Alternative 1: Technical Control3
Internet Protocol Cameras.3
Cloud-Based Security Services..4
Data Encryption Services4
Radio Frequency Identification Tags .4
Biometric Systems of identification4
Using Electronic Articles Surveillance5
Access Control Mechanisms5
Non-technical Approaches to Solving Employee Theft in Retail Business.6
Pre-Screening the Employees7
Demystifying the Process of Loss in the Organization 8
Training on the Prevention of Loss 9
The Adoption of the Open Door Policy.9
Imposition of Strict Penalties on Rogue Employees..9
The Use of a Buddy System and an Employee Tip Line.10
This analytical is a comparative analysis of two courses of action for the issues of theft in the retail business. These two courses of action encompass the use of technological approaches to handling the issue of theft in the retail business and the use of non-technological approaches in handling the same issue. From this report, each of these courses of action will be evaluated considerably with possible significance to the issue. A recommendation of the most significant approach to the issues of theft in retail business will be analyzed and addressed by the executive corporate management, the supervisory team, and other employees in branch management of the AAA Company. The validity and reliability of this report are dependent on the extent or the capacity of these approaches to solving the problem of theft in the retail business. These courses of action are intended to be implemented by the management of the AAA Company to annihilate the issues that affect the economic elements of the business of the company.
This analytical report encompasses the executive summary, which provides a succinct and cohesive overview of required business operations of the Company to annihilate the issues of theft in the company’s retail business. The introductory part will provide insights on the state of the theft in the retail business and some of its effects on the society. As such, it will seek to provide the executive management, the supervisory team, and other employees in the branch management of the company with information that suggests that failure to identify the required course of action for the problem will have consequences to the organization. The main section of this report is the body or the analysis, which encompasses a discussion of each of the two courses of action and an evaluation of the most reliable approach to employ in the Company. This report contains a recommendation for the best course of action and a conclusion that provides a summary of these courses of actions and the recommended one.
Business come is a global problem confronting many business owners in different countries. For instance, in Russia, the existent legal system in the county does not define the transfer of the property rights or the ownership of assets. As such, the number of crimes in relation to business has doubled since 1985, which makes it challenging for the entrepreneurs to operate within the given framework of the existent law. A Recent study in Canada suggests that the cost of the employee theft, which includes theft of inventory, cash, and fixed assets, is approximately $20 billion annually (Thoms, Wolper, Scott, and Jones 18). In addition, the theft in business causes an approximated 30 percent of the business failures in retail or small businesses. In the United States, the business crime or theft issues cost the economy of at least $186 billion yearly. For this reason, theft in retail business is a major problem for the owners of small business, which, in this case, is AAA Company. In order to annihilate the issue and the economic effects of this issue, it is important to employ a variety of options in the business functions to handle the issue.
Analysis of the Problem and Choices
Alternative 1: Technical Control
Internet Protocol Cameras
Internet protocol cameras are one of the technical controls that can be used to solve theft in the retail business in terms of taking money from the registers. That is, the debit and credit card purchases may be rising in the company, but the cash is still minimal from the accounting information of the business. The internet protocol cameras are an emergent technical approach that has replaced the analog tapes and the closed-circuit cameras, which were previously used to monitor the cash registers. These new IP (Internet Protocol) cameras have new features that make them convenient. For instance, the Atlanta-based MySnapCam gives the small businesses live streams from a variety of video cameras connected to the internet (Thoms, Wolper, Scott, and Jones 21).
This technology is elemental for offsite viewing through internet-connected mobile devices or computers. The service of the IP cameras enhances the prevention of losses and enables the monitoring of the customer services as well other workplace aspects. These IP cameras allow for the access of events through the web browsers, iOS and Android apps. This service can use as many cameras as six. Some of its features include the triggers of motion detection, emails and texts alerts, simultaneous viewing on a variety of devices, and cloud storage. This service promotes the maintenance of security when the employees work remotely.
Cloud-Based Security Services
This technical approach can be used to solve issues of copying the digital assets of the business organization. Various regions have been experiencing issues of a security breach. As such, activities such as logging networks become paramount for the protection of the digital assets of a company from a variety of parties, including thieving employees. Most of the retail businesses lack the bandwidth or have insufficient bandwidth to monitor their networks, making the cloud-based security services potentially valuable investments. These services enable the managing of extensive remote measures of security, such as antivirus monitoring, firewall maintenance, and intrusion prevention (Thoms, Wolper, Scott, and Jones 29). With reference to employee theft, the auto-logging and the reporting features of the service may be essential. That is, by recording the network activities or keeping the detailed logs, companies or business organizations can see the type of files moved by whom and where, which is crucial information needed for the recovery of stolen data.
Data Encryption Services
These services enable solving of issues related to stealing of the customer data. When the thieving employees leave the business organization or company, most of their preferences are within the stealing of customer data. For this reason, encrypting the data of customers can be crucial in dealing with this issue. Backup appliances are some of the data encryption services that restrict access of information on the hardware levels. These devices are in varying sizes of storage and can enable the small or retail business organizations create copies of backup for as many as 25 PCs. The devices, which have removable drives of varying capacity, allow both the offsite and local backup. Some of the data encryption devices make the removable drives hack-proof (Schwartz 11). Therefore, they are geared toward the business organizations seeking to remove the risks of data loss, especially concerning financial information, which are the core elements of the business functions. They support the remote administration for the business organizations, which contract their information technology outside. The use of these services enables the keeping of company secrets when the employees move out.
Radio Frequency Identification Tags
These technical control devices enable solving of issues related to pilfering products. Sound inventory activities or practices in a business organization can be elemental for the prevention of theft. These tags come in varieties and can promote detection of up to approximately 40 to 300 feet away (Schwartz 17). As such, accounting for the stored or shelved products becomes less laborious, which allows for the frequent conducting of the inventory. Small businesses can employ this measure of the technical approach to promoting efficiency in protection and prevention of theft in the business.
Biometric Systems of identification
These systems prevent cheating on the time sheets. Fraud on the payrolls is rampant in most of the workplaces. Leaving early from the workplaces, reporting late to work, and taking extensive or extended breaks reduce the time of the workday or required work duration, which reduces the productivity. For this reason, the systems of biometric identification keep the employees accountable for a time in the workplaces and prevent practices of having other colleagues clocking them in and out. These monitoring devices or products use facial recognition, web interfaces, RFID badges, and fingerprints to track the employee time in the workplaces. In addition, this type of technology measures multiple characteristics of an individual, including the eyes, hand geometrics, and palm prints with the aim of distinguishing that individual from others within the organization (Schwartz 21).
For instance, fingerprint scans encompass placing of the fingers against sensor plates, which capture the images of the fingertips. While the fingerprints are not stored, the differentiating features, such as arches and loops, are translated into 256-chracater digital fronts of interpretation, which are then compared to previously entered samples. Nevertheless, scanners of the fingerprints are sensitive. Another form of the biometrics is the hand geometry, which uses the geometric shapes of the hand, such as the size and length of the fingers, and the blood vessel or palm patterns in the hands, to authenticate the identities of the users.
Using Electronic Articles Surveillance
This approach involves the use of electronic tagging. The exit gates of the retail businesses detect the tags that have not been deactivated or removed. These tags are made smaller progressively, and the detectors are reliable. Source tagging is another elemental aspect of the electronic arts surveillance. It reduces the costs because the tags are included in the packaging of the goods. Research suggests that the use or the employment of this concept can reduce the rates of retail theft by 75 percent. Surveillance also comes with using the advanced systems of electronic surveillance (McNees, Gilliam, Schnelle, and Risley 10). First, the use of video investigators can enable the monitoring of the movements of the employees and detect unusual activities. This software alerts the operators of the monitoring rooms and the security guards with a flashing screen or chime. Shelf alert is another advanced system of electronic surveillance, which can be used to reduce the instances of theft in the retail business. This system is a security rack, which can alert the center of monitoring when too many items are taken off the shelves at once. If a product matches images in the database, the electronic system computes the price of the product and adds it to the bill of the employee immediately.
Access Control Mechanisms
The business organization facilities through the management can implement both the internal and external control mechanisms of access. The internal access technological controls are logical approaches to separating what the defined users or groups of users can or cannot do with the systems resources. The external access technical controls are the approaches of controlling the interactions between the outside individuals and the system. When setting up the technical access controls, the facilities or departments of the business organization incorporate a variety of mechanisms in the operations (McNees, Gilliam, Schnelle, and Risley 18). The retail business organizations can employ the access control lists. They are registers of the users, including processes, groups, and machines, with the permission of using given system resources, as well as the type of permission. The Company management can then maintain the ACLs and establish identification and removal procedures of the users or employees who have left the company.
Critics argue that technical control systems have heavy implications based on the costs involved. However, McNees, Gilliam, Schnelle, and Risley (2009) argue that the organization incurs similar opportunity costs by failing to prevent the occurrence of theft. The authors use a four-year period to and plot the graph of cost incurred due to employee theft against that of incremental cost of technology. The intersection of the two graphs indicates the point at which the organization balances the two costs. There may be a 3 percent decline in the costs of technology over the four years, but they are offset by a 4.5 percent decline in the opportunity costs resulting from theft.
Graph gotten from McNees, Gilliam, Schnelle, and Risley (2009): CONTROLLING EMPLOYEE THEFT THROUGH TIME AND PRODUCT IDENTIFICATION." Journal of Organizational Behavior Management (2009): n. pag. Print.
Non-technical Approaches to Solving Employee Theft in Retail Business
As a manager of the business, I believe that non-technical solutions also offer approaches also offer a credible solution to employee theft in the retail business. Non-technical approaches shift the focus of those in management from the use of technical equipment to practical principles and standards. The focus is on the human resources of the organization rather than the use of equipment. Non-technical approaches target the mental aspect of the employees through the realization that their engagement in theft is unethical. For this reason, they must suffer the consequences of their actions(Gross-Schaefer, Trigilio, Negus, and Ro 2). The approach is important in the sense that it can be used independently or in conjunction with the proposed technical equipment. In addition, some of the non-technical approaches are cheap in the sense that the business entity may not have to spend financial resources for the purchase and maintenance of the technical equipment in question.
Non-technical approaches also have other additional advantages. First, they improve the interpersonal relations at the organization by encouraging the close interaction of the management and the employees. Managers and senior staff tasked with the supervision of the other employees must understand the attributes of all the individual employees given there is no equipment to help in the supervisory task. In order to learn and be aware of all the activities happening in the workplace, the senior staff have to maintain a close relationship with the people they manage. Secondly, non-technical approaches enhance the values of trust and integrity among the employee. Occasionally, the reason underlying theft in an organization is the inability of the management to understand the employees. Due to the close interaction, employees can be left to manage and handle their affairs. The act shows that the management trust the employees, and there is little need for close supervision. The following is an evaluation of the approaches usable as the non-technical approaches:
Pre-Screening the Employees
Prior to hiring and incorporating the employee into the operations of the organization, the candidate should undergo thorough screening on integrity and transparency. My managerial role is to ensure that the officers in charge of the process of hiring in the retail entity must carry out effective checks on the background of the person in question. If the aspiring employee was an employee at another organization, the management must find out the reason that made the person in question leave the particular organization. In order to ensure that the process of background checks is effective, the document used to hire the employees has to compel his or her to avail as much information as is possible(Kimiecik and Thomas 102). The information must be relevant to the personal conduct of the person. During the interpersonal interview, the officers in charge of the hiring process must ask the same questions to assess the consistency of the responses of the employees.
The employee being hired has to state a number of individuals in his or her resume. These people can be interviewed at various intervals regarding the conduct of the person in question and their responses compared. The management should also consult with the immediate supervisors of the candidate to ensure that there is no collision to give responses favoring him or her in the process of hiring. In a case where the employee is a first-time worker, information regarding the person’s background may be acquired from relevant law enforcement agencies such as security agencies and judicial agencies. If possible, the candidate in question may have to provide a certificate of good conduct issued by the investigative agencies of the government. These certificates are proof that the person participated in either a criminal and civil violation activity or no.
Tests on the level of integrity of the individual indicate the employee’s perception on matters such as deception and theft. However, it is also possible for a person seeking employment to engage in theft, undergo conviction and rehabilitation, and change the behavior. The willingness of the person to reveal past mistakes and present evidence of the change that took place should be considered to ensure that the management does not deny opportunities to qualified personnel. It is also important to use information from reliable agencies because some of the temporary ones may not have the adequate information required. Background checks will ensure that the organization hires individual with high levels of integrity and honesty(Gross-Schaefer, Trigilio, Negus, and Ro 15). The management can allow them to work without supervision. If any is required, then it will be minimal or meant for other purposes besides retail theft. The non-technical approach of employee screening uses techniques such as interviewing and other checks to assist in the management of retail theft by the employees.
Demystifying the Process of Loss in the Organization
Similar many of the retail entities in the market, the process of identifying and combating theft has been outsourced. Private companies take up the opportunity to help the entity manage theft by the employees, making seem as if it is a mystical process that the management cannot handle using internal resources. The offer is advantageous to the firm in terms of the cost implications although it has some disadvantages still accrue to the entity.
The private firm has the primary role of catching and identifying the dishonest individuals in the entity. Given the dagger and cloak approach, the private firm fails to enlist the help of the employees because it works under the assumption that independence yields better results. On the contrary, the perception of the private firm is that every employee at the firm is a potential suspect with an objective of defrauding the organization. Consequently, the private firm does not bother to involve the employees in the fight against theft at the organization. There is no cooperation between the employees of the organization and the external personnel tasked with the duty to safeguard the property of the entity.
The problem emanates from the objectives of outsourcing, which seem to beat the essence of combating employee theft. Seemingly, the firm has implemented a measure of security rather than focusing on the prevention of loss(Kimiecik and Thomas 11). The management should foster the corporation between the employees of the firm and those of the private firm. Treating employees as a source of information rather than suspects reduces the tension between the two groups and makes them value the property of the firm. As such, they will act as an internal watch while the hired personnel carry out the secondary investigative roles. For instance, the deploying the employees of the store and engaging them in the strategy for the prevention of losses with the outsourced firm, then there is a higher likelihood of attaining positive outcomes. Most of the long-term employees of the organization would not take it positively if personnel from an outsourced from treated them as suspects. It may affect output. As a manager, the strategy is to position the two groups in a manner that it is inherent to work without the help of the other.
Alstete (2006) developed the following chart to show the role played by the management, the private firm offering outsourced services, and the employees of the organization. Employees contribute nearly 65 percent.
Data estimates for the pie charts referred from Alstete (2006). "Inside Advice on Educating Managers for Preventing Employee Theft."International Journal of Retail & Distribution Management (2006): n. pag. Print.
Training on the Prevention of Loss
At times, I level accusations against the employees for theft yet it is a case of the lack of training to detect and prevent the occurrence of loss. For instance, part of my managerial duty at AAA Company is to oversee the performance of duties by the cashier. If the cashier does not have adequate training, they may lose the valuable property and assets belonging to the company. For instance, he or she may charge a lower price to a customer or grant a discount on a product that does not have such a provision. When balancing the company’s financial statements, the lost value of the item sold to the customer may be perceived as an incidence of theft.
It is important for the employee to be aware of the possibility of theft and the need to regulate and curb its occurrence. Training should begin with encouraging the employees to adhere to the ethical standards and the rules set regarding the handling of company property. The essence of training is to make employees watch themselves and those around them. The dominant feeling and principle of operations should instill a value where employees are aware that stealing from the company jeopardizes the job security of the employees by affecting the level of profitability(Guthrie and Todd 4). The training will emphasize the need to report any incidences of theft in the organization or any suspected cases. Given that I am in a position to access the financial statements and reports of the company, I will incorporate the reports into the training by assessing the financial performance of AAA when the cases of theft are high. The data will be compared to periods when the cases of theft are low.
Using the training, the employees will be able to assess the consequences of theft at AAA based on the losses incurred by the company after the theft. As such, they will be vigilant against the cases of theft after the training given that their salaries may be affected due to the decline in the profitability levels at the organization following the theft.
The Adoption of the Open Door Policy
Sometimes, there is an inhibiting factor for effective communication between the management and the employees of the company. Some individuals may be willing to disclose incidences of theft, but a barrier of communication between the management and the subordinates inhibits them. Dealing with employee theft in retail business entails acquiring and assessing information from loyal employee keen to uphold integrity and honesty as they perform their duties. The values can only be utilized if the communication structure of the organization allows employees to share any information that they know.
The open door policy encourages the interaction between the manager and the other employees. In case there is a problem in the organization, employees should feel free to consult any manager by approaching him or her in the office. The open door policy is one of the strategies used to improve the interpersonal relationships among the employees at in various organizations. The board governors of AAA should come up with a structure that allows a systematic flow of information. The structure could be a top to a bottom system of information or a bottom to the top system. The communication structure should be flexible to allow employees to share confidential information without the need to use the official channels(McDaniel and Jones 11). The open door policy is a non-technical approach for combating employee theft because the management can learn about such cases in secrecy and embark on investigating and punishing the offenders in question. The following pie chart bases on data by Kimiecik and Thomas (2006). They suggest that 75 percent of employees will be willing to offer information in an open door policy system as compared to an aristocratic system.
Chart based on data by Kimiecik, R. C., and C. Thomas. Loss prevention in the retail business. Hoboken, NJ: Wiley, 2006. Print.
Imposition of Strict Penalties on Rogue Employees
One of the elements that condone employee theft in the company is the lack of a clear framework imposing strict penalties on the employees perpetrating the crime in question. When people are unaware of the consequences of their actions, they tend to indulge in wrong activities on to a larger extent because there is a lack of certainty of punishment. The human resources manager should emphasize the need for all employees to adhere to the organization’s code of ethics as they perform their duties(Gross-Schaefer, Trigilio, Negus, and Ro 23). Failure to comply with these regulations compels the management to take disciplinary action against the employee. From the onset, the management should categorize the penalties applied for every act of theft.
The actions could range from demotion from senior positions, termination of the contract of employment, arrests by law enforcement officers, suspension from work, and the payment of damages to the company. If the employees are aware of the exact consequence of theft, there is a high probability that the company will be able to combat the cases of employee theft. Psychologically, the employee tends to be risk averse of any actions that may jeopardize their opportunity to continue working at the company. As much as the cases may still happen, the certainty that the crime will be punished plays an important role in reducing the number of individuals willing to take part in the crime.
The Use of a Buddy System and an Employee Tip Line
In most cases, employee theft happens because the company has assigned one individual to important departments such as the store and the purchases clerk desk. As such, it is easy for an individual to perpetrate the crime given that he or she handles high volumes of goods. There is ease of stealing from the company given that the person in charge of such a department may not have efficient cheques and balances to make him or her accountable(McDaniel and Jones 20). The buddy systems encourage the allocation of two or more persons to attend to the responsibilities of the sensitive departments. An employee tip line refers to a confidential mechanism through which the employees can alert the management of cases of theft.
The graph showing the financial implications of the technical and the non-technical combinations are shown above as discussed by McDaniel, M. A., and J. W. Jones. "A meta-analysis of the validity of the employee attitude inventory theft scales." Journal of Business and Psychology (1986):
As compared to the non-technical control measures, the technical control measures are more effective. The technological improvements and advancements in the world, today have made the electronic systems more efficient and effective in the execution of programs in the business organizations. The technical controls focus on the security controls, which the computer systems in the retail business organization execute (McNees, Gilliam, Schnelle, and Risley 29). These controls are effective as compared to the other non-technical systems of controlling theft in the retail business because they depend on the appropriate functioning of the existent system in the organization for their effectiveness. In addition, these technical controls are effective because the implementation process requires significant considerations in the operations of the organization, which often conforms to the security management of the business organization.
The effectiveness of these technical systems of control is such that they operate with technological devices including the computers. For this reason, the authentication and identification are essential components of the computer security because the form the basis for a variety of access controls for the establishment of user accountability. These elements, authentication, and identification, are technical measures, which prevent the unauthorized processes or individuals from gaining access to the automated information systems, which contain essential information as regards theft issues in the business (Alstete 21). The access control often requires that the system identifies and differentiates among the users based on the least privilege that encompasses the granting to the users of only accesses minimally needed to perform duties. The accountability of the users requires the linking of a variety of activities on the systems to the specific individuals, such as the involved employees.
Access to the information technology resources of the AAA Company has to be managed by the combination of the administrative and the technical controls, which increase the effectiveness of the technical controls as compared to the non-technical controls that only require the management of the administrative controls. The uniform policy, which is a component of the technical control for access to all the networks and systems of the Company, is required to support the inter-connected environment of the business entity. In addition, it ensures that the weaknesses of one department in terms of elements of employee theft do not affect the information assets of the business organization (Thoms, Wolper, Scott, and Jones 26). These technical controls are also effective because they provide access to the resources of the information systems of the company only to the authorized individuals. The individuals with authorization to access the information resources are assigned appropriate individual levels, which makes them accountable for all their actions. In addition, the access of the information systems is limited and controlled based on the positive mechanisms of authentication and identification.
For instance, before initial distribution of accounts, there has to be the positive identification of the individuals receiving the accounts of the business organizations. Any individual entrusted by the system administrator can perform the physical identification. For instance, if an employee in the company requires access to systems located off-site, the supervisor of the employee can physically identify the employee and request for access to the electronic mails. The technical control measures are affordable with some of them such as the cloud-based security services costing as cheap as $19 monthly (McNees, Gilliam, Schnelle, and Risley 34). In addition, the non-technical controls can lead to issues or effects such as employee dissatisfaction, which might be challenging in terms of business progress.
Employee theft in retail business results in high amount pf losses. Similar to all organization in the market, AAA Company should not accept employee theft as a norm of the retail business. The implementation of technical approaches will be appropriate to enable the organization combat the theft and deal with the perpetrators effectively. The non-technical approaches provide an alternative mechanism that can be evaluated by the board of governors and the other managers for implementation in case of the failure of the technical approaches.
Alstete, Jeffrey. "Inside Advice on Educating Managers for Preventing Employee Theft."International Journal of Retail & Distribution Management (2006): n. pag. Print.
Gross-Schaefer, Arthur, Jeff Trigilio, Jamie Negus, and Ceng-Si Ro. "Ethics Education in the Workplace: An Effective Tool to Combat Employee Theft." Journal of Business Ethics (2000): n. pag. Print.
Guthrie, J., and S. Todd. Retail crime and loss prevention. Bradford, England: Emerald Group Pub, 2006. Print.
Kimiecik, R. C., and C. Thomas. Loss prevention in the retail business. Hoboken, NJ: Wiley, 2006. Print.
McDaniel, M. A., and J. W. Jones. "A meta-analysis of the validity of the employee attitude inventory theft scales." Journal of Business and Psychology (1986): n. pag. Web. <10.1007/BF01014165>.
McNees, Patrick, Sharon W. Gilliam, John F. Schnelle, and Todd R. Risley. "CONTROLLING EMPLOYEE THEFT THROUGH TIME AND PRODUCT IDENTIFICATION." Journal of Organizational Behavior Management (2009): n. pag. Print.
Schwartz, Howard. "Are You Controlling Employee Theft?" Cornell Hotel and Restaurant Administration Quarterly (2010): n. pag. Print.
Thoms, Peg, Paula Wolper, Kimberly S. Scott, and Dave Jones. "The Relationship Between Immediate Turnover and Employee Theft in the Restaurant Industry."