BY BARRY BRANDMAN
securitybrief
as the economy sinks, theft rises
THE DISTRIBUTOR’S INVENTORY VARIANCES
had historically fallen within acceptable levels. So it
came as a shock when the latest report revealed that
over the past six months, inventory “shrinkage” had
increased by upwards of 400 percent.
Unable to find an operational explanation, the company’s managers hired a security firm to conduct a confidential investigation. The undercover operation
revealed that a group of long-term employees had been
stealing inventory on a weekly basis. When apprehended, the workers admitted to the thefts, telling investigators that the economic downturn had left them desperate for extra cash. After weighing the alternatives, they
had decided this was an easy, low-risk way to supplement their income.
This is not an isolated case. Business publications
have been full of stories lately about the rise in work-place crime. The timing is no coincidence. There is a
direct correlation between rising criminal activity and
the economic crisis.
Part of it is simple financial need. With tens of thousands of companies slashing expenses, the grim reality
is that workers face wage freezes, pay and benefit cuts,
reduced overtime, and in the worst case, layoffs. Even
if cutbacks haven’t yet taken place, many workers
believe that it’s just a matter of time and will start casting around for an alternative means of income.
Unfortunately, many workers see stealing from their
employer as one of those means.
Making matters worse, some of those employees have
convinced themselves that they’re simply taking what
they’re entitled to. One supervisor caught defrauding his
employer tried to justify his actions this way: “I’ve
worked hard for this company for a long time, and I didn’t see the owners making sacrifices like they expected us
to.” Another distribution center employee, when identified as a member of a theft ring, told investigators that he
was “just doing it to them before they did it to me.”
Protecting your bottom line
While there is no way to make your company bulletproof, there are several steps that can dramatically
reduce your risk. Here are four proven strategies:
1. Maintain open communication with your workforce. If layoffs or cutbacks are pending, don’t
announce it through impersonal e-mails or postings;
arrange to have the news personally delivered to the
staff. The direct approach can keep simmering resentment from boiling over into full-blown retaliation.
2. Share the pain. If you’re forced to make cutbacks,
make it clear to everyone that the sacrifices are being
made across the board. If they don’t see senior managers tightening their belts too, workers are unlikely to
believe that the reductions are really necessary.
3. Make sure you have proactive safeguards in all essential areas of your business. Certain distribution activities
are particularly vulnerable to collusion and, therefore,
merit special attention. These include shipping, receiving, returns, driver deliveries,
pickups (“will calls”), and
transfers. We exposed one
scheme in which a delivery
driver and one of his customers were netting nearly
$1,500 a week by deliberately
overloading trucks. Inventory
loss can easily spike if you
don’t have effective methods
of monitoring the personnel
responsible for these activities.
4. Establish an effective way
for workers to report illegal activity. Many times,
employees are aware of blue- or white-collar crime but
are reluctant to blow the whistle because they’re afraid
of putting themselves at risk. To encourage workers to
report theft-related activity, give them an absolutely
safe, risk-free way to communicate. One of the most
effective methods is to set up an anonymous tip line.
Making a hotline available will not only increase the
odds of learning about internal theft, but will also
serve as a deterrent. If an employee knows that co-workers can easily (and anonymously) report him,
he’ll be far less likely to yield to temptation in the first
place.
Barry Brandman is president of Danbee Investigations, a Midland Park, N.J., company that
provides investigative, loss prevention, and security consulting services to many of the top
names in the logistics industry. He is the author of Security Best Practices: Protecting Your
Distribution Center From Inventory Theft, Fraud, Substance Abuse, Cybercrime and
Terrorism. You can reach him via e-mail at bbrandman@danbeeinv.com or (201) 652-5500.
