The busy environment of a hospitality business requires a strong level of trust between employer and employee. As you’re growing your business, a certain level of your success will be sitting with whether your most trusted employees are doing the best across every aspect of their job, including the handling and balancing of money at the end of the day.
Unfortunately, it’s not uncommon for employees of hospitality businesses to commit fraud on the job. Often it starts small; a slightly unbalanced cash register at the end of the day, or items taken from the storeroom and sold for cash. The Fraud Triangle, a concept developed by Donald R. Cressey, sets out a useful explanation of why fraud occurs, and through it, we can build an understanding of how to manage it across the hospitality industry.
Cressey explains that fraud occurs when there is an opportunity, rationalisation for the action, and unshared pressure or motivation to carry out the action:
1. Opportunity – something to steal – for those working in hospitality, that might be money from the cash register, or high-value alcohol that’s ready to be sold on.
2. Rationalisation – “Everyone is doing it!” – your staff might think that they’re not the only one up to no good, that they’re not being paid enough, or that their employer should be sharing in the success with them.
3. Pressure or motivation – this is often unseen or unshared. An employee might be struggling with debt, addiction, or pressure outside of work to increase their income.
So how can we control it?
Although it would be very difficult to completely stop an employees exposure to the opportunity to carry out fraud or theft, you can limit their opportunity. Defining clear roles and responsibilities for your team will greatly decrease the opportunity for fraud or theft. For example, defining and setting responsibility for tasks such as managing stock rooms and managing the POS and cash register and separately carrying out stock audits and counting of the cash register creates segregation of responsibility, and decreases the opportunities available to an employee to act. Double-checking the work of others, and carrying out regular spot checks will also dramatically reduce the opportunity for fraud to occur in the first place.
Taking the time to build a close-knit and high performing team can also reduce an employees rationalisation to carry out the fraudulent action. Creating an ethos of integrity and honesty among your team can lead to positive mindsets generally, which will reduce general workplace negativity that is often associated with the rationalisation of negative actions at work. You can back this up with both a workplace Code of Conduct and Theft Policy, letting your team know what is and isn’t acceptable at work.
Creating an open and positive workplace culture lets your team know that as their employer you’re there to support them, and support and understanding of an individual’s personal circumstances can go a long way in decreasing the pressure or motivation to carry out the fraudulent act. If your team knows that they can discuss their own personal circumstances with you, they will be less likely to feel that they have no other option than to defraud your business.
An open and supportive work culture that shows support for staff can help your business decrease the risk of fraud or theft by employees.