The high school senior was very excited for her upcoming school dance. Her dress was exquisite, and her shoes and bag matched perfectly. She was saving money from her job at the local fast food restaurant to pay for everything she needed to make the event so special. There were flowers to choose from, a limousine for her and her date and a few friends, photos, and a host of extras that would make the evening a lasting memory. She had all her future earnings planned for the next few weeks and had saved them for the special occasion. What she hadn’t planned for was the inexplicable shortage of $20 in her cash until work. The restaurant had a policy that all cash shortages had to be returned. “Oh no!” she thought she. “I didn’t steal any money, what am I going to do? I need every penny I earn to pay for the dance.”
Mandatory return policy
When checking with retailers and restaurant owners, the conversation will often turn to cash shortages. Some have boasted that they were simply not short of cash because of the policy they put in place. The policy required tellers to pay shortages at their tills. They further stated that stock-outs may occur once or twice, but after paying for the stock-outs, a cashier would not usually have stock-outs again. The shortage required no investigation, no investment of a manager’s valuable time, no disciplinary action, and no complicated cash-handling policies.
political implications
So, having investigated many, many cash shortages and implemented effective cash control programs for retailers and restaurants, paying cash shortages is not part of the equation unless of course a thorough investigation has been done, the cashier admitted to the cash thefts and restitution was part of the settlement. Reducing pay or making an employee pay an employer for lack of cash could result in the employee earning less than minimum wage and put the employer in danger of violating wage and hour laws.
unintended consequences
Making tellers pay for shortages can also have an effect contrary to your intent. Suppose the young teller is making preparations to go to the special dance, as in the previous scenario. He needs money for his dress, matching shoes, tickets, hair and makeup, and maybe share the cost of a limo. It’s a big expense for the young woman, but she’s budgeting carefully, and every dollar he earns is earmarked as she prepares for her special event. She is a very good cashier and even better employee. But unfortunately, her cash register falls short. She didn’t steal cash from the till. An error counting the change or mishandling the coin may have been the problem. Perhaps there are other possible explanations. Perhaps there was a mistake on the part of a manager removing excess cash from her register. Perhaps another teller filed transactions in her register while she was on break and mishandled the cash, or she stole it.
According to the rules, our cashier has to return the shortfall. She panics because she imagines that her perfect evening will be ruined. She can’t afford to pay for the shortage. Could she ask permission not to pay the shortage? Sure. Could she ask someone to lend her the money? Yes. But, she’s desperate. She decides to get the money back by methods she knew other tellers were doing. They had been flagging fraudulent transactions and stealing money for longer than she had worked there and no manager asked them about it. They had often bragged about the “extra” money from her. She had always disliked her arrogant attitude about stealing. She makes her decision. She would only take the amounts necessary to make her dance special, and then she would return them.
He calls in fake employee meals, voids, refunds, and price reductions and pockets the cash. He’s stealing! It was so easy that he continues to take money that far exceeds the amounts he intended to pay back. The manager can quickly spot cash register shortages, but he neglected the other parts of cash management. The robberies continue long after his dance and his cash drawer never runs short, and he never pays it back. She crossed the line, and now she’s a thief. If she is caught, she could be arrested.
cash management
This story is true and has happened in many retail stores and restaurants. A strong cash management program does not require that cash shortages be financed. Incidences of cash shortages should be recorded in the teller’s performance history. Cash management programs should include investigations of significant cash variances and implementation of progressive disciplines for each incident requiring additional training where necessary. Acceptable tolerance levels must be established for each component of customer transactions, such as voids, refunds, markdowns, and no sales. Performance in these areas should be monitored and discipline established for poor performance. Every time an exception occurs outside the acceptable level of performance in handling cash transactions, discipline is stronger. For example, the first time a teller is more than $3 short, a written warning is reviewed with the teller. The warning includes more serious repercussions with subsequent violations that can lead to suspension and possibly termination. The concept is called progressive discipline. The warning advises the employee that his performance is being monitored, that proper cash handling is important, and establishes documentation of poor performance. The idea is to change behavior.
Effective loss control programs contain these elements of cash management. They are fair and equitable, setting the “ground rules” for cash handling performance, and providing accountability to those employees who may be stealing through transaction manipulation. Requiring recovery from cash shortages as the foundation of a cash management program does not adequately address poor cash management performance. It can even cash registers, but it does little to address the exploitation of the lack of cash controls.
By DB “Libby” Libhart, CPP
