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Internal Theft in the Hospitality Industry

60% of employees will never steal from their boss
30% will steal only if given the opportunity
10% will find a way to steal under almost any circumstance



By Errick Calloway

May 9, 2011

For far too long the hospitality industry and the retail industry have been looked at completely differently with regard to theft and operational losses.  This is very evident specifically pertaining to employee theft.  But are these industries that different?  Is there any less opportunity in a hotel or campground then there is in a major department store?  If so, what?  Can the loss prevention retail approach work in the hospitality industry?  First we have to answer the question, “Why do people steal from their employer in the first place?”

Philosophy: 
Contrary to popular belief, it is usually not the disgruntled employee that is going to steal from you.  Disgruntled employees are usually ok because they tell you what is on their mind, both professionally and personally.  So how can you identify a potentially dishonest employee and what is going through their mind before they commit a theft? 

1.  Behavioral indicators:  Identify the possibility for “need” and look for changes in behavior.
A normally on time employee is suddenly late all the time.  A normally late employee is suddenly always on time.  (That may seem odd at first, but consider the possibility that they took the money from you to pay for car repairs) A normally quiet person is all of a sudden up beat and talkative and vice versa.  Pay very close attention to the above behaviors in conjunction with a recent divorce, medical procedure, car repossession, ongoing custody battles, death in the family, etc.  This can be both personally and within close family or friend contacts.  One thing all dishonest employees have in common is need.  After they determine they need it more then the company, next is rationalization/ justification.

2.  The mental process: The need to rationalize and justify the theft takes over.
After an employee determines the need is too great to overcome, they still have to justify taking something that does not belong to them.  This is done by de-humanizing the company.  By first rationalizing that they need it more then the company, it will make it easier later to deal with the guilt.  They look at the “boss” as a nameless and faceless rich entity that will not miss the money/ merchandise.  Then they convince themselves that the company deserves to be ripped off because they either did not care enough about “me” or that they made it so easy to steal that they had it coming to them all along.  These emotions grow over time along with confidence.  That is why most dishonest employees do not stop, take more chances, and increase the amount they take each time.  How easy would it be for a hotel manager to let friends and family stay for free?

Now that the why has been explained; what steps should be taken to first prevent dishonest employees from being hired and identify the employees who later decide to become dishonest.
  • Pre-employment screening- (Not to be confused with background checks) People like people who are like themselves and the hospitality industry is not immune.  It’s known as the “halo effect.”  As an impartial third party, it is easier for a loss prevention professional to set emotion aside during the initial hiring process and focus on the needs of the company as specified by standard operating procedures.  Through the use of standard interviewing techniques as well as kinesics (body language cues), this is your first line of defense.
  • Camera installation- The focus here are the employees in the 60% group.  The front desk and back office area in the hospitality industry is not unlike a retail store.  Sensitive areas have to be protected.  Both overt cameras (what you can see) and covert cameras (what you cannot see).  Don’t be fooled by expensive camera systems.  All camera systems are basically the same.  It is the proper installation that counts. 
  • Compliance auditing- Employees in the 30% group often will think the cameras are for show, nobody is watching, or they will find the “blind” spots.  Auditing will make them have to be more creative in the way they steal from you in order to not leave a paper/ electronic trail.  The harder it is, the more mistakes they are likely to make.  This is the most cost effective and proactive approach in loss prevention.  Video can then be reviewed to help with loose ends.
  • Interview/ Interrogation- For that 10% that does not care and the manager that knows the operations inside and out, it is still possible to get employees to confess to theft and fraud without evidence.  A loss prevention professional properly trained in interview techniques that is taught the day to day operations of the hospitality industry can be very effective when all else fails.  The technique is known as “cold interviewing.”
The hospitality industry is different from the regular retail industry in many ways except one: the vulnerability to theft and operational loss.  Hospitality has to focus more on comfort and customer service than retail.  This unfortunately opens the door to extra opportunities for theft and loss that retail does not have to deal with on a regular basis.  Loss Prevention is a household term in retail.  While the hospitality industry tends to be ahead of the curve when it comes to physical security, it seems to be lacking in regard to proper loss prevention programs.  Until this changes, the industry as a whole will continue to suffer.


About the Author:

Errick Calloway is the sole proprietor of Prevention Unlimited.  He has over 12 years of loss prevention experience across many different industries, to include, but not limited to, department store retail, hospitality, specialty retail, restaurant, and grocery.  Over the last five years, Errick’s focus has been employee theft investigations and compliance auditing.  Specializing in “cold interviewing”, Errick employs the Wicklander/ Zulawski and Reid techniques of interview and interrogation as well as kinesics (body language) to illicit confessions for theft and fraud.  This combined with his ability to custom create audits based on the specific needs of the client, Errick has the ability to obtain confessions without evidence in many cases.  In addition to the aforementioned experience, Errick is proficient at the operation/ installation of CCTV (close circuit television) and all aspects of physical security as well.  To learn more about Errick’s approach and philosophy, please visit: PreventionUnlimited.com or contact him at ThinkShrink@PreventionUnlimited.com.


Contact:

Errick Calloway
Prevention Unlimited
(678) 313-4855
PreventionUnlimited.com
ThinkShrink@PreventionUnlimited.com


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