Harvest America CUES BLOG

Most of you are probably thinking: “what an awful statement to make”. The American mantra is always the opposite and has become the basis for our legal system, yet from experience, I would state that the best approach is to plan for the worst in an effort to prevent it. Allow me to explain how this works in restaurant operations.

The reality for management must be that everyone could be dishonest if given the opportunity. It becomes important to realize that managers should thus focus on taking away the temptation in an effort to help your employees and customers remain honest.

“There’s an old saying that’s long been accepted in fraud prevention circles called the 10-10-80 rule: 10 percent of people will never steal no matter what, 10 percent of people will steal at any opportunity, and the other 80 percent of employees will go either way depending on how they rationalize a particular opportunity. The good news is that there is much a business can do to sway this 80 percent to their side.
Another widely accepted theory is that of the late Dr. Donald R. Cressey called the “Fraud Triangle.” According to this theory, there are three factors — each a leg of a triangle — that, when combined, lead people to commit fraud.
One leg is an individual’s financial problem or need that they perceive is nonsharable; i.e., a gambling debt. The second leg is this individual’s perception that there exists at the place of business an opportunity to resolve the financial problem without getting caught. The third leg is the individual’s ability to rationalize or justify the intended illegal action (“After all I did for my company, they mistreated me. I was entitled to that money.”). In shorter terms, PRESSURE plus PERCEIVED OPPORTUNITY plus RATIONALIZATION equals FRAUD.”

http://www.businessknowhow.com/manage/employee-theft.htm

What is most telling about this quote is both the need to take away temptation and the employees’ mindset that they might be able to justify their dishonesty based on “after all I did for my company”. Let’s look at 100 (not literally) ways that people can and do steal from restaurants.

• Theft of cash from a register
• Servers or bartenders shorting the till by not recording certain items that are sold to guests
• Accepting favors from vendors in exchange for over-ordering or buying items at a cost that should be lower
• Walking out of the operation with product
• Over-portioning, not portioning, giving away free drinks (theft of service)
• Taking small equipment
• And the list goes on and on

By nature, most of us want to trust our staff and co-workers. To this end, restaurants in particular, tend to be physically set-up under the premise of trust. Look at your own operation in this regard:

• Do you have locks on your cooler doors?
• Do you require your cooks to requisition product from a central receiving area?
• Do you have a system of checks and balances where more than one person (from a different department ideally) is responsible for ordering, processing bills and taking inventory?
• Do you perform unscheduled inventories on alcoholic beverages?
• Do you require your cooks to scale out ingredients, especially high-cost center of plate items?
• Do you clearly state that those responsible for ordering abstain from accepting any gifts from vendors?
• Do you require those who order to solicit bid prices from various vendors?
• Do you use a system using purchase orders that match up to invoices?
• Have you implemented a portioning system in your bar?
• Do you limit only one person to access the cash register on any given shift?
• Do you require your staff to leave backpacks, or large carry bags in their cars or at home rather than bring them to work?
• Do you conduct daily inventories on high cost, portioned proteins?
• Do you conduct weekly or at least monthly inventories of all products used in generating sales?

If the answer is no to any of these questions, then there is an opportunity for your staff to steal. This does not mean they will, it simply points to a weakness in your system and a responsibility that you have not taken to help your staff to stay honest.

There are answers to this dilemma that allow trust in the workplace to exist and create an environment where employees (management included) are part of the solution, not the problem.

• Limit access to coolers and storerooms either by using locks or incorporating a system of planning using requisitions and delivery to various stations in the kitchen or bar
• Use cash registers that require employees to enter a password and management to lock out others during a shift
• Have cashiers count and sign for their bank at the beginning of a shift and sign off on their drawer at the end of a shift
• Require regular inventories conducted by two parties who do not report to each other
• Have all employees sign a terms of employment document that states that they are not allowed to accept favors from vendors
• Install a method of portioning in both the front and back of the house
• Watch patterns of over/short daily cash reports
• Offer orientation and training sessions for staff that outline your control procedures and how important it is for all to participate in the financial success of the business

The key to a successful program is to make it participatory rather than allowing employees to feel that they are being watched and pre-judged. Restaurants are businesses with very small margins for profit and they can only be successful if all staff members’ buy-in to the need for control. Control is a word that oftentimes poses negative connotations. Control should not be designed to control people, but rather control the environment that they work in. If it is presented in this fashion, your staff will see the merit and understand their role.