10 Effective Ways to Prevent Employee Theft & Fraud in Your Salon

Employees are the biggest asset of any business. Especially for the beauty industry, it thrives because of its stylists. While your employees play a significant role in increasing the overall bottom line of your salon, they can also be troublemakers.

Have you ever casually checked the retail area of your salon, only to find a few products missing? In fact, you may have just restocked recently. Where did they disappear all of a sudden? Chances are they’ve been stolen.

Pilferage and salon employee theft is a matters of serious concern for your business. No matter what the size of your business is, theft is a harmful and severe issue. According to a survey, 75% of employees steal from their employers. It is extremely important to track such behavior and keep it at bay before it becomes a habit.

Your salon or spa is not just a victim stealing of merchandise but also of confidential information and a client’s personal contact details. For example, if an employee in your salon wants to start off on their own, they may tend to steal the personal information of your clients. Any kind of employee theft or fraud in the salon or beauty business is considered unlawful.

As a salon or spa owner, you can’t be there all the time nor can you see everything, so how do you protect yourself? The best way to go about this is by using the inventory management feature on salon software.

Most Read: Maximize Profits with Salon Inventory Management Software

It is the best way to keep a check on employees as well as salon activities. This way you can also maintain proper records and prevent any kind of malpractices in your salon.

If you still feel like your salon is victim to theft every now and then,

Here are 10 effective internal controls to prevent employee theft that will help you reduce pilferage in your salon & spa:

1. Monitor Retail Products:

Most salons and spas display their retail products on a shelf near the reception. Give the person at your front desk the responsibility to monitor any kind of frivolous activity. In case they are too busy attending to a client, get someone else to do this. Even before monitoring retail products, it is important for you to know how much stock you have in hand. The easiest way to do this is on your salon management software.

You can easily track product sales and generate reports that list each sale. If you end up doing it manually, the chances of human error are high. The best way to know what you stock is by conducting regular audits and physical stock checks. If the number of products matches your expected number, there’s no misbehavior going on in your salon.

2) Conduct surprise audits:

These informal and instinctive audits can help you understand your salon’s back bar inventory management in the most effective way. It’s also helpful to have a yearly audit by an outside firm.

3) Create a clear staff policy:

This is a basic but most important step. The policy must clearly state what counts as pilferage and what doesn’t. An effective policy must detail immoral engagements including accounting fraud, stealing cash and inventory, or misuse of confidential information. Once the policy has been written efficiently, it should be provided to every single employee at the salon and spa. Make sure every staff member reads and understands it. Also, don’t forget to mention the consequences and legal suit to follow if they’re caught stealing.

You may be interested in: The Best Way To Manage Salon Staff Efficiently

4) Hire sensibly:

Before getting a potential employee on board, a thorough background check is a must. Get references from their previous jobs and conduct verifications. Also, check if they’ve been involved in any kind of dishonest activity.

5) Develop inventory procedures:

When it comes to products you use for your services, it’s difficult to differentiate between theft and wastage. It could even be that your stylists are using too much product for a client while delivering a service. The only way to identify theft or wastage is by implementing a product usage system. MioSalon’s auto product consumption feature on the salon software helps you track this.

All you have to do is name the product and the quantity consumed while performing a particular service. For example, a hair wash may require two pumps of shampoo. Calculate the total quantity of each product used over a given period, based on all the services that were delivered. Once you get insights from the salon management software, all you have to do is conduct a physical audit to see if it matches what you see. By comparing the actual usage of the product with projected usage, you can identify any kind of areas that don’t match. Large discrepancies are indicative of theft while small ones are signs of wastage.

Also Read: Why Use Salon and Spa Product Inventory Management?

6) Improve employee wages:

A great deal of pilferage in a salon can be controlled if your employees are paid fairly. If you make them feel like they are your assets from the very first day, they are less likely to steal or feel undervalued. You could also offer them discounts and free products as work perks that will boost their loyalty and reduce any chances of dishonesty.

7) Reward your employees:

Employees like to be rewarded for their best performance and encouraged during their difficult times. After all, they spend a chunk of their time in your workplace. Give bonuses or cash prizes to top performers and create a meaningful work relationship with everyone.

Salon employee performance analysis and rewards

8) Use a lock:

Most salon employees are given access to the storage rooms because they may need products every now and then. This promotes pilferage. Instead, appoint an inventory manager who will be responsible for tracking inventory. By appointing a dedicated person, you can be sure whom to question in case any discrepancy occurs. In the stock room, you could also fix cameras.

9) Let employees report theft by co-workers:

This is the most sensitive part of the entire picture as you can easily be remembered for not trusting your own employees. When an employee reports fraud or theft by a co-worker, ask for the entire scenario before getting into a confrontation.

10) Follow procedures :

No matter how many steps you take to prevent pilferage, you’ll still have some employees stealing. In case you do catch an employee red-handed, give them a chance to explain their actions before doing anything uncalled for. Once they do so, refer to your policy to see how you need to reprimand them.

If you’re still managing inventory the old-fashioned way, you’re bound to doubt your employees every now and then. The best way to prevent pilferage, employee fraud, and theft in your salon or spa is by switching to MioSalon, salon & spa management software. Automating the process puts your business at a competitive edge. It completely eliminates the time-consuming process of manually recording inventory and increases employee productivity in other areas. It also discourages the habit of stealing among employees as they know that your inventory will now be accounted for on the software. Additionally, the accuracy of your inventory count will increase and clerical errors will be reduced.

Use inventory automation to reduce theft and fraud in your salon, schedule a free demo today.

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