2009.10.16 01:33:42

John McDaniel

So far I’ve presented six strategies for dealing with the problem of employee theft:

• Destroy all signature stamps and vow to never use them again
• Limit check writing authority to the owner(s)
• Limit depositing authority of staff and divide the duty between multiple employees with built in checks and balances
• Hire a fake consultant to review your processes to shake the tree; if something shakes out hire Waugoo Consulting Group to investigate the problems and create a plan to reduce your exposure to employee theft
• Computerize your inventory system and take physical inventory more often than annually
• Consider employing a video security system

This blog will continue to present steps that can help reduce your risk of the very real problem of employee theft.  As I’ve said before, keep in mind that each tactic works on its own but is exponentially more effective when paired with an overall strategy employing multiple approaches.  (Haven’t I said this before?)

Vendor Checks
Conduct semi-annual vendor checks.  Maintain a list of all vendors and personally contact them twice a year.  Ask for a statement to be sent to you personally (at home, possibly) that summarizes the past 6 months purchases and returns.  This accomplishes several things.  First, it prevents (or severely limits) an employees ability to create a shadow organization (i.e. a vendor in name only) commonly used to funnel practice funds while maintaining a proper and clean book record.  Second, this allows for a means of comparing the vendors reports of how much you should have spent (and been credited) over the time period so you can compare with what was actually spent.

Secret Shop with Cash
Secret shop the practice with marked cash to see where it goes.  The long term approach to this strategy has you using different amounts at different times with different staffers.  Cash transactions are the most common way (in my experience) for employees to steal from the practice.  The patient pays for their contact lens supply with $300 in cash and employee never makes a bill and never records the transaction.  There is no record of the purchase on the books.  Embezzlers vary in the amounts of cash transactions they prefer to target.  Some only like the “little” stuff and others don’t waste their time unless it is over a certain dollar amount.  Test all amounts on all staff over time.  This goes without writing (but since I am writing it that means it has happened before) but don’t send the same person in over and over to be the secret shopper.  Ideally, you want to recruit different people each time.

Password Protect the Owners Computer
Finally, password protect the owners computer.  Many people are guilty of poor use of this most basic safeguard; don’t be one of those people.  Also ask a family member to try and figure out the password and/or find where you store passwords for when you forget them.  The password is only as good as its ability to remain secret and unfound.  Finally, don’t make the mistake of giving this password to the staff.  Nothing can be more self defeating than this mistake.

Le Meas,

John G. McDaniel, OD, MLHR
President/Founder
Waugoo Consulting Group, LLC
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

preventing embezzlement | asset protection | staff management | loss prevention | employee theft

2009.07.23 00:47:59

John McDaniel

So far I’ve presented four strategies for dealing with the problem of employee theft:

• Destroy all signature stamps and vow to never use them again
• Limit check writing authority to the owner(s)
• Limit depositing authority of staff and divide the duty between multiple employees with built in checks and balances
• Hire a fake consultant to review your processes to shake the tree; if something shakes out hire Waugoo Consulting Group to investigate the problems and create a plan to reduce your exposure to employee theft

This blog will continue to present steps that can help reduce your risk of the very real problem of employee theft.  As I’ve said before, keep in mind that each tactic works on its own but is exponentially more effective when paired with an overall strategy employing multiple approaches.

So far, the strategies presented have been targeted for prevention of embezzlement.  In other words, the approaches deal with the stealing of funds from the business bank accounts or lines of credit.  I prioritize this type of theft as the most egregious for one reason – it has the potential to do the most damage to a business.  This is not to minimize the more common types of theft (product, services, supplies, and time); they are important as well.  Just keep in mind that when you hear about employees stealing tens or hundreds of thousands of dollars those losses are not coming from frames, contact lenses, or time in most cases.

Several readers have expressed an interest in ways to help prevent employee theft of “stuff,” such as frames, contact lenses, supplies, etc.  You asked and I will answer.  Just one note about a specific reply I received from a reader.  The reader indicated that preventing the theft of merchandise would be more useful because it is far more common.  While it is true that there are more incidents of employees walking out the door with product or other things the assumption that the stealing of funds and cash happens “far less often” is simply untrue.  Don’t allow yourself to fall into the trap that big time theft is the outlier here – it is far more common than most believe.  Also, there will be more suggestions to help curb theft of merchandise in future blogs.

The first approach that can help reduce the theft of saleable goods is computerizing your inventory system.  A good inventory system should allow quick counts on key products such as frames and contact lenses.  There are dozens of business benefits that come from a well designed computerized inventory system including the ability to collect key metrics on the products you are selling (and are not selling).  The better the inventory system the more difficult stealing becomes.  In and of itself it won’t prevent all theft but as part of a comprehensive system it will reduce the opportunities.  With any inventory system the most critical element is using it.  To use a system you must routinely take physical inventory.  The more often you take inventory the better you will be able to measure the theft problem and the more accurate you will be in determining when and how theft is occurring.  Everybody hates inventory – it is a universal law in business.  Everybody delegates the job, too.  It is OK, to delegate the job but make sure you delegate to different staffers as often as possible and make sure you delegate to yourself on occasion as well.  Such valuable information comes from a good inventory system, especially when a physical inventory is done.  You will shortly find that you are better able to manage your marketing with this data as well.

The most basic of security measures is a video surveillance system.  These are common because they work.  They help prevent theft from the general public as well as from staff.  In some offices I’ve seen where the staff has access to and manages the video system.  By doing this you open the door to staff subversion of a great antitheft tool.  Some of the newer systems allow for monitoring remotely via the internet and allow for great control over who can manipulate the video output.  These systems are not inexpensive but if your theft costs are high they can pay for themselves in short order.

Le Meas,

John G. McDaniel, OD, MLHR
President/Founder
Waugoo Consulting Group, LLC
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

employee theft | loss prevention | staff management | asset protection | preventing embezzlement