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Employee Theft in the Self-Storage Workplace: Factors, Prevention, Detection and Response
While most self-storage managers are honest, reliable and hard-working, internal theft can and does occur. Even a good worker can turn to bad behavior under the right circumstances. Let’s look at the factors that drive employee dishonesty as well as strategies you can use to prevent and detect it.
6 Min Read
Most self-storage managers are honest, reliable and hard-working. Trustworthy. As an owner, you put the performance of your multi-million-dollar asset into their capable hands. You believe they will have your facility’s best interests at heart. After all, those interests often align with those of your team, helping them earn more money come bonus time.
The unfortunate reality, however, is internal theft can still occur. It happens. Even a good worker can turn to bad behavior under the right circumstances.
The good news is that by implementing a few simple, preventive measures and fostering a culture of transparency and accountability, you can significantly reduce the likelihood of theft and maintain a secure work environment. Let’s start by looking at the situations that might drive your self-storage staff to engage in dishonest behavior.
Factors That Drive Internal Theft
Employee theft happens for several reasons, but it’s primarily a crime of opportunity. Most self-storage facilities employ very few people, and there’s rarely any direct supervision. This absence of accountability through authority can easily lead to temptation, especially at facilities that accept a lot of cash payments for unit rentals, retail sales, truck rentals, etc. Here are some the reasons a worker might steal:
They believe they are underpaid. Perhaps they haven’t received a raise or a bonus in a long time and feel they deserve one.
They feel disrespected or unappreciated by the company.
They need extra cash for an unexpected expense and have no other way to get it. They might take a few dollars, intending to replace it on payday and rationalizing the crime as a “short-term loan.” When they aren’t caught, it may encourage them to do it again.
They may be suffering with an alcohol, drug or gambling problem, or a shopping addition.
They may be facing other personal challenges such as a maxed out credit card, a medical issue or a divorce. Some simply like to live beyond their means.
These are just a few of the desperate situations that can push a self-storage manager into a financial bind, leaving them feeling like they have no other option. In some cases, they never meant to steal from you; they were simply overwhelmed by their circumstances and felt trapped.
One last thing to keep in mind is an employee can steal more than cash. They may be sneaking supplies, or renting out space to their friends and family at no charge. They may be stealing time by not working all the hours they state on their timecards.
Do you have a manager who never seems to answer the phone when you call? You might even show up at the property to find the office locked and the employee nowhere in sight. When you ask them about it, they claim they were picking up supplies, taking a lunch break or making a bank deposit. Perhaps they’re always in the office but doing another job such as online sales, web design or some other money-making activity. Make no mistake: This is theft. The person takes your money and gives you only a portion of the time for which they’re being paid.
Preventing Employee Theft
Right now, you’re wondering what you can do to prevent employee theft at your self-storage operation. Here are a few effective strategies:
First, know all the features of your facility-management software and the data it produces. If you see red flags in your financial reports, investigate.
Inform all employees that unannounced facility inspections can occur at any time … and do them! Threats mean nothing; actions say it all. It doesn’t mean that you don’t trust your team. It’s just a good business practice. As self-storage owner, it’s your responsibility to protect your money.
Consider not accepting cash payments, which eliminates the need for a cash drawer and the temptation all that money creates.
Use paperless leases so there are no printed copies lying around that can be used for a cash-paying tenant. Every customer should be logged in your management software.
Put as many tenants as possible on autopay using a debit or credit card. This not only eliminates cash payments, it helps you avoid delinquency.
Instead of keeping petty cash on site, give your managers an Amazon, Lowes or Home Depot credit card for things like office supplies, cleaning supplies, weed killer, etc. The accounting department can easily itemize and reconcile these accounts, and it removes the temptation of cash.
Make sure your self-storage auctions are handled by a third party and all payments are made with a credit card.
Warning Signs of Employee Theft
So, how do you know when an employee is taking advantage of your self-storage business? There are a few methods you can use and red flags for which to watch.
First, pay attention to changes in income. If your self-storage facility has been around for a while, you have historical financial data. Use it to help you identify potentially problematic trends. While periodic fluctuations can occur due to economic factors like inflation and increased competition, dramatic dips require investigation.
Regularly reviewing your self-storage management reports can also help you spot patterns. For example, if your facility traditionally handles a lot of cash but you notice fewer cash payments despite steady occupancy, something might be amiss. If you’re seeing that late fees are frequently waived in your software, it’s possible that the employee is collecting them in cash and putting it right in their pocket. If you’re seeing your manager offer a lot of move-in specials, particularly months of free rent, further investigation may be warranted.
Responding to Potential Employee Theft
If you suspect that one of your self-storage employees of stealing, begin by doing an investigation and documenting any findings. Never accuse a team member without solid evidence! Here are a few critical steps you should take:
Conduct a thorough facility audit (or hire a professional to do one).
If you have a cash drawer and petty-cash account, balance them.
Review all tenant files to ensure there are no leases with zero rent, and check the software to confirm no units have been removed. Count any inventory and balance it against the computer records.
If you find proof of theft, it’s time to end the manager’s employment. I could write an entire article on the subject of termination (and have), but here are a few general steps to follow:
Prepare the employee’s payroll as well as any pay due for vacation time and bonuses.
Collect any company property from the employee including facility keys and uniforms.
Have a locksmith change the locks. (You can’t be too careful. Keys can be copied.)
Have the employee remove all personal items from the office.
If the employee lives on site, give them a clear and reasonable amount of time to vacate. If there’s a door between the residence and the office, have the lock changed immediately. Once they’ve moved out, conduct a walkthrough of the living space to ensure everything is in the condition you expect.
There are many reasons why a good employee might make a bad decision and steal from your self-storage company. While this doesn’t happen often, it’s crucial to be prepared. Offer competitive pay, treat staff with respect, and implement motivating and achievable bonus programs. Also, give them the authority to do their job, conduct regular performance reviews, maintain open communication, set clear guidelines, and perform regular facility audits. This proactive approach benefits you, your facility and your managers by addressing problems before they escalate.
Pamela Alton is owner of Mini-Management Services, which has been placing self-storage managers in positions all over the United States since 1991. She also offers staff training, operational consulting, facility audits and inspections. For more information, call 321.890.2245 or email [email protected].
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