Measuring staff dishonesty prevention: Why the store with no cases is the worry

Measuring staff dishonesty prevention: why the store with no cases is the worry

Measuring staff dishonesty prevention is where the industry needs to go next, and that is where Professor Emmeline Taylor lands in this episode. ECR Retail Loss’s research in The 98% estimates that only 2% of internal dishonesty cases are identified and actioned, so detection on its own will never close the gap. Prevention has to carry the weight, which means retailers need to know which interventions actually work.

Drawing on a recent ECR Retail Loss meeting with retailers, Emmeline and Colin Peacock describe how prevention messaging has moved from the occasional campaign to business as usual: newsletters, screensavers, staff-room posters and training, in stores, distribution centres and warehouses. The idea that stood out came from one retailer’s store dashboard. It lists internal cases generated and closed by store and region, and it turns the usual logic round: the store with no cases is the one that should raise eyebrows.

They also weigh zero tolerance against trust and high staff turnover, and set out what success can be measured by: case numbers, whistleblowing contacts, compliance audits and the outliers that habitual behaviour throws up. One retailer cut shrinkage by 15% with an awareness campaign.

More at the retail loss, safety and security hub.

The full conversation follows.

Measuring staff dishonesty prevention: Colin Peacock and Emmeline Taylor in conversation

COLIN:

Welcome to this edition of the Sell More and Lose Less podcast. This week we’re going to focus on staff dishonesty, and we’ve got Professor Emmeline Taylor joining us. We’re both going to try and struggle through this with our different colds.

And of course, I’ve got the very, very, very worst, and Emmeline’s is just a light one. The fact she’d been down for about five days in her bed doesn’t really count in my books.

Anyway, here we are, and we’re going to return to staff dishonesty. Now, we’ve done a lot of work at ECR on staff dishonesty, and we’ve looked at both the prevention side, through our work with the University of Loughborough and students, involving communications and advertising and talking about staff dishonesty. But we’ve also looked at the detection side, and we’ve done various deep dives, if you like, with retailers on exception-based reporting tools that might help to surface some of the potential incidents.

And we’ve learned some of the good and the bad and the ugly of those tools, and the limitations of those tools in a landscape of risk in retail that is ever expanding, with omnichannel, with self-checkouts and other risks. And we have put this podcast together really to bring together our thoughts and where we’re at, with a focus perhaps on the prevention side of things.

And so, I know you’ve taken some notes down to prepare for this, Emmeline. If you can get through it without sneezing and coughing, where are you at on some of this staff dishonesty? And perhaps, how might what you share instruct retailers listening to this podcast, thinking about what they could do next to change their approaches to staff dishonesty reduction?

Why only 2% of cases are caught, and why culture matters

EMMELINE:

Yeah, thanks, Colin. And let’s just flag the project that was published last year, The 98%. That was really about communicating that when you crunch the numbers of industry data on an international scale, we estimate that only 2% of internal dishonesty cases are identified and actioned. So what do you do about the other 98%?

And I guess the absolute key principle here is that this is about culture. It’s about having a staff culture that makes it feel risky or undesirable to commit any level of offence against your employer. Now, how do you do that?

And I guess from the call that we had, the ECR call last week, what really came through loud and clear to me is that whereas this once used to be an ad hoc campaign, periodically, “Oh, crikey, we seem to have a bit of an issue, let’s launch this big campaign about it”, that has now become business as usual. And so we’re seeing these campaigns and messaging being embedded in everyday practices, and there’s a real diversification across the industry in the different ways that employers are communicating to their staff.

So we heard about newsletters, screensavers on computers, posters in the staff room or the back of the loo. We had training in person or e-learning training. And this wasn’t just in the retail premises, it was in the distribution centres, in the warehouses.

And so for me, that was fundamentally the difference. It was actually embedding this into everyday practices that seems to now be the norm.

The store with no internal cases

COLIN:

Yeah, what was really interesting, there was a conversation that came up that said, yeah, we’re quite comfortable talking about staff dishonesty at our head office, when we’re working out how we’re going to reduce shrink: well, we must tackle staff dishonesty. But some of the retailers will say it’s a bit of a taboo subject to take it any further down, to actually talk about it in the stores.

And I think that’s what you’re saying: there do seem to be some retailers, definitely not all and definitely not the most, looking to create this dialogue. And I thought there was a really good example from one of the retailers where they were almost creating a sort of dashboard, a sort of league table, if you like, for stores.

And they were able to list out, per store, per region, how many internal cases they had generated and closed out. And that brings a new level of visibility to the problem. And perhaps when the store gets a visit from the district manager, and they’ve got no internal cases, whereas the average for all the other stores is seven cases a year, and they haven’t had one, you might start asking: well, why haven’t you got any cases?

EMMELINE:

Exactly. And it was so powerful, I think, how they flipped that, because you might think, oh gosh, we’re having 10 cases every few months, we’ve got a real problem. But actually, they were saying, no, the problem lies with the store that has no cases, because that in itself raises a few eyebrows. Is that really the case? Or is it the culture that has set in in that store that allows for staff dishonesty not to then be challenged or actioned? So I thought, yeah, that dashboard was very interesting, wasn’t it?

But in terms of that visibility, I thought this was fascinating. So there’s lots of tools that retailers are using behind the scenes to look for suspicious behaviour, look for those anomalies that might signal that somebody isn’t playing by the rules. We’ve got exception-based reporting, just as one example. But it was also about how do we use the eyes and ears of everyday employees? How do we raise that visibility?

And for me, this brought about the question of, well, what is suspicious behaviour? Now, of course, if we see somebody putting something in their bag and they’ve not paid for it, we all know that’s not right. But we talked about things like the empty packaging, or somebody behaving in a way that doesn’t seem to fit.

How do you then communicate to employees what this suspicious behaviour looks like, and then provide them with the means of reporting that, through these whistleblowing hotlines or emails, in a way that they feel empowered and supported? So for me, the idea of suspicion, and training staff to spot the signs as well, was really key.

Zero tolerance, trust and staff turnover

COLIN:

Yes, I remember one of the presentations we had from an Australian retailer, and they had the sort of “the standard you walk past is the standard that you set”. And they illustrated that with an empty can of Red Bull. And I think we saw on the call last week an example from a retailer that used, again, I think it was an empty Coke bottle, with “crime scene” written around it.

But you’re absolutely right. This whole thing with coffee stations in stores: these are areas where it’s sort of like, well, is it wrong to take a coffee? Well, I got here early. I need a Red Bull. Where does this whole line around zero tolerance fit in? And can there be zero tolerance?

I think the answer has to be yes, otherwise you’re in a very grey area.

EMMELINE:

It’s a slippery slope, isn’t it?

COLIN:

And that’s where it comes back to the culture. Is the store manager happy to have those conversations? I don’t suppose it’s finding the Red Bull and not telling anyone, but literally every week having that conversation around, “I keep on finding empty Red Bull or Coke bottles”, or “the coffee machine has unaccounted-for losses”. Those are difficult conversations.

It’s famous in retail that hardly anyone gets fired for staff dishonesty in December, because even if there are things, they’re still stacking shelves, and I need my shelves stacked at Christmas. So it’s very difficult. You’re trying to build a trusting relationship. At the same time, the business says zero tolerance. And we’ve heard it before from big retailers: they’re firing store managers of 30 years’ tenure for drinking a can of Red Bull and not getting a receipt for it.

EMMELINE:

It is. It’s really challenging. And I think, just picking up on your point there around walking that fine line in terms of ensuring you have trust: that your employees feel trusted, while having enough oversight to spot when things aren’t being done right.

The context, I mean, think about the UK. We’ve got 57% staff turnover in retail. So it’s really challenging to recruit and train. We’ve got an increasingly transient retail employee population. So to get that messaging, get that training in place and build that loyalty is really challenging, at the same time as having one eye on staff dishonesty.

And you mentioned Christmas: we’re just entering the Golden Quarter. We have a huge number of casual or temporary employees. How do you communicate to them, and ensure that you’re employing the right people, who are going to do the right thing? So yeah, really challenging.

Staff searches and the trust problem

COLIN:

Yes, I’m often intrigued by this Thruvision technology they have in distribution centres. And of course, there’s no way that could scale down to a small store, but the whole idea of searching staff, and how it’s really complicated by that trust piece.

Stores are encouraged to do staff searches. Again, they get the guard to do it, and it’s really awkward. The Thruvision, where it’s like an airport-style scanner, would be great. Who’s monitoring the exit of the stores at 10 o’clock at night when the store closes? It’s really, really hard.

EMMELINE:

It’s been grappled with a lot, hasn’t it? Do you do the randomised search? Do you do the “everybody gets searched”? There’s all these different approaches to try and maintain that feeling of trust while at the same time trying to weed out the bad guys. So yeah, maybe it is everybody, and we move away from this randomised approach.

The blind spot: why staff dishonesty is easy to ignore

COLIN:

It’s always quite interesting as well. I mean, the question around, well, why don’t you just pay everyone lots more money? And the fear of losing your job increases. Again, this is perhaps more anecdotal, but there is a sort of sense that if there’s more fear and consequence and sanction of losing your job, maybe staff dishonesty can improve, or reduce, I should say. So yeah, that was really very interesting indeed.

I don’t envy retailers trying to tackle this one, because I think it’s something that’s easy to ignore, because it’s easier to blame organised crime and prolific offenders and the supply chain, the bias for getting things wrong. It’s less easy to see this problem. And it’s perhaps the reason why it’s the sort of path less travelled in loss prevention.

And certainly we had some American retailers on the call the other day who just said, look, our company’s got a blind spot to this. And we had another one where they’re talking about the supply chain. In five years, they have about $200 million in the road every single day, in five years. And they’ve never had a single apprehension of a sort of member of staff being dishonest. So it is culture. It is difficult.

The reporting, to your point, I think, really helps bring the problem to life. I think that’s probably one of the biggest step changes I’ve seen, where you can then have a league table, if you like, but more importantly, just say: why are you not getting any internal cases? I like your point there.

Measuring staff dishonesty prevention: which interventions work

EMMELINE:

Yeah. And I think if we look back just a few years ago, the question was very much: what can we do about this? We’ve now moved on. We’re seeing lots of different ways, technological, humanistic, all these different ways that this is now being challenged, trying to persuade employees to be honest. I think where the dial is now shifting to is: how do we measure success? How do we know which of these interventions and which levers we can pull, and then measure that that actually made a difference?

Now, we heard some quite interesting ways that this was being done on the call. So some retailers measure the number of cases, as we’ve discussed. It might be the number of contacts to these whistleblowing email addresses or hotlines. It might be compliance audits. So across a range of different metrics: how many searches did you fulfil? Are you meeting your quota?

And key, I think, is always looking for those anomalies and those outliers, because typically, with humans, we tend to be quite habitual. We tend to act in the same way. So where you have these anomalies, that’s often the route that you need to follow to see when you’ve got an issue.

Yeah, I think looking at these indicators of success is where the industry now needs to move to.

COLIN:

And I think that was perhaps partly the inspiration behind the project we did with the University of Loughborough. We did learn from one retailer that was able to reduce their shrinkage by 15% through the introduction of an advertising campaign, if you like, an awareness campaign. That through their new remote CCTV monitoring station, they could see what was happening in stores. And the stores then found out, “Why’s Mary having an interview a week after they’d just gone onto the CCTV remote monitoring?”

So I think there is reason to believe that this could be for many retailers who might be listening to this podcast. If they made a concerted effort against this particular problem, they could find that they can make a double-digit impact on their shrink number, if they measure it and do everything that some of the best practices suggest you do. And posters and reporting seem to be a really good way to get into it.

But again, it’s tough, but it does go back to providing management with evidence of your work, and some metrics that can give management confidence that you as a team are embracing this strategy and working with the business. And that does require making some tough calls: firing people in December, perhaps, if they are.

A big prize for relatively little spend

EMMELINE:

Yeah, yeah, absolutely. But do you know, I think the prize is big in this space, and for, I would argue, relatively little expenditure. I mean, you might challenge me on that, but I think this is one of those areas where you can provide cultural change without having to invest massively in technologies, resources, things like that. This is about subtle nudging behaviours. And I think that can be done through posters, through screensavers. I don’t think that comes hugely expensive. So why not at least give it a go?

COLIN:

To your point, we’ve often, I think, in the world of loss prevention, believed that covert is best. Don’t tell people what you’re up to. Do all your exception-based reporting on the quiet, go out by exception and then have the conversation with those people.

But as we heard on the call, some people are going to be more overt: this is how many investigations we’ve got going in this many stores. In your store, why haven’t you got an investigation going on? What’s going on here? And so I think that move to being more overt and explicit in what we’re doing can play a role in prevention.

And that doesn’t cost a lot of money, to create a dashboard for your stores, to your point. And then everyone knows, and the store manager is then having a constant narrative when they see that their dots are the same as their other store managers’. So I think your point is very well made. For a relatively low amount of money, you can get a lot for your buck.

EMMELINE:

A lot of bang for your buck. Yeah.

COLIN:

That’s the word I was looking for. Yes. Well, look, we managed to go through this whole podcast without dying of flu or cold. Thank you very much indeed, Emmeline. It’s been a pleasure.

EMMELINE:

Thank you.

COLIN:

And thanks for getting all those notes together. And we’ll see you next time.

EMMELINE:

Brilliant. Thanks, Colin.

COLIN:

Thank you.