Guest post by Peter Baskerville. Read the original post on Quora: How do I handle employees from exploiting my own business?.
My experience, from operating 30 retail/hospitality outlets, informs me that if stakeholders feel justifiably compensated for their effort and input then there is little motivation to exploit or steal from what they perceive as your rightful share as the owner. In fact the reverse is true, they want to see you be successful because your success is directly correlated to their own.
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So here are the strategies I adopted to ensure employees did not take from my rightful share as the business owner:
1. Compensate employees appropriately – In Australia this is not that difficult because labour laws ensure that we do. Even so, I made sure that those employees that contributed to my success were appropriately rewarded. If you are relying on the tipping culture to appropriately compensate your employees, then I think that you are in trouble.
2. Have a sophisticated Point of Sale system – When making sales, get employees to push assortment item buttons on electronic cash registers or input Stock Keeping Unit (SKU) codes to convey the thought that every assortment item is tracked and must ultimately be accounted for. Reinforce this view by periodically mentioning that certain stock items were missing and seeking explanations as to why that might be.
3. Implement a daily cash register balance process – At day’s end, the cash taken from the cash register for banking must equal the cash sales less any cash payments and cash refunds. Get staff to record the under/over amounts every day where these amounts don’t agree and always be highly suspicious of the store/employee who never reports any unders. They are the ones most likely stealing from you by keeping the register draw open and putting cash sale proceeds in but not registering the sale. At the end of the day they do the balance and take the excess but ensuring that they don’t record any missing money fearing that it will expose their scam. The truth is, honest employees will have no trouble reporting under amounts in their balance because they are recording facts and they know they didn’t take the missing money and are as curious as you about the cause.
4. Monitor your Gross Profit % – A drop in your gross profit % is a leading indicator of either staff theft, staff giving products away for free, supplier under-delivery/over charging or increase in the cost of goods. This will involve stock-takes of inventory which should be done by yourself or independent people. Wether you do the actual calculation of unaccounted for loss or not, the fact that you are doing it and noting the loss of merchandise will generally keep employees from doing the wrong thing because they think they can be so easily found out.
5. Employ staff holding values – I particularly liked employees with strong religious convictions. See, if they stole from me … they went to hell. I figured that hell was a great deterrent for them doing the wrong thing by me and it was comforting for me to know that they thought that someone was watching what they did when I wasn’t there. I also liked employing people I could trust because they were governed by their own moral code that abhorred taking what was not rightfully theirs. But I only found these trustworthy staff by first taking the initiative to trust them first.
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