IT monitoring effective in deterring restaurant fraud

September 3, 2013

For many firms, losing significant revenue and profit to employee theft has been a cost of doing business. But a new study from Washington University in St. Louis finds that information technology monitoring is strikingly effective in reducing theft and fraud, especially in the restaurant industry.

"Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity," by Lamar Pierce, PhD, associate professor of strategy at Olin Business School, finds that mining sales data of employees increased restaurant revenue about 7 percent.

The paper is co-written with Daniel Snow, associate professor at the Marriott School at Brigham Young University, and Andrew McAfee, research scientist at the Sloan School of Management at the Massachusetts Institute of Technology.

Using monitoring software called Restaurant Guard developed by NCR, the researchers measured the effect of theft and fraud before and after installation of the software at 392 restaurants in 39 states.

Pierce and his team found that after installing the , revenue per increased an average of $2,982 per week, about 7 percent. Restaurants also experienced a 22 percent drop in theft.

"The NCR system works with data directly from the point of sale," Pierce says. "It reduces the need for managers to use cameras and constantly watch their employees. In that sense it's not more surveillance, it's better and less intrusive ."

Employee theft and fraud are big problems in the United States, adding up to more than a $200 billion annual impact on the economy.

"Our results suggest a counterintuitive and hopeful pattern in ," the researchers write. "Employee theft is a remediable problem at the individual employee level. While individual differences in moral preferences may indeed exist, realigning incentives through organizational design can have a powerful effect in reducing corrupt behaviors in a way that benefits both the firm and its workers."

Explore further: Employers feel no love for unscrupulous practice of 'service sweethearting'

More information: apps.olin.wustl.edu/faculty/pierce/cleaninghouse.pdf

Related Stories

Chinese firm accused of stealing US software

June 28, 2013

(AP)—China's largest wind turbine company and three people are accused of trade secrets from a U.S. software company, the Justice Department announced Thursday.

Recommended for you

Can genes make us liberal or conservative?

August 4, 2015

Aristotle may have been more on the money than he realised in saying man is a political animal, according to research published Wednesday linking genes with liberal or conservative leanings.

Model shows how surge in wealth inequality may be reversed

July 30, 2015

(Phys.org)—For many Americans, the single biggest problem facing the country is the growing wealth inequality. Based on income tax data, wealth inequality in the US has steadily increased since the mid-1980s, with the top ...

Earliest evidence of reproduction in a complex organism

August 3, 2015

Researchers led by the University of Cambridge have found the earliest example of reproduction in a complex organism. Their new study has found that some organisms known as rangeomorphs, which lived 565 million years ago, ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.