General Alert

Q: How can I protect my business against loss from employees?
Fort Myers certified public accountants John Stroemer and Jon Lissack answer:

Hardly a week goes by that we don't read about internal fraud or embezzlement committed by a trusted employee. In many of these situations, the com-pany doesn't survive. Weak internal controls can allow someone to steal enough to ruin a business in less than a year.

A 2004 study by the Association of Certified Fraud Examiners reported that fraud costs U.S. businesses $660 billion per year, or six percent of an organization's revenues. The study showed that small businesses tend to be the most vulnerable.

One of the major reasons small businesses suffer greater losses is inadequate checks and balances. A business with fewer employees is likely to have less segregation of duties, fewer basic accounting controls and a greater level of trust between owners and coworkers.

Here are some guidelines that will help thwart corruption:

Hire the Right Employees
Conduct background checks for people handling money and inventory. Check past employment, criminal convictions, references, education and certifications. Consider conducting a drug test; often employees who steal from a business are supporting an addiction. But remember to always get the written consent of applicants before doing the research.

Maintain Strong Internal Controls
The basic rule is: If an employee handles cash or checks, he or she should not have access to the accounting records. Make sure management approves all invoices before payment occurs. In a retail situation, consider having security cameras monitor activity at registers and storage areas where inventory is kept. Employees are less likely to steal if they know someone is watching them.

Create a Fraud Policy
Have a written code of ethics that clearly states what the organization expects from employees. Inform them during orientation or training programs that fraud will not be tolerated.

Use a Hotline Service
The ACFE study found that the most common method for uncovering fraud was through a tip from an employee. Organizations that employ a hotline can cut their fraud losses by some 50 percent per scheme.

Conduct Surprise Audits
Catching an employee off guard could be your best bet in discovering a fraud scheme. The key is that the employee won't have the time to change the records to hide the fraud.

Enforce Mandatory Vacations
Require all employees to take at least one solid week of vacation each year. Those committing fraud are often afraid to go on vacation because a fellow employee might discover the embezzlement when performing the employee's job duties.
Contact Stroemer and Lissack at Stroemer Tuscan & Co., Fort Myers, 433-1002, or johns@stcpas.biz.

Q: "The customer is always right" is a phrase that is common but also frustrating. What can I do when a customer is wrong and I am asking my staff to handle him or her in a service-oriented way?
Human resources consultant Libby Anderson answers:

Although that phrase has been a mantra for so many for so long, it really isn't the issue. Right or wrong, the customer is still the customer and sometimes we have to manage him or her. When you have a customer who is "misbehaving," your staff members need to employ some techniques that will help them keep their cool and stay in charge of the situation.

First is to stay calm. When we find ourselves mirroring the behaviors of others, then we are certainly part of the problem, not the solution. Although simply counting to 10 or taking a deep breath might help, self-talk is beneficial when we need something stronger. Mentally talking yourself out of taking the customer and his issue personally can help you stay calm and see the situation more clearly.

It is never all right to ask an employee to put up with a customer becoming verbally abusive, especially if he is using profanity. At that point, an employee should either involve a supervisor or tell the customer that he would like to help, but can't unless the customer stops using threatening, abusive language.

Employees don't make situations any better by telling customers, "It is against policy." Although that is often the truth, a better response would be to start with things they can do and to tell the customer why they aren't able to accommodate the request. Customers need to feel a sense of control, so giving them alternatives is more effective than simply saying no.

Another very helpful technique is just to listen. When we don't take the time to hear the customer from start to finish, it makes a tough situation worse. Interrupting customers mid-sentence to tell them what can't be done, finishing a sentence, or telling them they are wrong, is absolutely going to make it difficult. Listening implies respect and empathy. Customers not only expect it, they appreciate it. Teach employees that patience can be a powerful ally.

Customers are the lifeblood of a business. Although they sometimes can take a lot of work, employing these simple techniques will make your life and the lives of your staff easier and your business more profitable.

Libby Anderson is president of EDA Human Resources Services in Naples. She can be reached at 262-3318 or edahrsvcs@aol.com.