How Do Most Restaurant Employees Steal?
Thursday, May 10, 2012 at 5:06PM How Do Most Restaurant Employees Steal?
As a manager I quickly learned the concepts of sweet-hearting, cash larceny and skimming, or how my employees will steal from me. At the time we had manual cash registers, nothing like the point-of-sale systems of today. It was easy for an employee to give away food, they would take money and look like they were making change; in reality they might take a five dollar bill and give the friend back four one dollar bills and 4 quarters on a $1.50 charge. If they gave back extra change the drawer would be short, but with 6-10 employees working out of the same drawer it would be hard to find the thief. Most managers blamed this on poor training, or over portioning. Employee theft was not thought to be the major culprit. No one wants’ to think their employees are stealing from them. What are the three biggest areas of occupational fraud and theft? They are Cash Larceny, Skimming and Sweethearting.
Cash Larceny
Simply defined is any scheme in which cash receipts are stolen from an organization after they have been recorded on the organization’s books and records.
Skimming
Skimming for the purposes of our discussion here is the removal of cash from an organization before the cash has been recorded in the organization’s books. Because the money is stolen before it appears on the books, skimming is known as “off-book” fraud. Basically the employee pockets the cash directly from the customer.
Sweethearting
In retail, "sweethearting" is one kind of theft carried out by collusion between an employee and a customer. It is so named because it most often occurs between a cashier and his or her family members or friends, usually with prearrangement.
I was always very successful in detecting a thief(s) for some reason, so after a short time the district, regional and divisional managers quickly figured out that they could use me to help with loss prevention issues in other store locations. If the numbers were off in a store and the normal audit(s) did not show why, I would be transferred into the store to verify if all company policies and procedures were being followed. I could quickly figure out if food was disappearing out the back door. In other words, if the loss was a food cost issue or if the mangers were stealing cash from the registers. We caught employees stealing cases of food, especially steaks and chicken. I also caught managers skimming thousands of dollars from the registers. The techniques I used then were very simple, but the concepts themselves are the same as I use today. Today I just use the technology to see remotely, what I would watch for in person twenty five years ago. In the twelve years working in restaurants, the skills I developed in loss prevention have always stayed with me. Both understanding the scams used by employees to perpetrate a fraud and the reasons why they would take the risk in the first place. This knowledge would stay with me throughout my career.
Introduction to Employee Theft, Fraud and Loss Prevention
Why People Steal or Commit Fraud
The best way I found to explain why people commit negative behaviors such as theft and fraud is illustrated by the Fraud Triangle. My source of this idea was the late Donald R. Cressey (1919-1987) he was a central figure in twentieth century American criminology. A distinctive feature of criminology since the 1930s has been the dominance of sociology among the various disciplines studying crime and criminal justice. There are categorically three reasons why someone typically commits occupational fraud and abuse - and these reasons make up the fraud triangle (shown here). Think of it as a three legged stool, if you take a leg away, it will fall over.
Financial Pressure usually comes from two places; inside the employee’s company in the form of job pressure or the pressure to meet deadlines and revenue goals, and external pressures such as family life, financial troubles, illegal drugs, extra marital affairs, the recession, etc.
Opportunity is the way that the employees believe that they can get away with it - and therefore it is primarily this part of the fraud triangle that I work with to eliminate temptation by enforcing certain types of controls such as video surveillance.
Rationalization almost doesn’t have to be explained - most of us are very good at it. But most of the time the argument is “My company doesn’t recognize my efforts.” “They owe it
to me. I deserve to get paid more,” or “I’m only borrowing the money. I’ll pay it back,” or “Nobody will miss it.” “The company can afford it,” or “Everyone does it. I’m not hurting anyone.”
In my experience most of these acts start out small and grow over time. I had one manager who told me he started with $20 by accident. He made brought change to the register and when he got home the twenty dollar bill was still in his pocket. No one noticed so $20 became $100, then $200 and so on. What happens is that within a short period of time the money they are stealing is no longer discretionary income, it becomes part of their weekly budget. I found this to be true especially in bartenders. Whenever I installed a system in a bar I would tell the owner that he will probably lose some of their staff. I would say “They will have to get a job somewhere else, where they can continue to steal.”
All three elements need to exist in order for the occupational fraud or theft to occur. – I could never do anything about financial pressure and as far as rationalization goes, that was up to the business owner. However, as a security professional I could attack “Opportunity & Temptation” if I could get the employees to think that they would be caught if they tried to steal, then I would break the cycle. I would look to physical security technologies to see how they could be used as a key fraud or theft countermeasure.
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