WSJ Reports Businesses See Rise In Employee Theft

WSJ-LogoThe Wall Street Journal posted a great article on the rise of employee theft as a result of the recession.  You can read the entire article on MSN’s Money page here.  The article reports that ‘New research shows that employers are seeing an increase in internal crimes, ranging from fictitious sales transactions and illegal kickbacks to the theft of office equipment and retail products meant for sale to customers.’  The article also mentions that ‘To many employers’ chagrin, the workers guilty of the most grandiose theft frequently turn out to be those deemed to be highly trustworthy’.

We have seen a dramatic increase in internal theft while in the field and expect to see a continued increase in 2009, especially in employees who rely on tips for a large part of their salary.  Many hotels have been forced to dramatically reduce the number of hours as occupancy declines and many of the hotel restaurants have slowed down.  Many employees are now really struggling to make what they made in the past and most cannot afford to take a pay cut and still pay their monthly expenses.    

What can you do to make sure your employees don’t turn to theft to make up for their lost tips?

First, have a good long-term forecast and reduce your staff accordingly.  Many hotels make the mistake of forecasting their labor week to week instead of quarter to quarter.  If you do a quarterly forecast, you can make better decisions.  Unfortunately, many hotels will be laying off employees over the next year.  If you evaluate your staff now based on forecasts, you can consider laying off a few employees now rather than just reducing everyone’s hours until morale really suffers.  Be upfront and honest with your associates and how the decreased business will impact their jobs.  For many employees, this is the first recession in their working lives.

Second, make sure you are reviewing your internal controls.  One of the most important tools to have now is a system to track all employee’s sales and tips by day.  Be sure to compare each employees’ percentage of cash sales to other employees’ percentage and investigate any inconsistencies.

Finally, continue to do what you have been doing in more successful times to keep theft out.  Many hotels are tempted to spend fewer hours reviewing internal controls or reducing mystery shopping to save money.  Don’t be short-sighted.  Think long-term.