Business Profitability & Theft Explored
How to avoid business theft because business theft poses a serious threat to your bottom line and can impact your business’s future.
You value your team members. You hired them yourself, you work alongside them every day, and they’re essential to your shop’s success. You don’t like to imagine that any of your team members could steal from you, yet you also haven’t made it this far by placing blind faith in people.
In other words, you trust the hand hovering over the till—but you still keep an eye on the till.
The truth is that 95 percent of all American businesses have experienced employee theft at some point. It costs them up to $50 billion every year! Naturally you have bigger fish to fry than battening down the Post Its and paper clips, though when you work in an industry where one gallon of something can cost hundreds of dollars, business theft poses a serious threat to your bottom line.
Darrell Amberson is like you. He places great faith in the team he manages as president of operations for LaMettry’s Collision, a family-owned collision repair firm with 10 locations throughout the Twin Cities area. He is also keenly aware that the LaMettry family, although quite generous to their community, would take unkindly to mysteriously vanishing materials and revenue.
“I’ve been in the auto industry for many years,” Amberson says. “I began working for a dealership during high school, and only left the business for a few years so I could tour as a professional drag racer. During that time I learned that business theft is rare, but also bound to happen occasionally, even if it’s only at a modest level.
“Eliminating theft altogether would probably be impossible without also managing a workplace no one would actually want to work in. However, there is more in your power to prevent it than you might think.”
Lead By Example
Amberson says that owners need to set the tone in their workplace cultures. You want your team to do as you say and as you do. Create examples with how you and the leaders among your staff conduct yourselves.
“If they observe you stealing from the customers, they may rationalize that it’s okay to do the same to you,” Amberson says. “If they see you taking cash under the table, they’ll become more inclined to join in. I truly believe that behavior doesn’t lie: Leading by example is the only kind of leadership that matters.”
Amberson also emphasizes on-site presence from top managers at LaMettry’s. He encourages them to walk the floors, take interest in projects, and show investments in that work. That brings more opportunities to set examples, but it also creates a team mentality so that employees won’t want to risk that with bad actions.
“Technicians will follow this example and become more invested in the shop’s success as well, which generally goes hand in hand with not doing something to jeopardize it,” he says.
Amberson says that he was touring a corporate dealership a while back and saw that it stores all fasteners in a cart in the middle of the shop. Techs visited it whenever necessary to retrieve clips, nuts, and bolts.
“This practice conflicted with what I had followed in previous shops, so I asked why they adopted it,” Amberson says. “They explained that people are, for the most part, honest. Techs aren’t necessarily going to abuse your trust simply because you’ve presented them with an opportunity to steal. They also explained how much more efficiently a shop can operate when techs don’t have to interrupt their work whenever they need such frequently used materials.”
Amberson realized that this was one of the best ways to foster honesty in a shop. The trust placed in the team instills a responsibility to do good for the business. He says that you can be surprised at the ways team members will reciprocate.
Research Before Hiring
Ideally, hiring managers want to avoid hiring people who would cause problems. Modern hiring practices can involve questionnaires and surveys to get a feel for a potential hire’s personality. It’s more than a background check—it’s a character check.
One of the first places Amberson starts is a simple Google search. Check out their social media pages.
“Just recently, one of our managers discovered an applicant’s photo of a pistol and an ‘adult beverage’ sitting together on a table,” Amberson says. “It was only one post, but worth taking pause over. While we do try hard not to be prejudiced at LaMettry’s, we’re especially cautious of any social media which conveys an outlaw mentality.”
Not every bad apple shows the proper red flags, Amberson says.
“Long ago I worked at a shop which was gradually hemorrhaging more and more money. After some investigation we identified the embezzler: a very nice woman who worked in the accounting department,” he says.” She was indiscernible from the most stereotypical grandma you could imagine, yet she was also going on extravagant vacations by playing fast and loose with the credit card statements.”
Occasionally, a member of your staff may violate the trust you’ve offered.
“Giving your team members free access to some materials has its benefits, but a well-managed shop can never become a free-for-all,” Amberson says. “We are all too aware that a tech with a side hustle has an unfortunate incentive to take materials home with them.”
It’s still necessary for managers and shop leaders to be on the lookout for signs of theft. If there are two left fenders on a bill, that might raise an alarm, Amberson says. An area that might be difficult to track is liquid inventory, but it is crucial when the cost of a gallon of clear coat can be more than $200.
Computerized inventory systems are important in this area, and owners need to make sure their teams follow strict processes for logging information. That makes it easier to go back and check records against work performed.
Finally, Amberson says that it’s important to keep track of your shop’s bottom line. High, unexplained costs are red alerts and require investigation.
“Paint only leaves the shop in one of three ways: on a car, as waste, or in a bucket or box.,” he says. “If your techs aren’t applying too much paint to the vehicles, and if they aren’t needlessly wasting it, then it stands to reason that someone could be carrying it out of the shop. With that understanding, it only takes casual monitoring to reveal the culprit.”
Encourage Whistleblowing Cautiously
It’s a fine line between encouraging tattling and fostering an honest system for reporting misdeeds. Amberson says that if a member of his team asks to speak about theft, he would go to great lengths to keep that report and person confidential.
But Amberson doesn’t actively ask whistleblowers to step forward.
“When you openly encourage your team members to report chicanery, you’re subtly confirming that chicanery is present,” he says. “This has the unintended consequence of suggesting that getting away with theft is possible—easy, even—which may create even more thieves than you originally had to contend with.”
One last word of advice? Amberson offers a rule of thumb. Run your shop more strictly than a summer camp but more loosely than a military camp.
Main Image: Enacting change in your business starts with a foundation of trust.
Article Credit to FenderBender.
What is your view of theft in the business? How do you handle theft in your business? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.
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