Employee discount programs are a great enticement for recruitment, provide employees with an incentive to “buy the brand,” and create an opportunity for increased sales. The challenge is that when abused, it can erode company profits. Erosion occurs when customers are purchasing goods at the employee’s discounted price.
In our experience investigating and deterring discount abuse, we have discovered three points of interest.
- Many companies do not track the frequency or amounts of the employee discount benefit
- The majority of employees who abuse the discount do not regard such as theft
- A general belief exists that since “some” money was paid there is no loss to the company
Companies would be surprised to learn that the internet provides several places for employees to sell merchandise they purchased with their discount. The availability of online selling affords an employee with the opportunity to re-sell discounted merchandise for profit.
To understand the magnitude of the problem and to learn how you can prevent employee discount abuse, we recommend the following article, “Should We Discount Violations of Employee Discounts?”
We want to hear from you about how you prevent employee discounts from eroding your profits? Tell us your story.