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Loss prevention for the layman

Part One

In this column we'll discuss various ways businesses lose money through dishonest activity on the part of customers, employees and competitors. We  will address specific weaknesses and problems found in many businesses and  suggest ways to plug these leaks. In many cases, simple and inexpensive techniques are very effective at reducing losses. Electronics, however, often  is the best solution both short term and in the long run. Therefore, we will delve deeply into electronic security applications. We'll cover alarm systems, electronic article surveillance, card access control systems, video surveillance, and how to protect yourself from illegal bugs and wiretaps. For  sensitive areas, we'll learn what is and is not legal. Of primary concern will be education - knowing enough about the various security products and services to purchase them intelligently, apply them effectively, and  get the most for your money. If interest warrants, we might expand also into computer and data processing facility security, and when to  consider the services of a security guard or private detective agency.

By following the advice presented in these columns, virtually any  business, from the smallest to the largest, will be able to cut losses  and improve their bottom line. OK - you're running a successful and (hopefully) profitable business.  You've got your product or service together, the money end under  control, and you've learned how to sell your product. In very basic terms, would you agree that the following is true?


Gross sales

- Expenses


If only it were that simple! A more realistic expression would read:


Gross sales

- Expenses

- Shoplifting

 - Employee theft

- Sweethearting

 - Alcohol and drug abuse

 - Vandalism

 - External theft

- Theft of copier, postage, phone services

 = profit

Look at the list above. How many of the items listed affect your business? How much is crime costing you? A commitment to loss  prevention can net you a return many times the investment.

 To keep from sounding too cynical, let's remind ourselves that most employees and customers are honest, hardworking people. And those of us  who live and work in rural areas are known to brag to the "city folk"  how few problems we have up here compared to the big city. But, in any  society there will be those who take advantage.

 You know, business owners shouldn't be the only ones concerned with theft. Lost profits cost the consumer in the form of higher prices.  Lost profits could otherwise be shared with employees as more pay and benefits. And creditors, investors and stockholders all would be happy with a better bottom line. In fact, I've seen profitable businesses close their doors because they couldn't absorb losses.

 Because loss prevention is everyone's concern, security procedures that invite participation from both employees and customers are a good first  step. A tremendously successful program, and one that offers an excellent return for a minimal investment, is the "ALERTLINE" program  offered by the Loss Management Division of Business Risks International  (check the Baltimore phone book). ALERTLINE is an anonymous tipster  program, where anyone with information about anything crime or safety related to a particular business can call a 24 hour toll free number and pass the information along to an interviewer. The interviewer will then contact the company and relay the information, along with suggestions on how to combat the problem. Rewards are sometimes  offered, and complete anonymity is guaranteed. Businesses who subscribe to ALERTLINE are furnished visible signs to post inside and outside the  workplace. Employees also are kept aware of the program through meetings, pay envelope stuffers, etc. People who don't want to get involved directly often are willing to share information with a third  party. I wish I had an interest in ALERTLINE, because I'm an  enthusiastic supporter, having personal knowledge of several businesses who have saved tens of thousands of dollars through their services.

 Don't overlook the little things which, if abused, can chew up bucks in a hurry. Although we'll get into it in detail in future columns, for now keep an eye out for theft (and that's the real life word for it) of  photocopier, fax, long distance telephone, postage meter, gas pump and  other facilities. These things often are considered "perks" of the job.  A friend of mine with a small business caught a receptionist using the  fax to distribute copies of a map to a party. What business hasn't had  unexplained long distance calls on their bill, or an excessively high number of message units? With a bit of analysis, it's possible to match  the time and date of alien calls to a particular shift, and sometimes individual workers. If a pattern develops, you'll know what's going on.

 Night and weekend workers tend to be the worst abusers. I've worked in  places where more illicit photocopying was done than for legitimate business functions. Copier purchases, maintenance and supplies are expensive, and abuse adds up quickly. Frequently, though, abuse isn't  readily apparent because the expenditures tend to be frequent and  small. One business we advised learned that approximately one fourth of their postage expenses were due to theft from night shift workers. We  discovered this when one of our personnel uncovered a Christmas card  envelope that had the business' postage meter imprint. Investigation disclosed that over 1000 personal Christmas cards from ten employees had been run through the postage meter. Moral: keep the meter locked after hours, and consider daytime key control with a log if your postage expenditures are significant.

 You might start by stating your policy, in writing, to all employees. Include your reasons why you are concerned about abuse, and mention  that you are aware and grateful that most employees are honest. Be  sure, though, that employees are notified, in no uncertain terms, that  theft of company supplies or services will not be tolerated. Perhaps  your policy could provide for one verbal, then one written warning  followed by termination for violators. Consider requiring restitution  for every instance of abuse. And make sure the policy applies equally to all levels of employees. Nothing creates more dissention among the ranks than double standards for line workers and management. If the  boss dips into petty cash before he leaves for lunch, it's hard to  expect employees not to do the same if they're short. If you have a lot of employees you might want to have your legal counsel review a prospective policy. Many firms require new hires to initial a copy of  the company's policy on abuse of services and supplies.

 Even office supplies can cost when employees are casual about converting business supplies to personal use. I read a statistic years ago stating that enough pens were purchased by business in a single  year for each man, woman and child in the country to have three.

 Well, that's all we have space for this month. If you'd like to see this topic discussed in a monthly column, or if you have suggestions for future articles, please indicate such to the editor. And, if you  have questions about anything we've covered, feel free to contact me at (410) 879-4035. Remember - security doesn't cost, it pays!

 Copyright (C) January 1990 by Stephen E. Uhrig, SWS Security


Part Two