to a Friend Who’s Sick,” is the result of Ms. Cottin Pogrebin speaking to many of the people she met while undergoing surgery, chemotherapy, and radiation treatments.

This is a book about sickness and death, but is also a book about friendship and casseroles. About gifts, and conversations. About children and the elderly. And it is about what is useful to most people who find themselves dealing with illness, and what is unhelpful.

Over the years of running a business with a significant number of employees, I have found myself in the position of having to interact with people who are sick, or have sick relatives, but without being able to fall back on deep personal friendships with the people concerned because they are employees. The feeling of wanting to help is tempered by not wanting to intrude, and not always knowing what to say, or what to offer to help. Or indeed how to say anything and not wanting to make things worse, or have one’s motives misunderstood.

“How to Be a Friend to a Friend Who’s Sick,” is a book that helps navigate not just the feelings of those who are sick and their immediate relatives, but also of those who are acquaintances. Understanding how people can help if they want to, and how to not help if the wrong kind of help is actually harmful.

Almost like an etiquette book of old, “How to Be a Friend to a Friend Who’s Sick” is a book about dealing with taboo subjects. There are few right or wrong answers, but it does talk about the need for communication and for an understanding of how to listen to the answers that are given. An easy book to dip in and out of, and surprisingly funny in places, Ms. Cottin Pogrebin’s book is the kind of work that should be required reading for almost everyone, but particularly managers. Managers are often are caught between a rock and a hard place when it comes to illness, particularly serious illness, in a member of their team.

As Ms. Cottin Pogrebin states;

“Empathy plus action equals kindness.”

“How to Be a Friend to a Friend Who’s Sick,” may be an odd choice for a business book blog, however, I would argue that it is books such as this that allow managers to show leadership. Management should always be about human connections. Knowing how to navigate some of the toughest interpersonal challenges any manager may face, and understanding the emotions of all involved, should earn “How to Be a Friend to a Friend Who’s Sick,” a place on every manager’s shelf.

It certainly has a place on mine.

conspiracy

 

Conspiracy is a book that the reader picks up believing it to be one thing, changes into something else while reading, and then turns into something unexpectedly different at its conclusion.
Subtitled; Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue, Conspiracy tells the story of the gossip and snark site Gawker’s outing of Silicon Valley venture capitalist Peter Thiel as gay. This sets in motion a conspiracy with Theil using his vast resources to try and find a way take Gawker down. Or at least clip the site’s wings.

The vehicle that the conspirators ultimately settle on is Gawker’s publication of parts of a sex tape of wrestling star Hulk Hogan that was made without Hogan’s consent. With Thiel footing the bill, Hogan can undertake a long and protracted campaign, encompassing multiple lawsuits in multiple jurisdictions.

Thiel’s motivations are at the heart of the book. Is he out for revenge? Does he feel that a site such as Gawker should be allowed to get away with pushing freedom of speech deep into the territory of invasion of privacy? The book explores these issues in depth, and the nature of conspiracies. This is not, however, a thesis on conspiracy theories. It is rather an exploration of what it takes to construct, and maintain, a conspiracy. It is also a behind the scenes look at how the rich and powerful (all the characters in this tale are rich and powerful by conventional standards) go to war with each other.

Where Conspiracy sets itself apart is its examination of the aftermath of the Hogan vs. Gawker lawsuit and its effect on both the conspirators and the media. Mr. Holiday also uses the case, and Thiel’s motivations, to explore the culture wars and society’s relationship with the media.

Conspiracy is an entertaining and intelligent book. The constant focus on the nature of conspiracy can get tiresome, but this a tale that is rarely told and it reveals a lot about us as a society and the use, and the potential use, of power in the business world. It is a tale that has implications far beyond its Silicon Valley and Hollywood roots.

courage small

The Courage to be Disliked is an odd book.

It uses the literary device of a conversation between two people, which I have used myself and for which I now apologize. I can now see how annoying it can be. The conversation between a philosopher and a young man can at times feel patronizing and is not helped by the ham-fisted characterizations on the audio edition (which was what I was listened to.)

The title is a little misleading, but is really a reference to being comfortable in your own skin and not let what you perceive as the opinions of others dictate your happiness.
The Courage to be Disliked does bring up a number of interesting, and potentially controversial, ideas. The idea of compliments and praise being a form of manipulation, for example, while very interesting is also ripe for abuse.

What the book also does is to introduce the reader to the ideas of Alfred Adler and Alderian psychology. Alder, a contemporary of Freud and Jung, was arguably so far ahead of its time that it is only now that we are really realizing just how important his ideas are.

This is a book about personal development, how we perceive the world and how we feel about how the world perceives us. It has some significant short comings in execution; however, its mission is to bring complex psychological concepts to a wider audience is admirable and it certainly achieves its goals.

The Courage to be Disliked is perhaps hamstrung by the readers preconceptions, given its title and blurb. It does not live up to its press, but that does not mean that there are not valuable lessons to learn from Kishimi, Koga, and Adler.

moments

Any book by Chip and Dan Heath is worth reading and their latest, The Power of Moments, is no exception. For those who do not know the work of the brothers Heath you can check out my review of their first book “Made to Stick” here, and what I consider one of the best business books ever: “Switch” here.

Interestingly, The Power of Moments is very similar, and treads a lot of the same ground, as Scott Strattan does in his books Unmarketing and Unselling; they even use some of the same examples. What makes the Power of Moments seem new and fresh is that level to which it delves to understand moments, why they work, and how they work; as opposed to just focusing on how to create new moments of your own.

An early example of the Power of Moments is to focus on the lack of attention that companies pay to an employee’s first day. What the Heath Brothers point out is companies have a golden opportunity to create a truly memorable first day for new employees; but that more often than not new employees are treated as an impediment to the day’s business. They rightly point out what would a first date be like if we treated it the same way we treat an employee’s first day? Suffice to say we probably would not get a second.

Creating memorable moments is not about delivering the best of anything, or better value than your competitors. Moments are about when clients have expectations and we do something to exceed them. To create moments, we need to give employees license to break the script. To do something for our clients that is unexpected and that creates a memory for them.

The power of moments, however, is not just about business to clients. Moments also have value when motivating ourselves and our own internal dialogs and bargains when it comes to setting goals. What the Heath Brothers suggest is that rather than using the traditional SMART goals (Specific, Measurable, Attainable, Realistic and Timely), or worse no real goal at all, that we borrow from the gaming world. In computer games, players advance from level to level, and in good games those levels are moments. For example, take the vague goal of wanting to learn play the violin. Even a SMART goal may just be to attend a lesson every week. However, with a level system, things look a little different:

Level 1: commit to one lesson a week
Level 2: Learn to read sheet music.
Level 3: Learn to play a particular song.
… Level 7 / Boss level: Play in a pub in Ireland.

By having an outsized end game, and then having manageable steps to achieving those level with rewards built in creates a sense of purpose. Purpose isn’t discovered, it is cultivated, and purpose trumps passion.

The Power of Moments is not a book about good businesses becoming great, but how to make any business extraordinary. Much like the book.

badblood

Ever get the feeling that the Silicon Valley Startup culture is more con than the pinnacle of new business development? If the answer is yes, or if you are afraid the answer may be yes, then Bad Blood is a book you should read.

Written by the reporter who blew the lid on the Theranos scandal in the Wall Street Journal, when they were still considered the darlings of the healthcare startup world, it is a remarkable story. If it was fiction, the story would have been laughed out of the editor’s office or thrown in the trash. It is a story of just how far networking and connections can get a company when they have a product that has really never worked. Of how the best, and the brightest, can be so intent on finding the next great thing, and of not missing out, that they will overlook almost anything.

But at its heart, Bad Blood is a story about rules and ethics. About how some people break rules and other refuse to. How some discover their own ethical lines, and how others see those same lines and cross them anyway without a second thought.
For those who do not know, Theranos claimed to have developed a spectacular new blood testing technology that only required a tiny finger prick of blood to be able to run hundreds of lab tests. They raised millions in investments but we never really able to get their technology to work properly; if at all. It is claimed that Theranos repeated lied to investors, business partners, and employees. They are, and continue to be, at the center of a number of private lawsuits and criminal prosecutions.

As with any book about a still emerging scandal, it does suffer from being a little out of date. Since the book’s publication, the two central characters; Founder and CEO of Theranos Elizabeth Homles, and President Sunny Balwani were both prosecuted by the SEC. The charges were resolved by a complicated agreement with regards to company ownership and a fine; however, in June of 2018 they were both indicted on wire fraud and conspiracy charges by the Northern District of California.

It is obvious from the writing that there is no love lost between Mr. Carreyrou and his subjects; Ms. Holmes and Mr. Balwani. But this is a minor quibble and, to be honest, quite understandable given the levels to which they pushed back against his reporting.
It is an extraordinary tale for any one in business that raises an interesting question. How does a competitor prepare for, and compete, with a disruptive new technology that does not actually exist? The real victims of the Theranos scandal may not be the investors and employees, but competitors who undoubtedly spent millions, and hundreds of R&D hours, chasing a technology that so far has not worked. Not to mention the consumers waiting for better blood tests while the industry chased its tail searching for Theranos’ secret.

Of course, Bad Blood is also a cautionary tale about the cult of personality that surrounds many entrepreneurs today. It is a book filled with larger than life personalities, chasing larger than life dreams, that leads to larger than life crimes.

Here is a Silicon Valley worthy investment tip: the movie rights should be worth millions.

In the fifth and final part of this series, we look at some examples of employee theft, and overall prevention measures. In part one we looked a cash handling methods, in part two we looked at credit card theft, in part three we looked look at best practices for preventing theft from inventory, and in part four we looked at employee time theft.

cctv

As we’ve talked a lot about during this series, there is an overriding concept that helps to protect against employee theft: Trust No One. As we mentioned in part one – thefts are almost always crimes of opportunity. The goal of this series, and of owners and managers, is to remove those opportunities wherever possible and to make it easy to find the culprit where removal of the opportunity is not possible. If your business does not have video cameras in place, you are at a serious disadvantage due to the protection they provide to employers, and also to employees. If you take nothing else away from this five-part series it is that video cameras with solve far more problems than they ever create.

Unfortunately, the number one culprit for serious theft from a business is a trusted manger. It should therefore be the responsibility of all managers to create systems that are robust, create a significant paper trail, and to welcome oversight.

Thefts occur for a number of reasons including to solve money issues and general opportunity. A significant number, however, particularly when it comes to managers, occur to get revenge on an employer or prove how clever the employee is to “beat the system.”

Even when thieves are not managers, in retrospect it is often found that they have flaunted their methods to co-workers or not taken basic precautions. These are employees who feel significantly undervalued and feel that they are “owed” what they are taking. What other excuse can there be for an employee who sells high specialized products on eBay under their own name?

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image courtesy of Pixabay

Managers

Giving managers freedom to act of the behalf of the company, does not mean that processes should not be implemented to ensure that the freedom and power that they wield are not abused.

Whether a manager has a company credit card, or just has access to one, statements should not be received at the place of business but to the home of the owner, if possible, and religiously reconciled each month. Similar precautions should be taken with company checkbooks, and company bank accounts. Not giving a manager a company card; but making them use their own which they then have to submit receipts to get reimbursed, can seem like a solution to company credit card abuse. However, a manager using their own credit card only works as a theft prevention method if the expenses claim, that this will ultimately result in, is reconciled with the same care that would be taken with a company credit card statement.

Payroll reports should be inspected every time a payroll is ran. Any employees who are not recognized should be thoroughly investigated. Ghost employees, employees who don’t actually work but collect a paycheck which is then spilt with whoever prepares payroll, can bankrupt a business if not caught.

Accounts such as fuel cards which should also be monitored for abuse. Fuel cards in particular are easily abused as the transactions are often automated and happen offsite. Thankfully, fuel card vendors have a number of systems in place to help monitor and catch embezzlement. Unfortunately, it is often managers with little oversight that setup such systems.

Owners and managers must embrace transparency when it comes to theft prevention, not just pay lip service to it. It is in a manager’s own best interest to create robust systems that create double checks on their own work for their own protection if nothing else. General expense tracking should catch embezzlement, or certainly lead to further investigations but this only works if someone is looking.

theft

image courtesy of Pixabay

Other Thefts

Stamps, or automated postage machines, are effectively cash. We rarely treat stamps with the same level of reverence and security as cash however. The employee who is running a side business on Ebay and offering free shipping courtesy of your business’s postage is not unheard of.

Cash tips often cause issues when certain employees have jobs that are considered “tip-worthy” and others are not. Tips given to one employee, to give to another, is just a recipe for disaster. If this happens in your business consider implementing a strict handling protocol, such as: the tip is placed in a sealed envelope, in front of the client, and deposited into a lock box to which only the tipped employee has access.

Access to the incoming mail can lead to corporate identity theft. Loan and credit card offers are routinely cold submitted to businesses through the mail. Just like with personal identity theft, it can be difficult to prove that a loan or credit card has not been taken out fraudulently in the name of the business. Corporate identity theft also has the added drawback, for the owner, that the amounts can be so much larger and unless you can prove embezzlement, the company will have to repay the loan. The sorting of mail, unless the business receives considerable volumes, should not be a low-level task. It should be left to the owner or a senior manager. Employees should not receive private mail at their place of employment. If private mail is received, employees should be aware that it may be opened.

Employees should not be able to change prices in your sales system. If it is not possible, or desirable to restrict this ability, a daily report should be ran to ensure that modifications of price have been done in line with company policy and not as a method of theft. Few clients check their receipts, and fewer still say something when they think something looks off.

Always take complaints from clients with regards to wrong change, forgotten change, or overcharging seriously and investigate thoroughly. If the employee can’t come up with reasonable explanation, you may very well have interrupted a theft.

 

court

image courtesy of Pixabay

Prosecuting Theft

Always terminate thieves!

Always prosecute thieves!

To an employer the penalties given out in most employee theft cases make it seem not worth the time or effort; however, unless a thief has already been through the process, to most employees being prosecuted carries significant weight. Nowhere is that weight felt more strongly than with your remaining employees. When controls are lack it is not uncommon to have multiple employees stealing at same time in different ways.

When terminating an employee for theft, try to get the police involved at the termination stage. It makes a significant impact on the employee concerned and sends a significant message to everyone else in the business. Of course, if you are going to do this you must have your facts laid out and they must be easy to follow. If the police can’t, or won’t, get involved at the termination stage you may have to go to a police station and report the theft in detail. Again, ensure that you have all your documentation, and facts straight; however, do be careful not to over do it. I once had a case of what I believed was a $1,000 embezzlement that took place over six months. The prosecution never went anywhere, I believe, because the stack of paperwork I presented to the detective was too overwhelming for the amount of the theft involved.

Different states have different amounts at which a theft stops being a misdemeanor and becomes a felony. This will have an impact on how the case is handled and sentence that the accused will ultimately receive if convicted. Always be prepared to go to court, and always make a victim impact statement if given an opportunity to. You cannot complain about being unhappy with the sentence a thief has received from a court if you are not prepared to help the prosecutor and the process.

 

handcuffs

image courtesy of Pixabay

Examples of Thefts

The following are examples of the type of thefts that I have either been involved with uncovering or have heard about from colleagues. Some are quite ingenious and some are just plain stupid.

1: A late night receptionist who used a reloadable visa gift card to give themselves refunds each night. They would batch out the credit card machine, run their refund, and then rebatch the credit card machine. The only way they were ultimately caught was that the visa card had been a gift from their employer and they had registered it online in case it got lost.

2: A cashier engaging an elderly client in significant conversation so they lose track that they have not received their change.

3: An employee changing prices of items in the sales software, but charging the client full price and pocketing the difference.

4: The super helpful employee who takes the trash out from all around the building, including the inventory storage room where they help themselves to some easily resalable items. The items are removed from the building with the rest of the trash and they then return in the evening after the building is locked up and retrieve the items from the trash. They were ultimately caught because they stole some items that were discontinued and so relatively rare. A search on eBay uncovered the items being sold under their own name. A look at their eBay history provided a history of everything they had stolen over a two-year period. In addition, their listings offered free shipping which explained the thefts of stamps.

5: The employee who discovers that the payroll app has a feature that allows them to clock-in from home before leaving for work and then clock out when they get home giving them an extra 30 minutes every day.

6: The employee with money troubles who intercepts the deposits after they have been placed on the business owner’s desk, taking a portion of the cash of the day and the deposit slip, and replacing it with a new deposit of their own making.

As mentioned before employee thefts are crimes of opportunities. Remove those opportunities and half the battle is won. Create a culture of transparency, and of checks and balances, and the other half will also be won. I mention to employees all the time; “Don’t put me in the position of where I may have to suspect you of something. Make it obvious that it can’t be you.”

In this ongoing series we look at ways of preventing employee theft. In part one we looked a cash handling methods, in part two we looked at credit card theft, in part three we looked look at best practices for preventing theft from inventory, and this week we look at time theft.

In most of this series, on preventing employee theft, we have been envisioning an individual who uses subterfuge to steal from their employer. Employee time theft can be a subtler and it can lead to shift in culture which makes time theft seem almost a perk to employees. Time theft can happen with both salaried and hourly employees; but since salaried employees should either be senior management or professions such as lawyers or doctors time theft, other than unproductivity, time theft primarily affects hourly employees.

Since the ultimate result of time theft is that the company is paying for labor it is not receiving, it is still theft and the amounts involved can add up dramatically; particularly if it becomes a widespread problem and culturally acceptable.

 

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image courtesy of ShutterStock

 

Clocking-In

All hourly employees should clock-in and clock-out; whether this is by using a manual time clock, a computer, or some other system. Try to have the time clock in a visible location, not hidden in a corner. This discourages employees from clocking each other in. It also discourages employees from arriving, clocking in, and then getting ready for work (putting items in their locker, taking off their jacket etc.)

All employers should have a system in place for tracking employees who call in sick or who call in saying they are going to be late. This call-in information must make its way to whomever is entering payroll so that it can be reconciled with who has been clocked in and out. If this does not happen “employee A” can call in sick but “employee B” can still clock them in and then out at the end of the day. If the report of the call-in just ends up in their employee file, “employee A” will still get paid for a day that they were not even in the building. If this happens at the beginning of a payroll period it is unlikely that anyone is going to remember the absence unless there is a protocol for recording it in the payroll system.

Be very wary of systems that allow for employees to clock in off site. They must be under strict control and ideally there should be some kind of flag in the system to ensure that the off-site clock-in system is only used when it has to be used because the employee actually is working off site.

 

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image courtesy of Pixabay

“I Forgot To Clock-In”

 

Employees can, and do, forget to clock-in. However, it is a good practice to spot check the time of arrival of an employee who has “forgotten” to clock-in with another system, such as looking at video playback of them walking through the door. An employee who is late, and their lateness is not noticed by a supervisor or manager, can make up when they arrived and claim that they forgot to clock-in. Therefore, spot checks are essential.

 

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image courtesy of Pixabay

 

Meal Breaks

Currently, federal law does not require employers to provide meal breaks. However, rules do vary at the state level with currently 21 out of 50 states requiring that employees get a meal break of some description. The rules vary widely from state to state; but usually work along the lines one unpaid break of half an hour, or an hour, and one or two shorter unpaid brakes per 8-hour shift. A perennial problem is employees not taking a required unpaid break, thereby going into overtime, and also potentially getting the employer in trouble with the state labor board if the state requires that breaks be observed. A time thief may take their lunch but not clock-out. If confronted at the time the thief may fall back on that they “forgot” and after the fact they may rely on “we were too busy.”

A potential resolution to both the above issues is to automatically clock employees out for their meal breaks and make them receive formal supervisor approval to work through their break and get paid for it. This is potentially fraught with legal issues and a labor law attorney should be consulted before instituting such a policy due the differences in labor laws between states. However, is it a very powerful way of ensuring that breaks are observed, but it also suffers from its own issues as employees, knowing that their break will be automatically deducted anyway, may take longer breaks than they are strictly entitled to.

Questioning employees who miss significant numbers of mandated breaks should go hand in hand with the implementation of a systems which allows employees to take their breaks at times that are both convenient for the business and the employee.

 

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image courtesy of Pixabay

 

Time Clock Security

As mentioned before, placing a time clock in a readily observable space will help alleviate the worst abuses of time theft. If using a mechanical time clock, however, it is imperative that only a very senior member of staff can set the time of the clock itself. If any employee can change the time of a time clock and get paid for an additional 15 minutes that they did not work, you can be sure that it will happen. Likewise, with computer-based systems, it is important that something as simple as changing the time on the computer does not affect the time that an employee is clocked in at.

For ease of catching issues, it is important that time clocks, whether mechanical or computer based, are set to the correct time. Although, it does not affect the number of hours worked or the length of an employee’s break, having them set to the correct time engenders trust in the system and makes tracing issues using other systems, such as time stamped video, much simpler.

 

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image courtesy of Pixabay

 

Employers Stealing Time from Employees

Employees, in order to get ahead of their day, or just gain extra hours, may come to work ahead of their shift and clock-in as soon as they arrive. This is a scheduling matter that should be handled as a coaching and then disciplinary issue. What should not happen is that the employer adjusts the employee’s clock-in time to match the time when their shift was scheduled to start. This is theft.

The Department of Labor takes a very dim view of such things as employees are entitled to get paid for the time that they have worked and to overtime for anything over 40-hours.

To protect themselves, employers should have employees receive copies of when they have been clocked in and out each day and ideally return them signed. Several payroll systems give employees direct access to see their hours, but not change them, at any time. Any change to an employee’s hours that is made should be made in complete transparency with the full understanding and approval of he employee.

It should also go without saying that meetings, lectures over a break which are mandatory, and travel to off-site locations, should all be paid unless your labor law attorney specifically tells you otherwise.

It is easy for employees to accuse employers of not paying them for hours worked. In these instances, it is almost always up to the employer to prove why this is not the case. Integrity of employee times and strong policies and procedures for making adjustments will provide significant protection and reduce the likelihood of any misunderstandings.

Next week, in the final part of this series, we look at overall theft prevention measures, company culture, and examples of real employee thefts.

 

In this ongoing series we look at ways of preventing employee theft. In part one we looked a cash handling methods, in part two we looked at credit card theft, in this part we take a look at best practices for preventing theft from inventory, and in part four we look at time theft.

As with credit cards, and particularly cash, inventory control and theft prevention are a matter of sensible precautions, double checking, and never allowing any one person too much control. Video cameras are also a prerequisite for any kind of inventory theft protection. The deterrent factor alone makes them a worthy investment. It is important to consider placement with video cameras, however, and to consider this when placing items in storage that are more likely to be stolen.

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Image courtesy of Pixabay

Risks

Identifying the high-risk items that desirable to a thief is an important first step in any prevention strategy. What makes items desirable to a thief? High value, small size, and / or easy to sell or use themselves. In a veterinary practice, controlled substances would be at the top of this list for obvious reasons, but pet food and treats would also make the list as they are routine supplies for any pet owner. Any establishment that sells alcoholic beverages, needs to consider just how easy, and desirable, it is to steal them – particularly hard liquor. It is informative to walk around your local grocery store and check out the different levels of security in different items and then apply those to your own business. Alcohol, of course, has additional measures in place in a grocery store, but so do razor blades (due to their expense and small size) and movies (due to their small size and ease of resale.) High risk high value items should have significantly higher levels of security and scrutiny than other items. That means that only key people will have access. This will make things more complicated for their handling, but the alternative is no security at all.

Certain items are always at risk of theft due to their ubiquitous nature: toilet paper, stationary, and cleaning supplies. Keeping an eye on reorder quantities is really the only way to ensure that a problem with theft is not missed; however, just watching the cameras on the employee entrance/ exit can often be enough.

Businesses that have significant issues with employee theft, will often ask to look in employee bags before as they leave the premises. While this can seem overly intrusive, it is important that your employee handbook contains language to make this a possibility if required.

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Image courtesy of Pixabay

Ordering & Receiving

Ordering in any business needs to be controlled. The person that is responsible for ordering, should not be the same person who is responsible to receiving goods and ensuring that what was ordered has indeed arrived. In addition to having multiple people involved, there also has to be a paper trail. When an item is ordered, the order has to be logged through a purchase order record of some description. When the item arrives, it should be received by someone other than the person who ordered it, the packing slip should be signed off on (or a packing slip created if the goods did not come with one) and then forwarded to accounts payable.

The packing slip should be matched to the purchase order which it turn is then matched to invoice. When things are paid for by credit card, it should be indicated on the purchase order, and then the credit card bill should be reconciled against packing slips and purchase orders.

The above may seem over the top for most small businesses, but the question that has to be answered is what is to stop an employee ordering an item from a supplier, destroying any paperwork, and taking the item home? Is your accounts payable person, assuming that they are not the same person who has been ordering, going to be able to find that one uncounted for item in amongst everything that is ordered when a supplier’s statement comes in weeks later?

On a side note, it should be made abundantly clear to all involved with ordering and receiving that “free product” or “gifts” from suppliers belong to the business, not to whomever receives them. There is sometimes the impression that because items have not been ordered, or have been nominally given a $0.00 value, that they are free to anyone who wants them. This cannot be the culture in your business.

Items which arrive outside the hours when they can be received properly, and by the appropriate members of staff, should be locked away unless there are serious reasons why they should not be (items that need to be refrigerated for example.) This prevents well intentioned, but misguided attempts to “help” and also more nefarious outcomes. It also prevents the frustration of knowing that an item is in the building but being unable to find it due to it being put away somewhere other than where it should be.

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Image courtesy of Pixabay

Stock

In order to sell products, employees need to have access to those products. That does not mean; however, that all employees need access to all products, at all times. A limited amount of non-high risk non-high value items should be placed on employee accessible shelves. Your main stock should be under lock, key, and camera. The inventory manager, or a supervisor, should be the only one who moves stock from one location to another. For high-risk high-value items, senior members of staff should be the only persons who can have access, and they themselves should have a strict protocol (a log book at minimum) which they have to follow when retrieving an item.

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Counting

Inventory has to be tracked. If you order 10 widgets and have 5 widgets in stock your inventory system should be able to tell you that after you have received your new widgets that, yes you can fill that order for 15 widgets.

The reality, of course, is rarely that simple. When it comes to inventory control you get out what you are prepared to put into it. An accurate inventory management system, where you can spot that five items are missing almost as soon as they are gone, only happens through hard work and effort. Good systems that are easy to use will work well, but they have to be maintained and repaired. Not just so that the system is correct, but so that the faith of employees, and managers, in the system is maintained.

High risk items should be counted once or twice a week. Discrepancies should be resolved or reported. All inventory items should be counted once or twice a year and the running count in the inventory control system reset. Constant shortages should be investigated as to whether it is shrinkage (theft), orders in process, or the mis-selling of items.

This level of effort put into inventory control can seem expensive and wasteful; however, you cannot track what you do not count. And you cannot know what is going on with inventory unless you count it.

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Auditing

In addition to counting, there is another way to see if items are walking out of your premises and not being accounted for. At the beginning of the year you bought 100 fidget spinners. You look up the invoice from Fidget Spinner Inc. and confirm that you were billed and paid for 100 units. At the end of the year you have 10 fidget spinners on the shelf. You run a report from your sales software on how many fidget spinners you have sold. Hopefully, it says you have sold 90. But what if it says you sold 80?

The inventory control side of things says that there should only be 10 in stock, which there are, but you have not sold 90. The problem could have been in the number that were received originally from the supplier, or whomever received them, or someone with access to the inventory control system has manipulated the system to make it appear that 10 fidget spinners are not missing.

You’ll notice in the above example, that it does not rely on inventory management to find that there is a problem; but it does allow for the problem to be narrowed down. This can really only ever be used for spot checking, but it does provide a backup system to the general inventory control system.

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Employee Sales

Sales of items to employees can be tricky to navigate from a theft prevention standpoint. An employee leaving the building with a bag of dog food from the vet’s office looks identical to an employee stealing a bag of dog food from the vet’s office. Having a strict protocol in place for sales of items to employees so that all items can be accounted for is essential. Do not allow employees to process their own transactions; there is just too much opportunity for issues to arise. All items should be billed for at full price and then a senior member of management should handle any discounts.

Inventory can be difficult at the best of times. Employee shrinkage; however, can be a serious problem and significant inventory controls will not only serve the needs of the business, but protect it from those should have its interests at heart.

Next week we will look at Time Theft.

In this ongoing series we look at ways of preventing employee theft. In part one we looked a cash handling methods,  in this part we take a look at best practices for preventing theft with Credit Cards, in part three we look at inventory theft , and in part four we look at time theft.  

When it comes to credit cards, preventing theft is not only about preventing theft from the business, but also preventing theft from customers. As with cash which we looked at in part one, the solution to preventing theft with credit cards is having the correct policies and procedures in place that conform to the basic idea of “Trust No One!”

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Credit Card Basics

Your credit card processor can bring you up to speed as to the best practices for running transactions, but what follows are some generally accepted procedures which should help protect any business.

Have cameras on your credit card machine / terminal(s) or at minimum keep them in an open area where multiple staff members can see them. Always use the chip option if possible when processing transactions. Try to avoid taking credit cards over the telephone. If you have to take cards over the phone, ensure that you are using all the security features; such as address verification and the CVC code on the back of the card. Try to always keep a customer’s credit card in sight of the customer. This is not always possible, but there is less chance of a customer’s credit card information being stolen if their card does not leave their sight.

Do not store credit card numbers, or photocopies of cards, unless you have an air tight system in place that is highly secure. Some of the biggest names in retailing have fallen fowl to having customer’s credit card numbers stolen from their systems. You should think very carefully before exposing your business to that kind of liability.

The ability to give a refund using your credit card terminal should always be protected by a pin or password. An employee giving a refund to themselves using their own credit card, if they are not very smart, or using a reloadable generic card is an easy way for an employee to steal if controls are lax. Members of the public are also not above trying to give themselves a refund if given the opportunity.

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Batching

At the heart of preventing employee theft using credit cards is batching. A batch is a report of everything that has been run on that credit card machine since the last batch. Once the batch has been run all the transaction are removed from the machine. Credit card processors will set your terminal(s) to batch out automatically, usually in the middle of the night. A better system is to manually batch your terminals at the end of each shift.

Batching at the end of a shift draws a line as to which shift ran which transactions. At the end of the shift, the batch(s) should be matched to the daily report in the sales system. Please do not use the credit card transaction slips to match up to your sales system. Credit card slips are very important, particularly if there is a dispute with a client; however, slips can get lost either by accident or on purpose. With a batch you will be able to see how many transactions have been run, for how much, and what refunds have been run. As mentioned before, refunds are an easy way for an employee to steal from a company, so it is important to pay them particular mind. Matching batches to your sales system, should also catch unauthorized refunds.

Good practice, particularly if you only have a few credit card terminals, is to ensure that there are no gaps in batch numbers. For each credit card terminal, the batch number should increase by 1 every time a batch is run. A missing batch is almost certainly an indication that transactions have been run, on the missing batch, and one assumes that they have not been recorded in the sales system. If you are missing a batch and realize it, you can always request a copy from your credit card processor or ask them to read out what should be on the batch.

Recording data in your in-house sales system accurately is not only important from an accounting standpoint, but it makes things much easier when trying to match batch transactions to the sales records. Try not to record transactions as “credit card” but as “MasterCard, Visa, or Discover” etc. Also, try to impress upon employees that if a client is paying with multiple cards, even if they are both Visa cards, that they should really be recorded in the sales system as they are ran on the credit card terminal. For example; two visa card payments of $20 should not be recorded in the sales system as a credit card payment of $40, but as two visa payments of $20 by the same client.

Just as with cash, matching the batches to your sales system should be initially performed by a supervisor and the person who has been running the majority of the transactions. Every transaction must be accounted for one way or another. This, of course, can get complicated, particularly when dealing with multiple terminals; however, there really is no substitute for ensuring that all transactions have been recorded properly, and that there are no orphan transactions or transactions that were not actually made.

Of course, the matching of each shift’s credit card batches should also be double checked by a manager who has not taken part in running any credit card transactions, usually the following day.

It can sometimes seem pointless to track down small inconsistencies between what was recorded in the sales system and what was processed on the credit card terminal. However, with a business that runs hundreds of transactions, small amounts can add up quickly. Overcharging clients by $1.00 and then refunding that $1.00 to an employee’s own card can be hard to detect unless small errors and constantly, and consistently, tracked down and resolved.

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Reconciliation

It should be noted that with some terminals it is easy to run a report, which prints a batch like list of all the transactions but does not batch out the credit card terminal. When this is done by mistake It is usually caught by the following shift as their batch will have all the previous shifts transactions as well as their own. This will be annoying, and make the matching of batches to sales system reports more difficult, but this is almost certainly just a mistake. More concerning is when a report is ran deliberately instead of a batch. In theory, this means that refunds could then be run on this credit card terminal after the report is ran, and then terminal could be batched out properly and the batch destroyed.

With the method outlined above, even keeping track of batch numbers one shift to the next does not protect the business. Of course, if batch numbers are not being kept track of then all an employee would have to do in order to steal is batch out the terminal, run whatever refunds they want to, and then re-run the batch.

For these reasons it is important, just as it is with cash, to reconcile the credit card transactions with statements from the credit card processor and with the monies deposited into the bank account of the business. This is usually the only way to be sure that there is not money being stolen via credit processing. Ideally, this reconciliation should be performed by someone who has not been involved in any of the previous steps.

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Theft from Customers

If credit cards must be ran out of sight of customers, and in a private area, it is easy matter for a thief to write down credit card details, or take a picture of the front and back of card. It is not usual for victims of such schemes, which usually happen at restaurants, to find that additional charges have been ran of their card before they have even got home from the restaurant! The thief texted the card details to an accomplice. If they are not greedy, it can difficult trace where the credit card details were copied from.
When credit card transactions must be ran in less than ideal circumstances, consider banning your employees from carrying cell phones. It is not an ideal solution, but it does make things harder.

As mentioned before, keeping credit card details onsite is an enormous liability and should be avoided unless a 3rd party is prepared to accept the liability, such as a software developer. However, even then I would be wary of such systems.

Next week we are going to look at inventory thefts.

 

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