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Cases > Internal Theft Case Study: Just Trim a Little Off the Top
Internal Theft Case Study: Just Trim a Little Off the Top
Internal Theft Case Study - Just Trim a Little Off the Top: Case Studies, Summit Loss Prevention Consulting, Inc., Indianapolis, Indiana (IN)
The Summit Investigative team has successfully conducted thousands of internal theft investigations of all types and sizes, from cashier
fraud within a small family owned hair salon chain to the pre-release theft and sale of a holiday
season DVD release from a major Hollywood motion picture studio.
The case study below is an example of how even a minor internal
investigation can reap unexpected rewards for the independent
business owner or operator.
Internal Theft Case Study: Just Trim a Little Off the Top
A Central Indiana
couple owned six units of a nationally franchised hair salon chain. Each store had an individual manager & assistant manager,
however the managers also performed as
stylists and could not watch everything occurring in the shops at all
When the owners
checked their recent sales figured, they noticed that the “product sales
mix” of one of their units varied greatly from the other five.
In most of the salons, full haircuts at $12 apiece accounted for approx 80% of
hair cutting sales,
while trims, which only cost $6 each, made up the additional 20% of
At the store in question, trims were outselling haircuts by a 60 - 40
ratio, which raised a red flag. The owners tried to track down which
employees were working on the days this occurred but found that sales
were being rung under the ID numbers of employees that were not working at the time
of sale. After a brief initial investigation, they realized that this
was a more complicated situation than it appeared, and that they were not equipped to handle it
on their own.
They contacted us to
perform an investigation of the unit in question, as well as perform a
company-wide loss prevention assessment of the various store locations.
Acting as the
company’s Loss Prevention Department, we immediately instituted a
few simple procedural changes to curtail the problem:
The first step
we took was to clearly inform all the company's employees that a Loss
Prevention Department existed, an investigation was underway, and that
changes were going to be made.
current employees to sign a “Duty to Inform” Policy agreement
the form to all future new hire packets.
Cut Your Losses With An Effective Internal Investigation
As part of our investigation, we performed
background checks on all existing employees as was allowed by a
clause in the company’s employment application. During the
course of these checks, one employee was found to have falsified
his application and was immediately terminated for cause.
Additionally, we discovered that while the company’s register system had the ability to force
employees to sign in and out for each sale, it was not being used
properly. We changed all employee ID numbers and trained the
staff on how to use them correctly.
Some of the other steps taken to
improve the company's loss prevention program included:
Companywide Spot Check Program:
Randomly visited each store on a
weekly basis to ensure compliance of the new procedures.
this function for six months after investigation was completed.
Changed or added
procedures and/or duties for store management to perform, including:
Checkout – Note and record sales percentages to detect any
Checks of Sales Procedures – verify correct use of ID #s
applications for accuracy on a regular basis
Perform background checks for all new hires
Introduced Tony Jarana as the company's new Loss Prevention Manager and
provided information to the employees on how they could utilize his
resources, if needed
Internal Investigations: Small Investigations Can Lead to Big
While this small investigation resulted in reversing the initial cut
vs. trim problem, conducting the investigation has paid for itself
its affect throughout the company. Tightening and
improving company-wide LP
controls resulted in improved sales performance
in the other five stores, to one degree or another.
In some instances, internal investigations may actually be
profitable for the client. Restitution from individuals responsible
for causing loss can be as much as three times the initial loss. In
addition, the cost of investigative services can be retrieved.
When you decide to conduct an investigation,
you are doing more than just solving the one case. The more
you investigate, the more that seems to be discovered, uncovering
problems and issues you were not even aware of, like finding the
employee that lied on the employment application.
How to Prevent Situations Like This
importantly, you want to ensure that all of your employees are aware that the company will
vigorously respond to any loss issue it sustains in a very methodical,
concrete manner. The initial investigation acts as a deterrent and helps
create a safer, more worker-friendly environment and develops a "Culture of Honesty & Integrity.”
For more information our our abilities to conduct both small and
investigations, call 317-363-8312, send email to
info@SummitLossPrevention.com. or submit the short form below:
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