There are Two Sides to Every (Lost) Coin
Apprehending an employee who has committed an act of theft costs you time and money. It also scatters your investigative team’s focus, making it easier for the traditional shop lifter to avoid detection. Taking employees out of the retail theft equation can make your strategy even stronger.
According to an article on SecurityInfoWatch.com by Mark R. Doyle, President of Jack L. Hayes International, Inc., the Hayes International 19th annual Retail Theft Survey shows that while revenue losses for retailers are still staggering for the 23 major retailers involved in the survey, retail theft prevention strategies have improved to the point where more dishonest employees are being apprehended.
The survey covers 23 major retail companies who have solid loss prevention programs in place. They represent 14,118 stores, with retail sales exceeding $537 billion. It also reports shop lifters and employees stole over $6.0 billion from these retailers.
The following are the numbers regarding incidents of employee related theft:
- Survey participants apprehended 66,507 dishonest employees, an increase of 6.57 percent over the previous year’s apprehensions.
- Dollars recovered from dishonest employee apprehensions totaled over $56.6 million, a substantial increase of 16.44 percent over the previous year’s recovery dollars ($48.6 million).
- One out of every 27.9 employees was apprehended for theft from their employer. (Based on comparison data of over 1.85 million employees.)
- The average dishonest employee case value was $851.44, a 9.26 percent increase over the previous year ($779.27).
According to the survey, shoplifting apprehensions and recovery dollars increased because of the following improvements made to loss prevention strategies:.
- With an increase in organized retail theft, they focused more attention on the shoplifting issue.
- They had additional loss prevention personnel on the floor looking for shoplifters.
- There was more of a focus on and much better use of CCTV in their highest loss departments and areas.
- More emphasis on employee training and awareness and award programs for reporting possible shoplifting activities, resulted in more calls/leads from the sales floor.
Participants were also asked why they experienced an increase in both dishonest employee apprehensions and recovery dollars. They gave us the following five primary reasons:
- They had new or improved Point-of-Sale exception reporting software which helped them to more readily identify dishonest employees.
- They focused more time and effort on internal theft cases.
- An increase in the training and education of their loss prevention personnel in regards to identifying employee theft cases.
- Promoted their award programs for employees who report dishonest activities/employees.
- A poorer quality of applicants resulted in more dishonest employees being hired in their companies.
More apprehensions mean more recovery dollars, but retailers then have to consider how much has been spent on bulking up their arsenal to fight retail theft, and inevitably subtract that amount from what has been recovered. Is there a short cut to making recovery amounts mean more at the end of the fiscal year?
The best scenario would be to never lose some of the revenues lost to retail theft at all. Obviously, a strong front needs to be upheld in order to apprehend the traditional shoplifting crowd. But what of those among your employees who have come to know the ins and outs of your strategy? They too can be apprehended with proper employee incentive and investigative measures place, but the greater benefit can be found in not hiring them to begin with.
According to Hayes, “The first step to reducing employee theft starts at the point-of-hire; that is, do not hire the bad apple.” Hayes believes that the prevention side of a company’s retail theft strategy needs to be just as strong, if not stronger, than measures taken to apprehend the criminals.
Additionally, Hayes suggests, “A company's pre-employment screening process needs to be at least as thorough as their competitor's or they will find themselves hiring applicants who have been rejected by other companies who are doing a better job in the screening process. A company is only as good as it's employees, so it is wise to spend the money 'up-front' screening out the "bad apples", than it is to spend it later trying to catch or identify the dishonest employees.”
Many companies do invest in a thorough screening program with conventional screenings in place to help detect applicants with criminal records (i.e. county criminal records search), but another trend in the loss prevention realm that seems to be picking up momentum is the addition of specialized retail theft databases to pre-employment screening packages. These databases are meant to detect offenders whether they have been convicted or not.
Since a retailer often has to weigh the monetary value associated with a theft against the time and cost of pressing charges against the offending employee, many incidents do not result in a criminal conviction. An applicant who has stolen from previous employers could receive a passing grade on their background report if prior offenses were just too petty, or too well defended against to result in conviction. But whether they’ve stolen a pair of sunglasses or a case of iPods in the past, there is a certainty among loss prevention experts that they will inevitably steal again, especially if such acts have never resulted in a conviction.
Retail theft databases offer an additional level of defense to help strengthen the prevention side of retailers’ investments to fight retail theft. Beyond that, since participating in a retail theft database program requires that they submit all incidents of theft in their stores on regular basis, retailers can unite to help other retailers who participate, allowing them to form an effective task force against “bad apples” whose luck simply has not run out yet in terms of actually being convicted in a court of law.
Members of the National Retail Mutual Association (NRMA) have experienced a significant boost favoring the prevention side of their strategies by being involved in such a task force. Read about their experiences here.
See the entire Spring 2008 GIS Newsletter Here
