When discussing crime in supply chain settings, external theft is often the first thing that comes to mind. It can be more comfortable to think that criminals unrelated to the company are the ones making off with valuable stolen goods – rather than the employees who are an integral part of the business.
It's sometimes difficult for employers to stomach, but staff theft is responsible for significant losses in the retail and logistics sectors.
Companies must be prepared to face this risk head-on and put in place stringent loss prevention measures to protect their stock, reputation, and businesses.
How common is employee theft?
Employee theft can be hard to detect and manage, which makes it difficult to know the full impact. With tactics including faking delivery paperwork or recording perfectly good items as damaged, a small percentage of employees can sometimes steal in ways that make it difficult to spot a crime has even taken place.
Despite the true extent not being clearly known, there is data which shows internal theft is a significant cause of shrinkage.
Employee theft in stores accounted for more than 22% of retail shrinkage in 2019, according to a study by the Centre for Retail Research. The same report showed 18% of overall retail shrinkage came from crime targeting suppliers and warehouses.
Both these figures are on the rise – increasing by 1.2% for staff theft and 4.6% for supplier & warehouse crime in 2019. Together, they accounted for an estimated £2.22bn of losses in the UK throughout the year.
Why do employees steal?
The motivations behind theft are not always straightforward – often there are a mixture of factors which cause someone to steal from their workplace.
Some common reasons include:
- Poverty and financial difficulty. Staff may take items which can be resold to help pay bills, or because an item is unaffordable for them. With increasing levels of unemployment and redundancies, there’s a risk that more staff may steal from their workplace to help cope with a lower household income.
- Unhappiness with the job or company. For some employees, stealing is a way of getting back at a company or boss they feel has wronged them. Whether they feel overworked, unmotivated at work or taken advantage of – low staff morale can be costly to a business as some employees seek to redress the balance in their own way.
- The workplace culture allows it. Crime is often opportunistic, and if an employee feels there is an opportunity to commit a crime, they are more likely to do so. In other cases, employees who normally wouldn’t steal can become tempted when they see other colleagues getting away with it.
- A belief that it won’t matter. Some employees will justify their actions with the belief that the theft will be covered by insurance, that item(s) won’t be missed, or that the company is big enough – or rich enough – to absorb the loss.
Thefts can range from very small, low cost items – such as office stationary, which is often taken in revenge – through to high-value products that are resold online.
7 ways to reduce the risk of employee theft in the warehouse:
1. Monitor staff – and make sure they know you’re doing it
Security solutions like CCTV can seem an easy fix for workplace crime. But rather than being an all-seeing ‘Big Brother’, many CCTV systems aren’t being effectively monitored – and staff know it.
If you’re not able to monitor cameras to the extent necessary, begin to operate randomly scheduled monitoring of the warehouse floor. Unannounced and unscheduled management and security walk-arounds - coupled with locker, bag and car searches - increase the risks associated with stealing and can help to stamp-out opportunistic crime.
2. Make stealing unacceptable
Many companies like to talk about their values of trust and integrity. Whilst this is very commendable, occasionally it leads to a culture which relies on these values and lacks stringent measures to counteract crime.
Bringing in a zero-tolerance policy alongside an understanding that stealing from the company is unacceptable begins to create a culture which deters staff from crime.
3. Be aware of seasonal risks
Seasonal peaks often mean that more staff need to be brought in to cope with demand. Wherever possible, thorough background checks should be carried out on all employees - even if they’re temporary staff.
Outsourcing ad-hoc work to companies who have already fully vetted their staff is another way to reduce this risk. If neither of these options are possible, consider increasing other security measures for the duration of temporary contracts.
4. Have stringent processes in place to check paperwork
In some cases, employees have faked paperwork to get stolen items past the warehouses’ security provision. Sometimes these may be significant thefts, with items loaded into lorries whose driver is also in on the theft.
There are a range of measures that can help tackle this. At the simpler end of the spectrum, seals are a cheap solution and can be effective when used alongside a robust process for seal and manifest checks.
Many warehouses now operate blind picks, preventing staff from knowing where an order will be sent and smuggling items out that way. As before, randomised spot checks of picks can provide a strong disincentive by increasing the risk involved in crime, helping to deter opportunistic thieves.
At the more advanced end, technology solutions such as RFID tags in boxes can be used to allow whole pallets and lorry loads to be quickly and accurately scanned.
5. Rotate staff shifts
It’s often challenging for a staff member to carry out a crime entirely undetected by anyone. This can lead to alliances being formed between workers on the same shift – conspiring to either help carry out the theft or keep quiet about what they’ve seen.
Putting staff shifts into a rota system can help to reduce the risk of these partnerships being formed, as staff can’t rely on working with the same people every day.
6. Keep the warehouse organised
Whether it’s paperwork, processes or items of cargo – an unorganised warehouse can make it easy for employees to remove items before anyone’s even noticed. Basic housekeeping measures like keeping stock well-organised, storing empty boxes and rubbish in specific areas and having clear – and well-separated – entry and exit bays makes it more challenging to move items unnoticed.
Clear processes for how incoming and outgoing deliveries, manifests, seals and paperwork should be dealt with can help to make discrepancies quicker and easier to spot.
7. Consider additional measures
If the above measures are in place and you’re still facing ongoing issues with theft or unexplained losses, consider other options to find the cause of the problem.
Anonymous tip-off lines can be used to encourage staff to report potential crimes, although these can be vulnerable to malicious reports and need to be used carefully. Trained undercover security officers - posing as a member of staff - provide another way to monitor activity in a warehouse and uncover the cause of ongoing losses.
Expert support to reduce warehouse crime:
At Cobac Security, we’ve worked extensively within loss prevention across a range of different settings. From an initial analysis of the risks facing your business, through to expert consultancy, technology solutions and professional security personnel services – we can support your business to deliver significant improvements to your loss prevention strategy.
Get in touch to speak to an expert member of our team on +44 (0)1332 948320.