Report: Retail Surveillance Changes Employee Theft Behavior

A recent retail theft study concluded that when restaurant workers know they were under surveillance, they are less likely to steal. Employee surveillance also increased the bottom line of the restaurants in the study.

The MIT Sloan Research Paper, Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity (PDF), used detailed theft and sales data from 392 restaurant locations in 39 states to examine how investments in technology-based employee monitoring impacted both staff misconduct and productivity.

With employee theft and fraud estimated to be about 1% of retail revenue, and restaurant profit margins at around 2-5%, any reductions in employee theft can have a significant impact on a restaurant's bottom line.

Although the savings from the alerts provided by the monitoring software were modest, the restaurants also saw a more noticeable uptick in revenue of about 7% per week. According to the researchers, this improvement came not from firing dishonest workers but from improvements in the behavior of all employees, knowing they were under surveillance.

Not only did they cut down on unethical activities (for example, a bartender not charging for a round of drinks, and asking the customer to "take care of me" with a large tip), they also channeled their efforts into encouraging customers to purchase more in order to increase the size of their tips.

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