Retail operations in the United States experience over 60 billion dollars a year in losses, primarily due to employee theft. Imagine you have been hired as a loss prevention specialist for a large retail chain, and your first assignment is to identify and address the current problems with inventory shrinkage. Select and discuss one of the following internal controls you would implement to help prevent future employee fraud or theft. Be sure to provide your rationale.
- Option A: More stringent background screenings for new hires (such as reference checks, criminal record checks, and credit record checks).
- Option B: Tighter security controls (such as video surveillance, random inventory or cash audits, computer system audits, and segregation of duties).
Solution
The most widely recognized reasons for stock shrinkage in the enormous retail foundation are worker extortion or burglary. I would embrace Option A: More stringent background screenings for new hires (such as reference checks, criminal record checks, and credit record checks) as inside controls to keep away from worker robbery and extortion as a misfortune counteraction subject matter expert.
I chose the 1st option because of the following reasons,
Employees are the spine and one of the most significant resources of the organization. We can guarantee that a worker’s set of experiences, credit reports, and criminal records, in addition to other things, are spotless and that the person in question is perpetrated to their obligations and won’t take part in any misconduct.
Subsequent to being utilized as a misfortune anticipation expert by an enormous corporate store, my first job will be to distinguish and address current stock shrinkage issues. Following are my inside controls.
Prohibition of Employee Fraud:
As indicated by the 27th Annual Retail Theft Survey performed by Jack L. Hayes International, a misfortune avoidance and stock shrinkage control counseling association, only 25 huge retailers captured practically 1.2 million shoplifters and unscrupulous representatives in 2014. This was up 7.1% from 2013, with untrustworthy workers up 1.7%. This concentration additionally demonstrated that unscrupulous representatives take more than six times as much as shoplifters. (Greenberg, 2018, p.g. 101)
While screening faculty through stores might help diminish extortion, it isn’t adequate. Representatives frequently cooperate to take from their bosses, and shoppers might visit foundations and proposition workers items they didn’t buy as a feature of a robbery procedure.
To diminish employee theft:
Play out an individual verification on every new representative: Perceptions aren’t the actual reality. Personal investigations might incorporate credit reports, criminal records, instructive records, and laborers’ pay records, as per the US Small Business Administration.
Checking three possible references:
If a potential representative gives us a reference, we can assume they anticipate a positive reference consequently. Remembering this, we should have at least three references to contact.
Improvement of the administrative environment:
Solid administrators lessen robbery in retail settings. A solid supervisor draws proficient lines and guidelines while driving with trust and regard. Holding one-on-one representative audits to some extent quarterly additionally helps construct a more grounded retail climate, as does regularly speaking with the whole group.
Control of cash :
While most purchase installments are finished with charge or Mastercards, cash is utilized much of the time, expanding the risk of corporate robbery. In order to help limit cash admission, have many individuals check the sales register receipts by the day’s end. In a perfect world, an administrator is responsible for this, yet even a director ought to have a subsequent representative actually take a look at the aggregates.
Monitoring of the new inventories:
Monitoring of new stock and is responsible for a burglary that frequently happens before items are sold. Ensuring that the stock is appropriately checked in, represented, and dealt with to forestall burglary. Letting more than one individual, manage it can also be an option to put the issue to rest.
There are various techniques to help keep away from representative extortion, however, none are 100 percent compelling. In order to control robbery, beginning with the staff is necessary as checking each customer has its own downsides, and it doesn’t send a good message about the business. (Tucker, 2018, p.g. 71)
References
Greenberg, J. (2018). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. In Occupational Crime (pp. 99-106). Routledge.
Tucker, J. (2018). Employee theft as social control. In Occupational Crime (pp. 65-80). Routledge.
