It’s a harsh reality of owning a retail operation that most entrepreneurs will have to face at one time in their careers: employee theft.
As any business owner knows, building a team based on trust is not always easy but an essential component to a successful business.
While everyone likes to trust those who work for them, in reality, risk and loss prevention experts estimate that retail stores lose up to a collective $60 billion a year in merchandise due to employee theft. It would be naïve to think that a dispensary would be exempt from these statistics. In fact, up to 90% of losses reported by dispensaries are due to employee theft – 90%!
Could employee theft be explaining some of the gaps you’re seeing in your inventory, cash or employee sales? Here are some tips we can offer to prevent employee theft in your dispensary:
DO YOUR DUE DILIGENCE
One of the first steps in preventing employee theft in your dispensary is to make sure you’re hiring the right people. As a retail operation that is dealing with thousands of dollars of merchandise and cash, you need to be able to have peace of mind that your product is in good hands. Take the time to do your due diligence when hiring budtenders.
Go through a thorough interview process, and don’t skip out on reference checks as well as criminal background checks. These HR processes can be costly and take a bit of time to complete but may end up saving you thousands in the long run. There are even a number of third party firms that can help you with this. Being thorough isn’t about being paranoid, it’s about ensuring you are taking every reasonable step to protect your business.
SET STAFF EXPECTATIONS
Expectations for your dispensary employees should be set right at the point of hire, laid on thick in training, and reinforced on the regular. Most employee theft that happens in dispensaries is not a result of staff grabbing handfuls of unaccounted-for bud and stuffing it in their pockets. Rather, a little extra sold here, a little discount given there, or a little pinch off the top of the inventory adds up.
Set clear guidelines in your employee handbook, and be clear about the consequences of breaking guidelines. What is your policy? 3-strikes you’re out? Zero tolerance? Whatever it is, be clear, proactive and consistent in its enforcement.
All budtenders would likely agree that they love being able to give discounts, but how much are these discounts actually costing you? Over time, employees could become overly liberal on the discounts they’re giving and to whom, and this can seriously cost you.
Consider setting a limit on discounts, maybe 10% being a reasonable place to start, and set a policy that any discounts over that amount will require managerial approval.
CONTROL THE AMOUNT OF “WEIGHING HEAVY” THAT HAPPENS
Most budtenders can’t deny that they’ve tossed in a few extra grams at the point of sale into what their friends or coworkers are buying. “Weighing heavy”, while a nice thing to do for friends of the dispensary, can end up costing dispensary owners big time.
Tackle this by limiting the amount that employees are selling to their friends and being strict about weighing procedures.
DON’T LET EMPLOYEES SELL TO THEMSELVES
Placing some restrictions on the way that employee discounts are processed can help you manage your stock.
When employees want to apply their discount, limit that procedure to managers or to other employee designates. If an employee is found to be using the discount beyond the guidelines, set your policy for disciplinary action and stick to it.
COUNT INVENTORY ON THE REGULAR
While it’s just good retail business practice, setting regular inventory counts into your business operations will act as a deterrent for theft and will help you more precisely monitor sales along with your stock.
Involve your staff in these regular inventory checks since they are ultimately responsible for the explanation of any discrepancies or irregularities in stock or cash.
DO SPOT CHECKS ON EMPLOYEE TRANSACTIONS
While you don’t want to instill a sense of fear in your employees, you do want them to know you are watching their sales, the cash flow, and your inventory.
Engage in regular spot checks, where you can dig into your employee’s sales records and seek clarification on irregularities between sales, cash, and inventory.
REWARD GOOD WORK
When focusing on employee theft, it’s easy to focus only on the ones you suspect may be screwing you over. When you’re looking into your employees, make you take as much notice of the trust that has been built between you and good employees as you do the ones you take concern over. Good, trustworthy employees for your dispensary are as good as gold; make sure you’re keeping those people gainfully employed and treating them well. On the same coin, be sure you’re clear in your words and in your actions about the consequences of employee theft. You have no obligation to keep those who are willing to rip you off employed: let go of the bad seeds while giving those you know you can trust more responsibility and recognition.
Taking steps to reduce employee theft in your dispensary isn’t about being paranoid or mistrusting, it’s about protecting what you have built as a business owner while staying within the confines of marijuana law in your state. The marijuana industry needs to protect its legitimacy by engaging in activities and creating policies around loss prevention so to demonstrate its viability as a profitable industry. Taking the time and opportunity now to review your recruitment strategies, employee training, and disciplinary policies can end up saving you thousands in the long run!