Archives for posts with tag: Change

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.

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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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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.

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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.

 

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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.

 

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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.”

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I have been reviewing books for a number of years now; however, movies have always been my passion and on occasion I have used movies in staff meetings for the accessibility of the message. I decided that it was time to share some of these.

 (Clicking on the image above will take you to Amazon where a tiny percentage goes to help my movie and book buying habit.)

 

Moneyball, based on the excellent book by Michael Lewis of the same name, follows the real life story of the Oakland A’s baseball team. In particular, Moneyball documents the Oakland A’s struggles of trying to be successful with a budget a mere fraction of their competitors. The realization of their manger, Billy Beane – played by Brad Pitt, that they either have to “adapt or die” is one that many businesses can relate to. The solution that Oakland A’s adopted was to look at the data about players, which informs hiring and firing, objectively rather than emotionally.

Looking at a problem from outside the box and understanding what a problem actually is, not what you have always thought it was, is a huge lesson for most managers. It is also one that is difficult to teach. However, the lesson of being prepared to do what others will not is one that many from the business world will be familiar with – or at least should be. Overcoming the objections, and down right obstructionist behavior, of those who have not bought into your ideas should also be familiar territory for most managers. The movie treats these issues with respect, and although there is an obvious “good guy / bad guy” dynamic, it is easy to overlook this and see the issues being discussed from both sides.

Since the publication of the book, the statistical approach to fields that have previously been lacking such analysis has become know by the colloquialism “Moneyball.” And although the initially baseball was dramatically changed by Billy Beane and the Moneyball approach, there are signs of it falling out of favor.

However, it would be a mistake to dismiss the book, or the movie, because of this change in the idea’s fortunes. Indeed it actually signals a misunderstanding of the limitations of the approach and of statistics in general. As is stated in the movie: “The first person through the wall always gets bloody.”

The movie does break some of its own rules for dramatic effect; however, these are minor sins given how excellent the movie is as a whole. Interestingly, the movie also has two of the best scenes I have ever seen about terminating an employee. New managers could do a lot worse than follow Brad Pitt’s advice on the matter that can be found in Chapter 8 at the 1:00:00 mark explaining the right and wrong ways to go about a termination. Chapter 10 at the 1:18:00 mark actually shows Jonah Hill”s character putting that advice to use and it is a highly accurate and realistic portrayal of how a termination should be done.

As a management tool, Moneyball is a great business story cloaked in a sports jacket. Both the good and the bad of analytics are on display here, as well as the difficulty of being a pioneer and trying to overcome entrenched ideas whose only validity is “that’s the way we have always done things.”

You may not like baseball, but this is a smart story, based on a smart book, about smart people. It also has the added advantage of being highly entertaining.

You could do a lot worse.

A brilliant book on change and how to apply it in the real world. Over 250 real world examples and ideas underline the authors basic concept – getting people to change is like someone riding an elephant. Appealing to the logic of change is like appealing to the rider of the elephant. The elephant itself is the emotional connection to change. Finally, the path is the environment which can either help or hinder change.

Through numerous examples, the authors show that by appealing to the rider of a situation (the logical argument), the elephant (emotion), or the path (the environment) change can be effected by addressing these disparate elements individually, or together.

An excellent example of this is provided with nurses making errors in the dispensing of medications to patients. The hospital used in the example had an error rate of 1 in 1,000 – pretty good, but still a lot of errors. The nurses understood the need to not have errors, so the rider / logical part of the problem was not at issue. Likewise, nurses directly saw the effect of errors in medication had on their patients and so had a direct emotional connection – the elephant was on board too. The issue was in the environment or path. Nurses are constantly interrupted by doctors, and other nurses, while they are working and found it difficult not to help when asked, thereby distracting them from their main task. The solution? Tweak the environment / change the path so that nurses did not get distracted.

A bright orange vest was employed whenever a nurse was dispensing medications so that everyone else on the floor knew that they were not to be disturbed. The program was universally hated – the rider element thought it was unnecessary, the vests got lost all the time and hated that they could not help their doctors and colleagues. The elephant part of the problem felt that they might as well wear a dunce cap – the nurses felt demeaned and that the vest drew attention to the fact that they made mistakes.

This might have spelt doom for the program until the data came back. Over six months every department that employed the program saw a decrease in errors of 47%. Needless to say the change in the path / environment won over the rider / logical objections and the elephant / emotional objections because it worked.

The book is also a great champion of checklists which have gotten bad name precisely because they work so well. They can be seen as dehumanizing and giving rise to the idea the checklists mean “a monkey could do it.” Like most objections the book deals with this argument deftly. “Well, if that is true, grab a pilot’s checklist and try your luck with a 747.”

There are a number of other elements that I can’t do justice too here: black and white goals, precise clear instructions, the power of action triggers, and the how to harness the herd to improve culture. But these elements are really tweaks to the fundamental concept of the logical, emotional and environmental components of enacting change.

At the back of the book is, essentially, a manual for enacting change complete with a web link to resources and PDF of a one page overview that the authors encourage you share! It is here by the way. This alone is worth the purchase price of the book and will ensure that the book stays on my desk rather than on a bookshelf.

Wonderfully researched, well thought out, and very smart. “Switch” is essential reading for anyone who want to understand why change can be difficult and what it takes to implement change against the odds. It should also be a template for other business books – ditch the theory unless you can prove it I the real world and show how it applies to the real world. Authors please take note.

Can’t recommend this book enough and owe a huge favor to the person who bought it for me.

(Clicking on the cover above will take you to the book’s Amazon page and contribute to my book buying habit / problem.)

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