75 percent of employees have stolen at least once from their employer, and 33 percent of all business bankruptcies are caused by employee theft. 37 percent of thefts are committed by a manager. Employee theft dwarfs losses from shoplifting. These may seem like harsh statistics, but they describe a side of the business world that Sim Nigro and Brent Larson, president and vice president of Loss Prevention Group (LPG), know all too well.
For over 25 years, Nigro and Larson’s business, headquartered in Woodland, has been helping investigate loss and customizing unique loss prevention services tailored to fit the needs of individual businesses across various industries.
As Larson explained, large national chain businesses typically have a proprietary loss prevention director and a loss prevention department to handle their shortages. The independent business owner, however, seldom has the expertise or resources to create a successful loss prevention department.
While other firms focus on surveillance or background checks or investigation, Larson said that LPG has created its own niche, described by their slogan, “prevent, detect, recover.”
“It’s difficult to duplicate what we’ve done because of our experience,” said Nigro. “Certainly there are other investigators, but our business is [a] full-service agency. We have all those services under one roof. We’re a one-stop shop.”
Nigro and Larson have adapted the business to market trends over the years. The business got its start in 1989 by placing loss prevention agents at local private grocery stores in Vancouver and Portland, such as Danielson Thriftway, but consolidation changed LPG’s customer base. As big box stores came into the area in the mid 90s, said Nigro, they drove a lot of the independents out. In response, the firm began focusing more on investigating employee theft. Now most clients are regional companies, not independent stores.
Larson added that innovations in technology have helped the firm be more efficient. For example, they can now implement video systems that tie into cash registers.
“We can complete many of our investigations from our office instead of having to look at hard copies of paperwork,” said Larson. “There’s very little business interruption.”
Beginning in 2000, LPG began augmenting their revenue stream by designing programs to prevent employees from stealing, instead of just investigating theft after it happened. This additional service has sparked significant company growth over the last ten years, even during the recession. Nigro said their client base has steadily expanded and now includes businesses in Vancouver, Portland, Olympia, Chehalis and beyond – some clients are in Idaho, California and even on the east coast.
“Our coverage area is expanding dramatically,” said Nigro. “We have four investigators now and may be hiring a fifth soon.” He added that between the four of them, they have completed well over 1,500 interrogations.
Larson said that the firm expects to expand into large markets such as Seattle and Eugene, and may open satellite offices in these areas to meet customers’ needs. While in the early 90s, he might have driven a 10-mile radius in a week, today he might be in Boise on Monday, Arizona on Wednesday and Indiana on Friday, then Virginia the next week.
“We jump on planes a lot,” Nigro stated modestly.
The firm is in the process of building a new 4,000-square-foot office in Woodland; they expect to break ground later this winter, after permitting is completed. The new digs will more than double their space.
Larson said they get calls daily for new investigations, and their average theft confession is $5,000. Many businesses that call LPG think they are only losing a few hundred dollars, but the investigation reveals a much larger loss – some investigations have revealed that theft has been occurring for five years or more, and totaled several hundred thousand dollars. But in most cases, Nigro added, businesses with an active loss prevention program will identify and solve the issue before the losses reach significant levels.
Typically, said Larson, thefts tend to get exponentially worse. An employee may start by taking $5 for gas to get home. They get away with it, then work their way up until they are caught. And the culprits might not be who you would imagine:
73-year old woman began stealing store product. This quickly turned into a daily occurrence. LPG’s investigation uncovered $45,000 worth of product in her home, organized and sorted in totes, with the store price tags still affixed.
A long-term employee had been embezzling for most of her career. The individual – the manager, and responsible for reconciliation of inventory – was stealing store product and selling it for cash. LPG’s investigation revealed $60,000 of theft that year alone.
In all cases, said Nigro, justification and rationalization play a central role. Millennials wonder why they can’t have a brand new car like their buddies. Some employees’ are concerned about their families being hungry, while others are “out of smokes.” Some don’t like the owner, or think they are not being paid enough (thinking of it as self-serve profit sharing).
Generally, said Larson, there’s a mantra of the theft being “someone else’s fault.” And a lot of times, there are tears, said Nigro, accompanied by the lament “I tried to stop but I couldn’t!”
“Most of the people we interview are great people,” said Nigro. “They have just made poor decisions and have to face the consequences. These are not the dregs of society.”
That’s why Nigro and Larson are excited about the addition of proactive programs that will keep employees honest.
“It is not fair for honest people to work side by side with a thief,” said Larson. “A large percentage of employees are fence-sitters and we want to keep them on the right side of the fence, to prevent the loss from occurring in the first place.”
“We hope we’re able to make a difference for people – the victims and the perpetrators of the crime,” added Nigro. “We hope to change their lives for the better.”
Seven best practices to avoid fraud
- Reconcile all balance sheet accounts and payroll records monthly
- Have more than just one person signing checks and reconciling accounts
- Hire an outsider to come and look at the books and reconciliations at random times (at least annually)
- Pay your employees what they’re worth – good employees pay for themselves on average tenfold, and bad employees can ruin companies
- Never hire anyone solely based upon friendship, family, obligation, or feelings of sympathy
- Build a culture of accountability, measure results and make sure everyone knows that you are looking at their performance
- Watch out for employees who are overly protective of their role – they may have something to hide
Source: Entrepreneur; John M Taylor & Co.
Loss Prevention Group
1925 Belmont Loop, #210 Woodland Founded 1989 www.lpgnw.com
