Article of Interest

[Lynch Mob]

Just thought many of you might be interested in reading this article I wrote.

http://www.mylpspaceonline.com/artic...%20Problem.PDF

I would love to hear your feedback.

[Curtis Baillie]

I agree. Lookout for lightning strikes.

[LPGuy]

I don't understand the point of this article.

You tell me right out that larcenies and shrink are at all time lows, and you spend the next 3/4ths of the article crunching numbers to explain how you arrived at those conclusions.

Finally (and I was waiting to see when you'd get to it), you get to your main agenda:

The traditional strategies of responding to theft through apprehensions [. . .] are not where our efforts should be focused.

Yet you spend no time making any case for this opinion at all. Why should I stop apprehending people when larcenies and shrink are reducing? Maybe I'm just catching the few people who persist in continuing to shoplift.

When we label ourselves “Loss Prevention” we must analyze why we spend so much time chasing losses [. . .]

It's not a loss until you've permanently lost the merchandise (i.e., the shoplifter leaves the store and escapes). If I catch a shoplifter with merchandise, I've effectively prevented the loss.

I agree with you that much of the loss prevention department's job should include hardening the target and keeping people from attempting to shoplift in the first place. But I'm not opposed to making that apprehension when all else fails.

[John H. Christman]

For some reason, I'm being denied access to this article.

[Lynch Mob]

I don't understand the point of this article.

You tell me right out that larcenies and shrink are at all time lows, and you spend the next 3/4ths of the article crunching numbers to explain how you arrived at those conclusions. No, not really.

Finally (and I was waiting to see when you'd get to it), you get to your main agenda:



Yet you spend no time making any case for this opinion at all. Why should I stop apprehending people when larcenies and shrink are reducing? Maybe I'm just catching the few people who persist in continuing to shoplift. Yes, and that is where payroll dollars become wasted.



It's not a loss until you've permanently lost the merchandise (i.e., the shoplifter leaves the store and escapes). If I catch a shoplifter with merchandise, I've effectively prevented the loss. You may have prevented that loss, but it is not effective. If you were effective, shrink would be reducing from your efforts.

I agree with you that much of the loss prevention department's job should include hardening the target and keeping people from attempting to shoplift in the first place. But I'm not opposed to making that apprehension when all else fails.

The point is that the numbers imply that Loss Prevention, as an industry, is irrelevant since it seems the only decrease in shrink corresponds to nationwide decreases in crime.

The case I make for not focusing on apprehensions is fairly strong, I believe. I think everyone can agree that apprehending shoplifters and employees has been the primary role of Loss Prevention for decades. If I were to make a guess, I would say that 80% or more of LP payroll expendetures are dedicated to making apprehensions. The numbers show that this strategy has failed. And, as LP budgets have increased, there is no correlation to shrink reduction, so much of what is expended on LP is just a drain on profits. So, if the focus on apprehensions is failing, and merely costing retail companies more money with no benefit, then it is pretty clear that a new direction is necessary.

[Lynch Mob]

For some reason, I'm being denied access to this article.

I have no idea why that would be. You may want to try going to the home page and accessing it that way. www.mylpspaceonline.com

[John H. Christman]

I can get the audio version, but there are too many statistics for my tired brain- how can I get a hard copy?

[N. A. Corbier]

Do you have a program to read PDFs installed? Adobe Reader, Foxit Reader, etc.

[John H. Christman]

Yes, Adobe 87.

[SecTrainer]

Just thought many of you might be interested in reading this article I wrote.

http://www.mylpspaceonline.com/artic...%20Problem.PDF

I would love to hear your feedback.

I hope you'll forgive my saying so, but the data analysis in the paper has a number of flaws and I don't think I would have approached the subject from that direction.

I agree that the development of loyal, happy, satisfied employees would certainly have a positive impact on shrink (including shrink from mistakes, breakage, etc.), but I think that loyalty is a very weak reed to lean - especially in a low-paying, high-turnover field like retail.

Perhaps more to the point, the prospects for building loyalty are weakened by the present employment environment. Some years ago, American employers by and large began to break their social contract with employees, deciding that people - their highest cost item in the budget - were expendable, especially the more longevity that they built up (higher wages, more vacation time, higher retirement liability). "Shove 'em out the door and bring in someone younger and cheaper!" just about sums up the way that employers discovered they could reduce their personnel costs. Pension funds evaporated. Benefit packages were cheapened and/or eliminated. "Loyalty" is pretty hard to find when the employer is saying "You don't matter".

Even if employers were to reverse that position (and there is no reason to think they will), it would cost them more than they lose in shrink each year to repair the damage they have done to the social employment contract. Employees - especially the younger ones - have seen this going on and have become very cynical about the ethics in the workplace and about how much loyalty they can expect from their employer (close to none), and with good reason. Who truly trusts their employer anymore? No trust, no loyalty...it's really quite that simple.

There are three equally critical elements of a good LP program, and they do not depend on something as ephemeral as loyalty:

1. Rigorous control over the opportunities to steal by the institution of proper control measures and an uncompromising insistence that they be followed to the letter. (This starts with proper hiring procedures, incidentally.)

All the "loyalty" in the world will not counteract sloppy procedures that invite employees (or patrons) to steal. Even the most "loyal" employee will steal under certain circumstances such as a sudden financial disaster if the opportunities are not removed.

2. A corporate culture and unyielding demand for absolute integrity, from the top down. This is supported by the findings of David Callahan in his brilliant book (*must* reading for all LP people who want to understand motives) The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead. Awareness programs that incorporate a strong element of expectations in this regard are part of building this culture.

3. Interdiction: Vigorous investigation, apprehension and/or discipline are absolutely necessary because it is inescapable that there will be employees (and patrons) who are simply "bad seeds". Some are sociopaths. Some are simply amoral. Others are driven by drug and alcohol addictions. Sociopaths, especially, can slip right through the hiring process with consummate ease because, by definition, they are experts at hiding who they really are. These sorts of employees will attempt to steal or will ignore stealing in others no matter what else you might do.

I think that building loyalty in employees is more likely to have a positive impact on sales, especially repeat sales, and a secondary impact on shrink. However, if the three critical elements above are supplemented by programs for employees that evoke loyalty (for instance, well-defined and accessible promotional pathways), the combination could be as good as it gets.

[LPGuy]

...Loss Prevention, as an industry, is irrelevant...

The case I make for not focusing on apprehensions is fairly strong, I believe.

What is your LP background again?

You claim success at several retailers, but I know of no large operations that follow any of your models.

[John H. Christman]

I could not agree more with the general thrust of SecTrainer's response. Well done!!

[N. A. Corbier]

This "breaking of the social employment contract" has affected two whole generations of the workforce. At the biggest big box, the phrase, "When Sam was alive" followed by a curse of the current CEO was heard quite frequently.

A little blog that "champions the consumer," called Consumerist, enjoys putting up leaked confidential data from the big boxes, including Wal-Mart's plans. In a plan that Consumerist said that was leaked to them by Wal-Mart, the plan noted that:

An employee who is elderly and with tenure and seniority produces less, costs more, and places a greater strain on resources than a young employee with no seniority.

Therefore, it is appropriate to market to and attempt to replace all but management personnel with young employees without seniority - lowering the burden on insurance, profit sharing, accidents and worker's comp, and sick days.

When the company is gaming you, you're going to game the company, and your friends and co-workers will help.... Because they're gaming the company too!

[Lynch Mob]

I hope you'll forgive my saying so, but the data analysis in the paper has a number of flaws and I don't think I would have approached the subject from that direction. I would like to hear what you believe are the data flaws?


There are three equally critical elements of a good LP program, and they do not depend on something as ephemeral as loyalty:

1. Rigorous control over the opportunities to steal by the institution of proper control measures and an uncompromising insistence that they be followed to the letter. (This starts with proper hiring procedures, incidentally.)

All the "loyalty" in the world will not counteract sloppy procedures that invite employees (or patrons) to steal. Even the most "loyal" employee will steal under certain circumstances such as a sudden financial disaster if the opportunities are not removed.

2. A corporate culture and unyielding demand for absolute integrity, from the top down. This is supported by the findings of David Callahan in his brilliant book (*must* reading for all LP people who want to understand motives) The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead. Awareness programs that incorporate a strong element of expectations in this regard are part of building this culture.

3. Interdiction: Vigorous investigation, apprehension and/or discipline are absolutely necessary because it is inescapable that there will be employees (and patrons) who are simply "bad seeds". Some are sociopaths. Some are simply amoral. Others are driven by drug and alcohol addictions. Sociopaths, especially, can slip right through the hiring process with consummate ease because, by definition, they are experts at hiding who they really are. These sorts of employees will attempt to steal or will ignore stealing in others no matter what else you might do.

I think that building loyalty in employees is more likely to have a positive impact on sales, especially repeat sales, and a secondary impact on shrink. It is one and the same. However, if the three critical elements above are supplemented by programs for employees that evoke loyalty (for instance, well-defined and accessible promotional pathways), the combination could be as good as it gets.

Aren't your three elements what companies have been doing in Loss Prevention for years and years? What company will say they are not looking to implement tight controls? What company will say they do not have a culture of honesty and integrity? What company will say they are not vigorously looking to find and address cases of dishonesty? When you look at what LP has historically been, investigations and auditing, this is exactly what virtually all LP departments are striving for. And, this is where LP goes wrong, in my opinion.

Yes, controls need to be implemented, but good controls are a one-time thing. You should not need to keep re-evaluating your controls (other than new technologies). If you need to keep re-evaluating, you don't have good controls. So this is not 0ngoing work for LP. Measuring compliance to those controls is where auditing comes in. I am not saying this does not need to be done, I am saying it should have a much lower priority.

Yes, investigations need to be done. But, LP should not spend every waking moment trying to find the employees and customers who are stealing. This type of approach will only breed dishonesty. Just as the parent who only tries to find their child doing something wrong will only create mutual distrust and a lack of respect, which will ultimately drive the child to act exactly the way you do not want them to, it works the same in the workplace.

Yes, you want a culture of honesty. When you build loyalty, you achieve that. Right now, this is perhaps where LP fails the most. We are not good at building a loyal culture. This is the crux of everything I am saying. LP needs to get involved in proper strategies for building a culture of integrity. We just don't do that. We create cultures of suspicion and mistrust. We create cultures of sneakiness.

All you have to do is read the various message boards out there to find that there is a HUGE us vs. them mentalty when it comes to ops vs. LP. As long as we are driven to investigate and audit as the primary functions of what we do, we will never see this change. That is the point of the article. Everything we have been doing for decades is really doing absolutely nothing. So, if we understand that, why not find another way to approach the business?

[Lynch Mob]

What is your LP background again?

You claim success at several retailers, but I know of no large operations that follow any of your models.

I have 17 years in the LP business. I was Director of Loss Prevention for three international companies. I have a BS degree in Management and a BS degree in Criminology. Currently, I am CEO of P&L Solutions, a Loss Prevention consulting and outsourcing firm.

In the companies I worked as Director for, I implemented strategies that place education ahead of investigations and auditing. In every company, shrink reduced by more than 50%. Our current outsoucing services follow the same strategies, and we continue to see shrink decrease by an average of 30% in the first year we work with companies, and by more than 50% after two years. Each of the businesses went from shrink above industry averages to shrink well below industry averages.

Of course you do not know of large operations that follow my model, because they are not doing it. That is the point of the article. LP has been the same for decades and the results have been the same for decades. As long as we keep doing business the same, the results will always be the same, because a strategy of investigating and auditing is not designed to reduce shrink. It can't.