Archives for posts with tag: termination

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’ve written a lot about Yelp.

Why I think Yelp’s business model is flawed, how I’ve pretty much come to terms with Yelp on a daily basis, and how to defend yourself from Yelp Bombing when things really go wrong. However, there is a new review demon out there, and they are making all the same mistakes as Yelp and the other review sites, but unfortunately, they also are adding a raft of new ones. This is the rise of the job boards allowing for reviews of employers from “in theory” former employees.

Indeed.com, and Glassdoor.com, are the two that have recently come to my attention, but I am sure there are other sites going down this road and it is such a flawed idea that it is actually quite amazing that it got past the development stage.

Glassdoor, is a site whose purpose is attract reviews of employers by former or current employees. They actually do a reasonable job of allowing a platform for employers to promote what they do, the benefits they offer, and the company culture. Glassdoor also state that they perform checks to ensure that reviews are genuinely from employees, have a flagging system for reviews with issues, and also have a platform for companies to respond. Glassdoor also offers companies the opportunity to place job ads through their system as a source of revenue – if not the only the only one.

Indeed.com has followed a slightly different path. They have an extremely successful job posting board, with fantastic SEO properties at a reasonable cost. I’ve used Indeed.com for years. However, Indeed.com now offers users of their site to review employers.
So, what is the problem with job sites allowing for the reviewing of employers?

Let’s, for a moment, think about those who go to job board sites on their free time. By definition, those people are either out of work or looking for work so they can leave their existing job. There is absolutely no reason for a happy and content employee to visit one of these sites. This is in stark contrast to Yelp and other consumer view sites. People tend to have just one job, but everyone uses multiple businesses every day. Therefore, the majority of people in a position to review on a jobs site are those who have either chosen to leave, or who have been terminated from a job. The number of terminated employees who have warm feelings towards their former employer, regardless of the right or wrong of their termination, are pretty minimal. There is a reason that it is against Yelp’s terms of service for former employees to review a business they used to be employed by.
Reviews are anonymous. It’s hard to respond to a review that states “I was wrongly terminated” other than with the most generic of responses when you have no idea who the employee might be.

In addition, most HR departments and employers decline to give any kind of review about an employee’s employment due to the legal consequences of doing so. It’s hard to see these kind of reviews as anything other than an attempt to entrap an employer. Much like Yelp and the other online review sites, the sample volume is pitiful – only more so. If an employer has 200 employees, but only three reviews, how is that in anyway a representative sampling.

Finally, employers are the ones being asked to pay for this system. What is in it for employers? Sure, great reviews might help attract new talent, but not in a system that seems geared towards creating bad reviews. Indeed.com, for example, at the time of this writing has no flagging system for bad reviews and no way of communicating about a review other than sending an email to Indeed.com’s main customer service department. Indeed.com’s reps, much like Yelp.com’s reps, state there is nothing they can do about a product they are asking employers to pay for.

Now gaming this system would be a pretty straight forward process. These sites are actually asking for employees (current and past) to review their employer and unscrupulous employers can bring pressure to bear on employees, whether perceived or actual. But then what is the point? If the sites want genuine reviews, this is not how you go about getting them – it might not even be possible. There is a reason why LinkedIn, for all its faults, has never gone down this road other than with personal endorsements. You can read a lot into a lack of endorsements on LinkedIn.

Because of the legal climate, former employees get little in the way of references from the majority of employers. It could be that if both employers and employees genuinely want an open review ecosystem then that could be possible. But that would mean that employers would have to be free to review former employees. That is not going to happen any time soon and I’m not sure anyone wants to see what kind of bloodbath that would cause.

Company reviews from jobsites, as they currently stand, are untrustworthy at best, and perhaps a platform for dishonesty and disingenuous communication. They should be treated with scorn by both employers, who are being asked to pay for them, and jobseekers to whom they do a disservice.

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.

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