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Retail/Restaurants/Convenience

How Surveillance in Retail Changes Theft Behavior

May 21, 2014
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A study into retail theft shows that restaurant workers under surveillance are less likely to steal and that employee surveillance enhances a restaurant’s bottom line.

The study, Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity, is the work of three academics: Lamar Pierce, an associate professor at the Olin Business School at Washington University in St. Louis; Daniel Snow, an associate professor at the Marriott School at Brigham Young University; and Andrew McAfee, a research scientist at the Sloan School of Management at the Massachusetts Institute of Technology.

Employee theft and fraud is a big problem, estimated at up to $200 billion a year across the economy, said The New York Times. In the restaurant industry, analysts estimate the losses from employee theft at 1 percent of revenue. That does not seem like a lot, but restaurant profit margins are slender, typically 2 to 5 percent. So cutting down on theft can be an important contributor to a restaurant’s financial health, The New York Times said.

"Most of the restaurant industry pays its servers low wages and they depend on tips. Employee turnover is high. In that environment, a certain amount of theft has long been regarded as a normal part of the business," said The New York Times.

But monitoring software is now available to track all transactions and detect suspicious patterns. In the new study, the tracking software was NCR's Restaurant Guard product, and NCR provided the data. The software is intentionally set so that a restaurant manager gets only an electronic theft alert in cases that seem to clearly be misconduct. Otherwise, a manager might be mired in time-consuming detective work instead of running the restaurant.

The savings from the theft alerts themselves were modest, $108 a week per restaurant. However, after installing the monitoring software, the revenue per restaurant increased by an average of $2,982 a week, or about 7 percent.

The impact, the researchers said, came not from firing workers engaged in theft, but mostly from their changed behaviorThe New York Times said. Knowing they were being monitored, the servers not only pulled back on any unethical practices, but also channeled their efforts into, say, prompting customers to have that dessert or a second beer, raising revenue for the restaurant and tips for themselves.

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