Mike Wallace from 60 Minutes, the local IRS agent, and Curtis Bridges: three people you don't want showing up at your front door asking to see you. The first two are for obvious reasons. The latter, Curtis Bridges, is the director of loss prevention for Sugarloaf Creations. And that's assuming you even know he's near.
For the most part, when working a case, he's in full stealth mode. He was headed out the door one day to the airport and our CEO asked him where he was going. "Can't tell you, I'm on a case." Curtis reminds me of the TV cowboy detective Sam McCloud. If you met him, you'd see the resemblance. He's got the horses and everything.
As far as I know Curtis and his team of three are the only dedicated loss prevention experts dedicated to the coin op industry. In addition to Curtis, the Sugarloaf L.P. team consists of Mark Shepherd in New Mexico, Mark Bonze in North Carolina and Ellen Cammann in New York.
I spent some time visiting with Curtis the other day. His credentials are impressive. He spent the first part of his 30-plus year career in the public sector of law enforcement at the state and local levels before working in loss prevention for such companies as Pace Warehouse Co., Denver Dry Goods, Kmart and Sugarloaf. He's seen a lot and has the stories to go with it.
Our industry is rife with theft at all levels. So many aspects of our industry lend themselves to thievery. Let's start at the top. There are some owners in our industry that steal every year, via unreported income, as standard procedure. That's an ugly truth about our business. It's very easy and tempting. You lead by the example you set.
Curtis explained to me that the retail industry averages 2%-4% shrink. He suggests that our industry shrink is easily double the retail standard. Theft is 100% from the bottom line profit of your company. Eliminate theft, and 100% of that money goes to the profitability of the company. Curtis cites the unique "opportunities" to steal as the most problematic for our industry. They are:
1. The collector's work is, for the most part, unsupervised. Time is on their side. Whether it's on location tampering with meters, counting money unattended, or maybe even at home, exposure here is high.
2. Few, if any checks, and balances are in place. Our machines have meters, but they are only good if they're monitored regularly.
3. Theft is easy to hide. Honestly, how many of us can miss a buck or two a week from a machine?
4. It's all cash. There's no more tempting commodity to steal than cash. No fencing, no pawnshops, no bartering with criminals. Once it's stolen, it's a spendable asset.
Retail companies have a significantly easier time monitoring theft. First, employees are on site with the potential for supervision much higher. Checks and balances can be regularly monitored through registers. Mini cameras can be used without being detected.
If you don't think you have a problem with shrink in your business, you're kidding yourself. At an industry meeting that Curtis spoke at last year, he asked if anyone in the audience felt that they didn't have a theft problem in their business. One guy held his hand up, "I hire honest people that don't steal," he said. That was probably one of the most ignorant statements Curtis had ever heard.
Statistics tell a different story. Explained Curtis: "20% of the people will always steal no matter what, 20% will never steal anything, and 60% of the people will steal if given the opportunity."
That's 80% of the population that are potential thieves. Furthermore, wages are not a deterrent to theft. You need to look no further than the Enrons of the world, with execs making seven figure incomes, now spending their days trying to stay out of jail. Theft is not about "need" or "greed," but rather "opportunity." Thieves start stealing a little here, a little there, and after a series of successes, they get hooked and that's generally when they get caught.
What the gentleman's answer to Curtis' question validates is that denial is rampant in our industry when the conversation turns to theft. Some consider it a cost of doing business. Others consider it part of the employee's compensation package. Others, as the operator above, live in ignorance.
Theft is more prevalent in these tough economic times than in normal prospering economic conditions. Employees don't have to look far for theft justification, and justification is a major theft motivator. You mean I'm getting a 2% raise instead of the projected 5% raise? I'll pay myself. You're going to make me start paying for my health care? No worries. I used to make $50,000 per year at my other job before I got laid off and you're only going to pay me $35,000? No problem.
Curtis's bullet points for implementing a Loss Prevention Program in your company:
1. A good pre-employment process is where it all starts. This should include drug testing, criminal history check, driving history and credit history. Go with your gut feeling about people. The only thing that happens after gut feelings is you talk yourself into hiring people, or doing things you'll regret later.
2. Prevention: Set the tone. Sugarloaf has a zero tolerance policy regarding employee theft. If you get caught stealing, we will use all our resources to force restitution, and/or pursue prosecution. There is no one in the organization that is not aware of this policy. There are a couple of former employees in prison as examples. There are numerous examples to cite. Setting the tone in the organization is a key step in reducing your theft. If the tone is zero tolerance, and the employees know you're serious, they're less likely to steal if they know the consequences are severe.
3. Apprehension factor: Let the employees know that you're going to search out the dishonest ones and pursue them with a passion.
4. Establish clear guidelines within your company. Be clear in your communication that stealing of any kind will not be tolerated.
5. Have good data and systems. Exception reports should show you a route that drops in revenue unexpectedly. Meters that are all over the place, as well as meters that are to the penny every week, are red flags too. That doesn't happen in real life. Be sure that you can track test plays, refunds, and look for abnormalities and unusual behavior of any kind. A sudden change in life style, and new wardrobes are indicators that something may have changed that may be of interest to you.
6. Enforcement. Without an enforcement resource in place, employees will know that the rules are not enforceable. "There's no one to catch me." Dedicate someone, outsource the program, or do it yourself. Be sure someone enforces your rules. Check meters, seed machines, buy some monitoring cameras, whatever it takes. We've gone to the customer many times to ask for their assistance in an investigation. They generally always want to help. After all, it's their money too.
One of the many stories about my father that sticks with me is about
one of his former employees years ago. The employee knew that Stan needed
a new electric drill. He stole it from somewhere, and proud as he could,
went to my father and gave him the new drill. After determining it was stolen
goods, Stan fired him. "If you steal for me you can steal from me."
The lesson that day was that you can tell a lot about what a person is going
to do in the future by what he's done in the past.