Sak's Zero Tolerance Policy for Employee Theft Was Reasonable

In my opinion, Sak’s zero tolerance policy for employee theft was reasonable. Reasons are listed as follows.

Firstly, theft of cash ranks as one of the most common threats to retail operations. And this policy is a strong way for internal controls which can significantly reduce the likelihood of losses stemming from employee theft.

Secondly, Fierro forged signatures for the related discount and pilfered assets and both of them not just threaten to retail operations, but broke the law. Hence, he should be published with the harsh measures even for such a trivial transgression.

Thirdly, zero tolerance policy can help set up strong sense of responsibility and form rigorous style, thus forming a strict management style and reducing unnecessary errors.

As a whole, the policy was cost-effective.

In the short term, the policy may not be cost-effective because of the negative effect of Fierro’s termination. He was an exceptional employee and produced sizable sales, thus sales may decrease if he left the company.

However, in the long term, the policy can be significantly cost-effective. The policy can retain qualified employees and eliminate those who sought for trifling advantages, and in this way, staff quality would be enhanced substantially and losses stemming from employee theft would be reduced at the same time.

2

Sak’s anti-harassment policies and the related complaint procedure did not qualify as internal controls.

A system of internal control consisits of policies and procedures designed to provide management with reasonable assurance that the company achieves its objectives and goals. Management typically has three broad objectives in designing an effective internal control system: reliability of financial reporting, efficiency and effectiveness of operations, and compliance with