In the early 1990’s as a young theme park operator, I was oblivious to the possibility that one of my own would take company property. It was not like these were thug kids with hard lives. They were young adults, just barely younger than me, raised in good households, working on college educations. Yet there I sat, one cruddy night, with 8 of them sitting outside my office as I spoke to them individually on the little scheme they had been running. Their process was simple. After closing, they would take some inventory out of the retail store and place it just outside the front door as the locked and closed down the building. As the others cleaned and prepared the facility for the next day, one of them would drive around and pick up the loot. The only reason I caught them was because one of them had a guilty conscience and disclosed to me who, what, when and how.
Although my only managerial experience at the time was overseeing the operation of rides at a theme park, there were many within our organization who had inventory control and cash handling experience. After the initial shock, we all looked dumbfounded and felt stupid that this occurred right under our noses without any inkling on our part that we were losing money. The main questions asked: What could we have done to prevent it? Who can we trust if we can’t trust this group? What do we do now and how do we keep it from happening again? And the biggest question of all: What tools do we have to help identify potential problems in the future?
Our managerial staff was small. We had a retail manager, who had 40+ years of retail experience, who oversaw the purchasing of new products, ordering of inventory when quantities were low, organization of the shop, and the price points. We had an accountant who oversaw the financial numbers from the sales and the purchases, but also kept the books on all the other aspects of the operation. And I managed the staff, ensuring they were scheduled, on-time, the place was clean, and they were all trained. At the time the operation seemed quite efficient; however in hindsight, it wasn’t perfect. The retail manager should have noticed the inventory was having to be restocked more quickly than expected, but she had no knowledge of the quantity of sales. The accountant had identified the significance in high cost of goods sold a few weeks earlier. The retail manager attempted to analyze the discrepancies for weeks. By utilizing sales reports generated by our Point of Sale system and her own manual receiving records on inventory, she did acknowledge a discrepancy in our inventory counts. However we had no reason to believe our staff was stealing, and the records were in so many different places, we made the assumption we had not received the correct amount, the Point of Sale was incorrect in our sales figures, and/or our customers were stealing from us. The latter was our final conclusion so we added staff to monitor the retail shop and decided to reconvene again in a few months. Obviously our conclusion was incorrect and we lost more and more before we realized what was actually occurring.
Although this scenario was limited to our retail store, I’m quite positive our food and admissions were affected as well. So what could have been done to identify and prevent? Management could have certainly worked together more closely and we could have monitored the employee activities much more carefully. However, since those days I’ve come to realize that if someone wants to steal, they will find a way. I have come to the conclusion most employee thefts occur due to the thrill of doing something they are not supposed to and/or they feel they are owed because the company makes so much money. If this is the criteria we are up against, then no amount of profiling or analyzation of applications/resumes will protect the company’s interest. The single biggest crime fighting tool for a facility is their management software applications and software provider. If you utilize a full facility management application, no other tool in your arsenal will touch all of your employees and their activities.
If during my early ’90 situation our Point of Sale had done more than just documented the purchase of admissions, retail, food and beverage, I truly feel we would have not only identified a problem, but also solved the riddle without someone’s guilty conscious being our savior. Unfortunately our Point of Sale did not document the receiving of inventory, or perform audits, or create purchase orders. If it had, we would have had a much clearer picture on the quantity of inventory we were missing. If our Point of Sale had a time clock built into its application, we would have been able to identify who was working when the missing inventory was documented. If our software provider had been a partner instead of just another vendor, we could have sought their assistance in analyzing data when we had identified a problem. In today’s world these features should be expected from your software provider, along with many other features not included in this blog.
I eventually left facility operation and joined the software development industry. One of my first jobs was as technical support for the applications we were providing to the entertainment industry. Most of my time was spent retraining facilities how to change their pricing or add an employee to the system. However every once in a while I received a call that would forever be remembered. I received such call from one of our facilities explaining to me that their numbers just didn’t make sense. They were reviewing their sales figures of gift cards, and the amounts was not coming up even. They expected if they sold a $20 gift card, their sales numbers should show $20, not the $19.45 average they were seeing in their reports. I asked if they were providing any discounts on gift cards, and they assured me they were not. They stated they had packages for higher amount purchases which would give their customer an additional gift card (i.e. buy a $100 gift card and receive a $10 gift card for yourself). However they had set up the 2nd gift card under a different category so it would not report like the original purchase. The proverbial light bulb went off in my head, and within minutes I was printing reports for them to review from my office to their printer. What I had discovered was a quite ingenious plot developed by the 77 year old millionaire who was working at the facility because he was bored. He had been selling himself $100 gift cards and receiving the extra gift card. He would then use these gift cards to purchase additional gift cards to sell to their customers, making a 10% profit for himself. When questioned by management, the 77 year old millionaire stated “the company was still getting their money, I was just taking my share.”
Although the facility treated me as though I was a hero catching the thief, in truth it was the functionality of the software that made it easy to discover what was going on, who was doing it, and how much he had actually taken. In the end, they sued the gentleman and won a decision for recovery, penalties and interest. In hindsight our software shouldn’t have allowed for the purchase of gift cards by gift cards, and this was rectified within a day. Very much like the anti-virus companies, as a software provider we are constantly making updates to improve the overall security and integrity of the system. And just like your patrons expect to be treated with the highest level of customer service, so should you expect it from your software provider.
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