Beauty Store Business

NOV 2018

Beauty Store Business provides solutions for better retailing! New products, industry news, savvy business moves and important trends affecting both brick-and-mortar and online retailers are included in each issue.

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44 November 2018 | beautystorebusiness.com THE IMPORTANCE OF HIRING PROCEDURES According to Joseph T. Wells, ounder and president o the Association o Certiied Fraud Examiners, minimizing the chances o employee thet begins with the hiring process. "Beore hiring anyone," he sug- gests, "you should conduct a background check to ind out as much as you can about the employee's previous experience with employers and law enorcement. "Background checks are always a good practice, but each employer must decide whether the time and expense is worth the return. At a minimum, you should check the background o any prospective employee who will have constant access to cash, checks, credit card numbers or any other items that are easily stolen. In a retail store, that covers nearly everyone." Wells recommends taking any or all o the ollowing pre-screening actions. However, beore taking them, be sure to obtain the consent o the applicant. Numerous ederal and state laws, such as the Fair Credit Reporting Act, govern the gathering and use o inormation or pre-employment purposes. Many o these laws require that you obtain written consent rom the applicant beore gaining some o the types o inormation listed below. It is also a good idea to obtain signed authorization and a release rom a potential employee. Consult with your attorney to ascertain the laws applicable to your business and to obtain the proper authorization orms. Here are our pre-screening actions or new hires: 1Past Employment Veriication: Even though most employers will only veriy the position and dates o employment when they call to check a reerence, you can also ask whether the applicant is eligible or rehire. 2Criminal Conviction Checks: Most public records services (such as LexisNexis or ChoicePoint) have criminal conviction records or almost every large county, but you can also go to a courthouse and search the criminal conviction records in the criminal courts division o the employee's county o residence (or other counties in which he or she previously resided). 3Drug Screening: Many business owners are now conducting drug screenings or potential hires as well as current employees. Frequent drug users are oten more prone to thet or raud. 4Reerence Checks: Surprisingly, very ew employers bother to call the reerences a candidate provides, operating on the assumption that an applicant wouldn't provide a bad re- erence. However, applicants will oten list important-sounding individuals as reerences with the hope that you won't call. In addition, people oten (incorrectly) assume that a ormer supervisor or coworker will provide a good reerence. POLICIES TO HELP DETER FRAUD "Developing anti-raud programs can be one o the most important things that you can do or your business," Wells says. "Prevention, in the long run, is always cheaper than recovering your losses." He suggests taking the ollowing precautions: Perception o Detection: Employees who perceive that they will be caught engaging in raud and abuse are ar less likely to commit it. Increasing the perception o detection may be the most eective raud prevention method. Internal controls, or example, do little good in orestalling thet and raud i their presence is not known by those tempted to steal. This means letting all employees and supervisors know that programs are in place or preventing internal thet. Employee Education: Every business should have some mechanism designed to educate all employees about the serious consequences o internal raud. One way to do this is to make it part o orientation or new employees. Any education eorts should be positive and non-accusatory. It's important to emphasize that illegal conduct in any orm eventually harms everyone, including employees, through lost proits, adverse publicity, decreased morale and lower productivity rates. Enorcement o Mandatory Vacations: Many internal rauds require constant manual intervention and are oten discovered when the perpetrator is away on vacation. The enorcement o mandatory vacations will aid in the prevention o some rauds. For example, manipulation o inancial records to steal cash. This type o thet is oten detected when someone else takes over the books while the guilty person is on vacation. Job Rotation: Some rauds are detected during sickness or unexpected absences o the perpetrator because they require continuous, manual intervention by the oender. That's why it can be helpul to requently rotate potentially sensitive jobs. Split Responsibility: I possible, don't allow the same person who handles incoming cash and checks to do the paperwork accounting or that money. Trash Control: Make random checks o dumpsters and trash bins or goods that may have been placed there or later pickup. Use clear trash bags or easy inspection and keep the lids o outside dumpsters locked ater business hours. Conduct Frequent Inventories: Do product inventories oten and at random times. Examine records o purchases and sales daily. Assigning inventory control responsibilities to speciic individuals helps to establish accountability. That, in turn, helps to discourage thet. Consider Video Surveillance: Technological advancement has greatly reduced the cost o video surveillance– putting it in reach o even small retail operations. Installing strategically placed cameras can be a strong deterrent to employee thet. However, it's important to emphasize the program in a positive light, ✔ Any hint of substance abuse (An employee with a substance abuse problem will need extra money to finance the habit. This is one of the most common scenarios in employee theft cases.) ✔ Those with a disgruntled, belligerent attitude, often complaining about management or their job to others ✔ An employee with a temper or unpleasant behavior who tends to discourage or avoid questions ✔ Inconsistencies in explaining discrepancies or errors in paperwork or cash register accountings ✔ Excessive loitering around the business by off-duty employees, ex-employees or friends ✔ Secretive conversations among employees and phone conversations that stop abruptly when you approach ✔ Unusually friendly relationships or loyalty between employees and customers or vendors (Watch for customers who loiter around for excessive times or who meet with employees around closing hour.) ✔ An employee living a lifestyle that appears to be in excess of what the salary could be expected to support ✔ An employee who habitually returns to the work area after others have left to retrieve something supposedly left behind THE SIGNS OF EMPLOYEE THEFT Even with the use of the best internal programs, it's important to keep yourself aware of the early warnings of possible employee dishonesty. Watch for the following:

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