Reducing Internal Theft and Staff Dishonesty with Internal Comms

Reducing internal theft in retail is less about creating a world with zero dishonesty and more about how you use internal comms to deter theft –  without damaging trust.

Colin Peacock and Professor Emmeline Taylor recap an ECR session on staff dishonesty, including research suggesting the people who get caught may not reflect who is actually stealing.

They explore how targeted messaging, short “blitz” campaigns, and building an “impression of control” can deter low-level and organised internal theft when done carefully.

Cleaned transcript

Why reducing internal theft in retail is hard to talk about

COLIN:

This week I’m joined by Professor Emmeline Taylor.

Emmeline has done some outstanding work for ECR, most recently in the Fortress Stores Report.

This week we’re looking at internal staff dishonesty and the role that communications can play in reducing internal theft.

Afternoon Emmeline, how are you?

EMMELINE:

Hi Colin, I’m great, thank you.

How are you?

COLIN:

Very good.

Well, I seem to see you now more on the TV or on the radio or in the newspapers these days than in person.

EMMELINE:

I know.

I’m sorry about that.

COLIN:

Yes, you’re a little media superstar.

But yeah, that’s great.

Some great messages you’re putting out there, so thank you for that.

We had a session on internal theft a couple of weeks ago now.

We had 43 retailers show up on it.

Our focus was less about how you create a company where you have no internal theft, and more about strategies around communication and whether you communicate and advertise the risk of being caught.

There are nuances around target audience, and the cultural niceties of organisations.

We also have in mind that we might do a project with some marketing students and unleash some of their creativity.

I’m keen to hear what your notes were, what you took away from the meeting, and what might be actionable points for retailers to sit down and think about.

We started off with a really great presentation from a retailer who had been an academic and written his thesis on internal theft and the advertising of it, the risks of it anyway.

What the research suggested about who steals and who gets caught

EMMELINE:

It was a really interesting session, and I’m not surprised the feedback was so positive because there were so many actionable points being shared around what businesses are doing when they know, or when they uncover, a particular theft issue internally.

It couldn’t be more timely because we’re beginning to see more focus on staff honesty.

As you and I know, customer theft and internal theft usually vie for the top spot in terms of which contributes the highest proportion to a business’s loss.

The presentation started to drill down into what could be contributing towards staff dishonesty.

It’s a really hard area to research, because quite often somebody who’s committed theft might be dismissed and no further action taken.

So we lose visibility of who they were and why they did it.

The overview of the research we were given used a clever methodology.

It asked employees not about their own behaviour, but about their colleagues: who do you think within the business is committing internal theft?

That threw up some interesting things, and arguably the opposite of what we might presume.

From these surveys, people believed it was members of staff who’d been in the job for longer and perhaps were older who were more likely to be committing dishonest acts.

And actually, it’s the young people who tend to get caught.

That doesn’t necessarily mean they reflect those that are actually committing offences.

The speaker talked about how we probably know about five percent of individuals.

Trying to construct a response based on five percent is problematic because you won’t be speaking to the vast majority.

Communication strategies for reducing internal theft in retail

EMMELINE:

There was a lot of talk about what can encourage and discourage staff to commit offences, and sometimes there’s overlap there as well.

If we’re thinking about organisational factors rather than personal circumstances, it can be culture.

It’s hard to pinpoint what culture means, but one that might support staff dishonesty could be encouraging it, giving a sense that everybody’s doing it, and not having good inventory, good systems, good supervision.

On the flip side, factors that discourage include workplace norms that show a heightened level of risk.

There’s close monitoring, and there are other staff members who are likely to blow the whistle if they become aware of staff dishonesty.

Through the discussion we encapsulated this as the impression of control.

That was a nice way of capturing all the processes and management styles that give staff the view that this is high risk and the likelihood is that you will be caught.

We also talked about an advertising campaign, and it would be interesting to trial in different businesses.

Morality vs punishment messaging for reducing internal theft in retail

EMMELINE:

There was discussion about whether an advertising campaign should appeal to somebody’s morality.

Going back to those findings, if it’s people who’ve been in the job for longer who may have learned the systems, or found a vulnerability they’re going to exploit, then what might deter them could be messaging like: imagine what your family would think.

You might also have social norms where you don’t want to be classed as an offender.

What might appeal to a different cohort could be different messaging, more around punishments.

That idea of an advertising campaign appealing to different motivations is really important.

Do we go for the fear factor, or do we appeal to somebody’s sense of morality and their social status?

I liked the language around “is it worth it?”, particularly for low-level theft like stealing a sandwich.

Appealing to whether it’s worth losing your job over, or how people might view you, seemed to have effective outcomes.

COLIN:

The numbers on the losses of sandwiches — I think they saw a 25% reduction in losses of sandwiches.

And the speaker alluded to double digit improvements in losses as a consequence of this advertising programme, which is highly impressive.

It has to be carefully thought through because what you don’t want to do is point the finger at hard-working, honest staff and create a view of surveillance and suspicion, that everybody is a potential thief.

That’s not good for staff morale, particularly when it’s difficult to recruit and retain staff.

So the key to any successful campaign is conveying that we’re talking to everybody, but we’re not pointing the finger at everybody.

Blitz campaigns for reducing internal theft in retail

COLIN:

We heard about one retailer that was really concerned about doing this, and they thought maybe they could get away with a blitz — an eight week blitz.

Not every day of the year, but still getting the balance right.

It does require careful thought.

It’s within the gift of every retailer to go to their marketing department and say: how would you figure out who the personas are in our organisation that we need to target?

What could those messages be, and what could the media be?

We heard about the power of the back of a loo — apparently the best place to advertise is the back of a toilet door.

Advertising campaigns can become wallpaper and you don’t notice them anymore.

A blitz is right, particularly when you know you’ve got a hotspot of activity and you want to give those messages.

EMMELINE:

In evaluations we talk about the honeymoon period.

You have an impact very quickly when something is initially launched and then it begins to tail off.

You stop the campaign and have a break from it, because otherwise the messaging is lost.

COLIN:

We heard about a retailer that launched a new remote monitoring service, and it was able to be paid for by the impact on shrink.

We heard another retailer say they were about to declare a store into the most at risk measures.

Before they made any intervention, or even visited the store, there’d been a change — the store realised they were under the microscope.

We’ve got clues that, done the right way, in the right form, at the right frequency, advertising and communicating the risk could play a role.

EMMELINE:

There was a study in Australia — I think it was the institute of criminology — where they used an honesty box with chocolates as a donation experiment.

People were taking the candy without giving the donation.

They put a pair of eyes above the honesty box, and found that people were more willing to pay for what they were taking.

That psychology of feeling like you’re being watched — that impression of control — even if there’s no actual consequence behind it, speaks volumes about what some of these campaigns could achieve.

COLIN:

That’s a great way to end, and it underlines the message that advertising could work if done well.

Next research on staff dishonesty and supply chain theft

COLIN:

You’re going to hopefully do some research towards the back end of the year with us at ECR Retail Loss.

Tell me a bit about what you want that research to go after and explore.

EMMELINE:

I’m really excited about this because it’s growing in importance and moving up the agenda.

We’ll look at levels of staff dishonesty, drilling into who does it and why they do it.

I remember a previous study decades ago about honest members of staff becoming dishonest, looking at the trigger point.

It could be personal life issues, financial difficulties, or being denied a promotion and becoming disgruntled and then defrauding the business.

I think there’s a shift in the offender profile now.

We’re seeing more individuals target the retail supply chain with a view to steal.

That’s different from going from honest to dishonest.

We’ve got people with ill intentions managing to get jobs and then committing theft at scale.

How do you notice that behaviour before you employ them, and if not, how do you spot it very quickly?

Then what action should you take?

There’s a huge exploratory piece around staff dishonesty and digging deep into it.

I’m looking forward to launching that, hopefully within a few months.

COLIN:

The retail context has changed so much since the last time ECR looked at it, which I think goes back to 2004.

We’ve now got buy online pick up in store, and fulfilment centres rich with opportunity for theft.

Perhaps a more external risk has grown, and maybe even the sanctions are different between stealing from a shop versus stealing from a distribution centre.

Very interesting.

Thank you so much for your time and for the recap.

Hopefully there’s lots for people to go after here, and we’ll see you next time.

EMMELINE:

Brilliant.

Thanks, Colin.

See you soon.