It’s my belief that the most effective way to prevent employee theft within your organization is to follow the golden rule: Treat your staff as you wish to be treated. More specifically, empower them, listen to them and compensate them well. That said, you still might find your self-storage operation facing an embezzlement situation. I’ll give you a few examples of this crime, plus ways to expose and prevent it.
Why It Happens
There are several circumstances that can lead to employee theft, and they typically related to a staff member experiencing personal or work-related difficulties. In either case, the person knows it’s wrong but proceeds anyway.
Personal problems can manifest in several ways but commonly involve an employee struggling financially, emotionally or with an addiction. Sometimes they’re embarrassed about their situation and will do everything possible to keep it a secret from an employer and coworkers, and that includes stealing.
Work-related issues can vary. Often, they steal simply because they can due to a lack of oversight or proper protocols by ownership. An employee who feels undervalued or unsatisfied with existing compensation can also be tempted to steal.
How It Happens
There are some common ways in which employee theft can occur within a self-storage operation. Keep an eye out for the following.
Ghost units. This typically occurs when a manager rents a unit off the books and without entering the rental into the management software. They then pocket the cash each month.
- Red flag: The most common indicator is a customer (non-company) lock on a unit that’s supposed to be vacant.
- Prevention: Ghost units are easily avoided with routine property walk-throughs. In addition, comprehensive accounting practices accompanied by a top-notch facility-management software will identify discrepancies.
Cash payments. When a customer pays his monthly rent or a late fee in cash, there’s an opportunity for an employee to keep the payment and simply waive the charge within the management software. They might designate the unit as being donated or complimentary to cover their tracks. The same could happen with the sale of retail product such as boxes and packing tape.
- Red flag: Any increase in free units and cash payments is a potential indication. Also, watch for unexplained losses in retail inventory.
- Prevention: Regular, unannounced site visits by supervisors or owners along with monthly auditing of facility-management software and accounting are excellent ways to prevent this type of theft. Consider requiring approval above the onsite management level for all donated and complimentary units, review all waived late fees, and look for trends with cash payments. If you see a spike in delinquencies, make a few collection calls. If a tenant says they made their payment and didn’t get a receipt, dig in and find out what’s happening.
Time theft. We’ve all seen a movie or TV show in which one co-worker does another a favor by clocking them in or out when they aren’t there. Time theft may seem harmless but can negatively impact a self-storage business financially and operationally. Employees typically have scheduled shifts. If they aren’t actually working those hours, it leaves the office unstaffed and phones unanswered. Not only does this impact potential and existing tenants, it leaves the property unguarded.
- Red flags: Missed calls, especially in the mornings or evenings, can be a sign that an employee isn’t in the office at scheduled times. This can easily be vetted by calling the office during these hours. Other indications include employee overtime that’s accompanied by an increase in move-ins, or customer feedback stating employees are “not in the office.”
- Prevention: Luckily, technology has advanced since the time of physical timecards! There are several services that’ll alert you when an employee clocks in at an IP address outside of the facility or at the wrong time. Additionally, security cameras with remote access can be an effective way to deter time theft and verify employee work hours.
What to Do When It Happens
First and foremost, if you think you have an issue with staff theft at your self-storage facility, look into it. Never accuse an employee without investigating. Collect clear evidence, so you can uncover exactly what’s happening and who might be involved. If you include other employees, be discreet. And document everything.
If you’re certain an employee is stealing, you must act. Terminating that person is almost always the best course of action. This should be done quickly to prevent further damage to the business; but first, consult with your attorney to ensure you’re acting in accordance with local and federal laws. Keep calm, and plan what to say. Then meet with the employee alone and present your evidence. Often, they’ll know they’ve been caught and won’t give excuses. If they do, don’t be drawn into a debate. You’ve made your decision, so stick to it.
Have the person’s final paycheck ready, ask for any company-provided equipment, and then escort them off the property. You’ll also need to make a few changes, such as updating passcodes and replacing office locks. In some cases, you might need to file a report with law enforcement.
Any self-storage business of any size can become a victim of employee theft. However, there are strategies to minimize the chances of it happening to you. These can discourage employees from thinking of theft in the first place:
- Conduct a thorough background check before hiring.
- Implement verification and accounting controls.
- Establish policies for payments, petty cash, unit discounts and deposits.
- Use quality management software.
- Perform site audits and question any discrepancies or odd trends.
Whether you own a single facility or dozens, cultivating a strong company culture is crucial to preventing employee theft. This might be challenging for a multi-location owner with staff across many sites, but it’s well worth the effort. With the right culture in place, employees are instilled with a pride of ownership, empowered to perform to the best of their ability, and have a voice to communicate ideas and concerns. A lack of culture will simply resolve an employee who feels undercompensated.
Your staff is the face of your self-storage business. Continually monitoring the industry for trends in compensation is the best way to ensure your people are paid fairly. Often, paying slightly above market will yield better customer service, stronger occupancy, higher revenue and happier employees.
Kerry Akins is the director of operations for Cubix Self Storage. With more than 30 years of management experience in the self-storage, telecommunications and route-logistics industries, he helps optimize the performance of the company’s owned and managed facilities in California and Texas. For more information, call 214.601.1171 or email [email protected].