When I was a teen, my father and uncle owned Downingtown Inn and Country Club, a resort hotel in Downingtown, Pennsylvania. My father was the COO, while my uncle was the CFO in the back office.
The hotel featured all kinds of sports activities including a golf driving range. The driving range was leased out to the golf pro. I think my father and uncle saw this as a way to reduce supervision. Rather than a fixed rent, the rent was based on the number of buckets of golf balls sold. This arrangement made good sense. If the sales were weak, the rent was low. If the sales were good, then the rent increased.
My father and uncle grew up during the Depression, and both worked from an early age; my brother and sisters and I were expected to work. The hotel was summer camp and weekend job for us all rolled into one.
My father suspected that the golf pro was cheating- not giving an honest count when reporting the buckets of golf balls sold at the driving range. Your assignment, Dad said to me and brother Robert, is to watch the golf driving range for a full day of operation, count the number of buckets sold, and see if that corresponds with the number reported when the golf pro pays the rent.
Our methodology was to station ourselves inside a vacant building across the highway from the golf driving range. We peered with binoculars out the window of the darkened building and ticked off each bucket of balls sold on a pad. The outcome was that the golf pro was not cheating, so in a sense, it was a waste of time. In another sense though, we verified that the guy was honest.
Letting associates know that you are watching is an important deterrent. There is the joke about the bar owner who watched from a dim corner as the bartender served one drink after another, putting half the cash from each sale into his pocket, and the rest into the cash register. After one sale, the bartender put all the cash into his pocket. The owner walked up to the bar and confronted the bartender. “What’s the matter, aren’t we partners anymore?”
Of course, if the transactions had been with a credit card, this would not have been possible, but as we all know, there is plenty of other monkey business that can be done with cashless transactions. Waiters have used credit cards to run themselves tips, in the hope that card owners were not watching.
After the hotel, we were in the restaurant business in Philadelphia. I recall finding an entire rib of beef, probably 30 pounds of meat, in the dumpster in back of the restaurant one day. The meat had been recently taken out of the refrigerator and Cryovac’ed (shrink wrapped in plastic). The thief planned to get it out of the dumpster and take it home later on.
My editors suggested that when writing about theft, I should discuss cyber theft, and the effects of the recent Equifax theft of millions of people’s personal information, or the theft of shareholder value by corporate frauds like Enron, or Tyco. I don’t have any particular experience or expertise in these areas; I try to write about what I know.
As business managers, we try to hire people who are not thieves, and who have attitudes similar to ours. We perform criminal checks, and administer surveys that indicate their attitudes to help make better hiring decisions.
I believe there is no substitute for doing things “the dumb way”- go look. Look in dumpsters, check and count inventory, walk around the place of business to say hello, look at co-workers’ computer screens. I call it “showing the flag” and believe letting people see that you are looking helps to keep them honest.
Perhaps employee theft is one of the reasons driving the “gig” economy. Uber doesn’t have to worry much about drivers and theft of time; they work for themselves and buy their own gas. Recently, Aldi, the German food retailer announced they will be partnering with Instacart to use independent individuals and their cars for food delivery. They won’t have to worry about theft of time, because drivers will work for themselves. They, as with all of the delivery services, still have the concern that everything ordered gets to the customer. Certainly items can be tracked and cameras can be watching. There still needs to be someone observing the screens to see what’s happening on camera, though.
About a year ago, we went to dinner at the Plymouth Meeting Mall. We’d parked our car in front of Macy’s. As we returned to the car, we saw a couple of women running with handfuls of clothes, and getting into a van not far from us. An alarm buzzed in the distance as they drove off. It was a grab and run theft from Macy’s. Macy’s was apparently so lightly staffed that no one was around to come out the front door after the thieves. The local store is one of 68 Macy’s stores across the country that will be shuttered in order to save money. Macy’s says that it is re-investing in e-commerce. Meanwhile, the e-commerce companies are seeking bricks and mortar locations. Retail theft is one of the disadvantages with which they will have to contend.
On a positive note, most people are honest; if that was not the case, our society would not function. We still need a person checking up through binoculars, though.
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