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Posts from the ‘Commentary’ Category

22
Mar

IBM Pays $10 Million to Settle FCPA Case

IBM has agreed to pay a settlement of $10 million to settle civil charges that it bribed Chinese and South Korean government officials to obtain computer equipment contracts.  The The Wall Street Journal that the SEC is suing the company over cash bribes that violate provisions of the Foreign Corrupt Practices Act (FCPA).  IBM did not admit to wrongdoing, but did say it has higher ethical standards for its employees and had taken “appropriate remedial action,” according to the WSJ report.

The SEC’s suit accuses employees in the South Korea offices of the tech giant of paying government officials $207,000 and providing travel, entertainment, and gifts of cameras and laptops in exchange for a contract to supply PCs and mainframes to the government.  The SEC complaint also alleges that more than 100 employees and two top officials of IBM in China paid for the vacations of Chinese government representatives, through slush funds established at travel agencies.

This case raises the issue of how difficult it is to make your corporate ethics statement a reality around the world.  It is almost certain that IBM maintained a code of ethics that would prevent this type of behavior but this did not prevent “widespread” bribery involving over 100 employees.  PCG Global now offers FCPA/Ethics training targeted directly to front-line employees who have to make decisions about bribes, ethics, and corruption in their normal course of work without direct supervision.  Contact us to find out how we can customize and deliver this training to your organization in your most critical areas of operation.

21
Mar

How Leaders Create and Use Networks

“Networking” is a term that gets abused, misused, and is often misunderstood.  But, networking, when done right and with purpose, can be a key business skill.  “How Leaders Create and Use Networks” is a good piece on this from Harvard Business Review.  In this article, three types of networking are identified – Operational, Personal, and Strategic.  There were a couple of lines in there that I really liked…first, in regards to personal networking:

“We observed that once aspring leaders..awaken to the dangers of of an excessively internal focus, they begin to seek kindred spirits outside their organizations.  Simultaneously, they become aware of the limitations of their social skills, such as a lack of knowledge about professional domains beyond their own, which makes it difficult for them to find common ground with people outside their usual circles.”

“Many of the managers we study question why they should spend precious time on an activity so indirectly related to the work at hand.  Why widen one’s circle of casual acquantances when there isn’t time even for urgent tasks?  The answer is that these contacts provide important referrals, information, and, often, development support such as coaching and mentoring.”

Second, in regards to the mindset of many managers:

“..we often hear, ‘That’s all well and good, but I already have a day job.’  Others..consider working through networks a way to rely on ‘whom you know’ rather than ‘what you know’ – a hypocritical, even unethical way to get things done.  Whatever the reason, when aspiring leaders do not believe that networking is one of the most important requirements of their new jobs, they will not allocate enough time and effort to see it pay off.”

How do you view networking?  Is it a “dirty word” or an essential business skill?

14
Mar

Guest Blog: Eric White on Supply Chain Security

Supply Chain Security: Vulnerabilities and Loss-Combating Measures Retailers Can Take

The retail supply chain is subject to great vulnerability when it comes to potential losses.  The risks are obvious: goods being transported across and even between countries, changing hands several times.  Due to the large volume of goods, it is simply impossible to check every container and pallet of goods.  Over long periods of time, items are loaded and unloaded at several different locations, increasing the likelihood of damage.  All of these conditions increase the risk of loss to the retailer. 

To complicate matters more, there is no single supply chain configuration across retail.  Large retailers may have regional warehouses, distribution centers and corporate-owned truck fleets, whereas small retailers may rely exclusively on direct store deliveries (DSD) by vendors.  The risks in each of these situations are different and require targeted solutions.  Top concerns include physical security – as forklifts and high stacks of heavy inventory can cause accidents –  the security and integrity of merchandise during transport, proper receipt and verification of the right kind and amount of product at the store, and the oversight of vendor visits to prevent theft and/or administrative errors.

Retailers must take decisive steps to prevent potentially crippling losses that occur before the merchandise even reaches the store shelves.  The following are some strategic ways that retailers can help prevent supply chain losses.

Create processes

Building processes that impose consistent verification and corrective action is one of the most effective ways to battle losses occurring in the supply chain.  By narrowing the window of opportunity for purposeful or inadvertent losses to occur, retailers successfully reduce their risk and identify “red flags” before significant losses result.  For example, by having a merchandise receiving process by which particular employees are assigned and trained to manage the receipt of deliveries and compare item or pallet counts with invoices, there is a greatly reduced opportunity for losses associated with incorrect amounts or types of goods received. 

Verify those processes

It’s not enough to just put processes in place, but critical to continually monitor them for consistent implementation and proper execution.  A combination of regular and unannounced audits is a great way for retailers to determine with certainty whether or not recommended processes are being implemented properly throughout all locations.  Audits should be designed, not only to verify proper implementation, but to help pinpoint the root causes of problems in the supply chain.  When audits indicate a process failure, retailers can take action by assigning immediate follow-up tasks and notifying key players within the organization about problems that require further investigation.  Taking immediate action based on audit results is important to inciting change. 

Video surveillance provides another great way to verify that employees are properly trained and following-through with recommended procedures.  Without constant verification, processes may be little more than symbolic gestures on paper.

Control what you can

Another good strategy is for retailers to determine if there are parts of the supply chain management process that can or should be brought in-house or outsourced to prevent losses.  For example, by centralizing shipments to a warehouse, stores can receive complete loads, avoiding confusion that frequently occurs with the unloading of trucks that contain shipments for multiple destinations.  By ordering larger shipments to supply more stores, retailers benefit from larger volume orders, bigger discounts and less hassle.  In addition, if they use their own trucks to deliver items from the warehouse to the stores, they can potentially reduce risk of loss due to theft. 

Hiring a separate LP team to manage supply chain risk and losses could also be a good move.  Since the problems associated with supply chains are somewhat unique, they require dedicated solutions and resources to ensure product integrity until it reaches its place on the store shelf. The real key is to provide visibility into the problems.

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We are pleased to feature this guest blog by Eric White from Wren Solutions.  Eric has over 20 years of experience in our industry and currently serves director of retail strategy for Wren.  White maintains his regular blog at http://www.wrensolutions.com/LPXtra_blog/ and can be reached via email at eric.white@wrensolutions.com.

11
Mar

Ikea Halts Expansion in Russia due to Corruption

Ikea, the world’s biggest home-furnishings retailer, has been held up over the past few years as the model of a company that has opened in Russia while refusing to compromise their corporate standards on bribery and standards.  But, apparently they’ve had enough.  The company says it won’t build more stores outside the Moscow region until local officials stop withholding permission for two of their outlets due to Ikea’s refusal to pay bribes to safey inspectors.

Ikea’s experience is not unique.  Carrefour, Wal-mart, Royal Dutch Shell, and Nestle SA have all faced trumped up government regulation according to the National Anti-Corruption Committee, a NGO based in Moscow.  To read more, find the Bloomberg article here.

25
Feb

Fraud/Corruption Continues in the Spotlight

It seems as if there is no end to high profile fraud and corruption cases in the news.  In the past couple of weeks, we’ve seen the two senior executives at China’s leading e-commerce site, Alibaba, resign due to pervasive fraud on their site and the former Security Director for Rooms to Go charged in a major kickback scheme by federal prosecutors.

In addition to the direct losses caused by these types of frauds, organizations face business disruption, bad publicity, and, in the case of U.S. organizations, potential Sarbannes-Oxley issues or FCPA compliance liability if the fraud or kickback involves government officials.  While this has typically been the domain of the finance or internal audit group, the Loss Prevention/Asset Protection function may have a role to play.  This topic certainly merits a conversation with your organization’s CFO to discuss how your function can support and assist on this important topic.

26
Jan

Guest Post on LPI Blog

Yesterday, LP Innovations published a guest column from me on their blog at titled “Loss Prevention as Management Science.”  In this post,  I argue that we need to do a better job, as an industry, of helping senior management understand that shrink results can be influenced by certain practices, routines, and activities that are largely within our control.

Senior management needs to view us as experts in what those tactics and techniques are and how they are best implemented within the context of a specific organization and culture.  This is in contrast to be viewed simply as “fixers” who can catch shoplifters, gain admissions from dishonest employees, and respond when a store manager breaks a key off in the front door.  Yes, those are things we do, but they do not encompass our mission or impact on the organization’s financial results.

As always, I would welcome your comments, disagreements, or thoughts…

19
Jan

Guest Blog: Eric White on “Making the Most of Retail Audits”

Getting Ready for 2011: Tips for Making the Most of Retail Audits

In order to prioritize 2011 retail initiatives, both LP and operations professionals must have current insights into what is going on across the organization.  With stores located in different states, regions or even countries, managers need to consider that each retail location faces different operational challenges, management strengths and weaknesses and economic and demographic environments.  These distinct circumstances make it nearly impossible for all stores to execute in exactly the same way. 

Yet for LP professionals working at the corporate or regional level, it can be difficult to obtain a clear view of what is happening at each individual location and the variance in execution.  In some organizations, managers may rely on word of mouth, conversations, and other informal communications, which provide neither a clear basis for comparison nor a comprehensive view of the situation.   

Most retailers conduct audits in an attempt to measure and compare consistency and compliance across stores.  While employed to some extent by almost all retailers, in many cases these audits are inefficient, ineffective and oftentimes extremely burdensome.  Some retailers use audits consistently to monitor highly regulated issues such as food safety and fire codes, but in areas like operations, marketing and security, retailers are not as committed to audits.  Other retailers effectively issue audits, but then fail to systematically follow-up on issues identified. 

In the year ahead, there is potential to use audits to monitor processes for improved insights and performance across the entire retail organization, but only if they are designed and executed well. This is not as simple as it may seem, as there are many potential pitfalls in audit design, issuance and follow-up.  Here are some tips for getting it right.

Simplify, simplify, simplify – Among the most common mistakes is making audit questionnaires too complex.  Multi-part questions force respondents to make a judgment call as to whether they should answer “yes” or “no” when the answers vary for different parts of the question.  Complicated questions that can be interpreted in a variety of ways also inhibit the effectiveness of the audit and can generate inconsistency of results due to variation in interpretation.  It’s best to ask simple, one-part questions that can be definitively answered with either a “yes” or “no.”

Design in coordination – Smaller, more frequent audits should be designed in coordination with larger, more comprehensive audits.  This serves to avoid contradictions in messaging and also to ensure that all activities are moving toward the same finish line.  The smaller, more frequent audits should align with a retailer’s more comprehensive, less frequent audits.  Meaning that if stores can and do pass the small audits, they should be well on their way to being able to complete the larger audit.

Ask the right things – Audits must be relatively short and manageable to impose minimal burden on the auditors and encourage them to participate in a timely manner.  In order to effectively collect the information needed about the great expanse of areas to be evaluated, it is important to focus questions around aspects of the process that may be broken.  For example, don’t ask “Are returns being processed correctly?”  Corporate already knows that returns are causing great problems in the store.  Instead, ask a series of probing questions such as “Are broken or faulty items that are returned being shipped back to the manufacturer within 5 days?” and “Are all returns processed with a receipt?”  The answers to these questions will help determine whether it is a problem with vendor warranties or return policies or if returns are simply being processed incorrectly without a receipt.

Practice immediate follow-up – Audits are a valuable tool because they indicate discrepancies in performance and areas that need to be addressed.  Retailers lose the value of audits if they fail to immediately follow-up by assigning tasks, opening investigations or sharing issues.  Retailers should identify tools and processes to assign immediate follow-up on issues after an audit.

With these tips in mind, retailers can ensure that their audits deliver meaningful information and serve as a catalyst for action.  From prioritizing risks that should be mitigated by loss prevention to identifying operational issues that need to be addressed, the effective use and follow-up of audits can position retailers to maximize their time and resources for the benefit of the company.

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We are pleased to feature this guest blog by Eric White from Wren Solutions.  Eric has over 20 years of experience in our industry and currently serves director of retail strategy for Wren.  White maintains his regular blog at http://www.wrensolutions.com/LPXtra_blog/ and can be reached via email at eric.white@wrensolutions.com.

18
Jan

Is E-commerce Lowering Your Shrinkage?

An industry colleague recently asked me if, perhaps, retailers might be lowering shrinkage rates, in part, by the growth of their e-commerce business.  It is not really a question that had come to my mind, but I think it is an interesting topic for discussion.  I’ve outlined his thought process below and would be interested in hearing some responses from our readers.

Most retailers have now branched into e-commerce, some in a significant way and others are just testing the water, and e-commerce transactions represent about 4% of retail sales in the U.S. according to recent government figures.  While e-commerce certainly has to deal with fraud, most e-commerce business is set up in such a manner that there is very little, if any, shrinkage in a traditional sense.  Retail organizations typically account for fraud, such as credit card fraud, on a separate line in their P&L.

Therefore, if e-commerce sales are being including in total company sales and yet they contribute little, if any, shrinkage dollars, does that understate shrinkage – at least in terms of comparison to historical data?  Could this be part of the drop we are seeing in shrinkage in the National Retail Security Survey results of the past couple of years?

What are your thoughts?

14
Jan

Lessons from Latin America

I’ve spent the past few days visiting retail operations in Colombia with a client and was struck by the advantages of the staffing model here in this country and other countries in Latin America (LATAM).  While the model here is not likely to be adopted by retailers in the U.S., perhaps there are some good reminders and lessons.

Whereas in the United States where we have a mish-mash of employees working wildly divergent schedules, hours, and days, retail stores here are typically staffed with full-time employees who work six 8-hour days and make this their career.  In addition, approximately half of them work the first shift and the other half the second shift.  Staff turnover can run as little as 5% annually or less!

Think of the advantages of this model when it comes to commitment, product knowledge, workplace safety, loss prevention, human resources and the like.  Employees in this model “own” their part of the store and their responsibilities.  It is relatively easy to get a consistent message to all employees at the same time.  And, the stores we visited showed this through their merchandising standards, their employee engagement, and product knowledge.

Of course, it is easy to argue why this might not be practical in the U.S. or in similar markets, but it is a stark reminder to the challenges faced when trying to get consistent execution while managing part-time employees who might work as little as 8-10 hours in the week and where turnover can run over 100% annually.  In the U.S. model, how do you even reach your employees much less get them engaged?

This, of course, is the challenge my firm accepts when we work with our clients on their communication strategies and training programs.  Please let us know if you want to find out more about how we can help.

4
Jan

What Are Your Priorities for 2011?

As I was cleaning out some files last week, I ran across an article I had saved from the January 2007 Harvard Business Review titled, “What to Ask the Person in the Mirror,” by Robert S. Kaplan.  The sub-head for the article is “There comes a point in your career when the best way to figure out how you’re doing is to step back and ask yourself a few questions.  Having all the answers is less important than knowing what to ask.”  Kaplan goes on to list seven areas where you should ask yourself some questions to make sure you are on track with your performance.

It is a very good article through and through but one pull-quote particularly caught my eye – “The fact is, having 15 priorities is the same as having none at all.”  Wow, what a great way to sum up a major problem for individuals, managers, and organizations.  One of the biggest challenges we find in working with large organizations on their training programs is the inability to prioritize the most important issues.  Instead, there seems to be a tendency to try and include every issue, policy, or exception that may possibly occur during their entire working career in one training program – and it is usually given to them on their first or second day of employment!

Every individual faces the same challenge.  Wouldn’t it be better for you to focus on three or four top priorities in 2011 and ensure you get those accomplished than to focus on 15, 20, or more and fail at all of them?  A summary of all seven areas that Kaplan suggests you interrogate yourself on can be found here, but I’d suggest a read through this entire article that can be purchased here.

30
Dec

Repost: New Year’s Resolutions for 2010

As we come to the close of 2010, I have reposted below the resolutions I posted for this year for our industry in 2010 exactly one year ago today.  I think most of them still apply today for 2011…Your thoughts?

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As we come upon the new year, I thought I might humbly suggest some resolutions for the retail loss prevention industry for 2010.  I’m sure some of them will be controversial but they are all made in the spirit of moving our industry forward.  Please feel free to comment.

#1 – Don’t make numbers up

In our quest to quantify what we do, let’s be careful about simply pulling numbers out of thin air or estimating numbers and presenting them as fact.  In fact, there are several parts of our business where we simply don’t have accurate numbers.  Let’s strive to change that fact, not make up facts.

#2 – Don’t make the case for loss prevention by acting like Chicken Little

The primary message I have gleaned from news articles about retail loss prevention during this past year is that things are really bad.  I mean, historically bad.  We’re talking drastically bad.  ORC gangs are hitting all the malls, shoplifting is up because of the economy, on-line auction sites are siphoning millions, if not billions, of dollars via fenced and counterfeit goods, there are no laws on the books that help us address these issues, retail theft is funding terrorism, our budgets have been cut, senior loss prevention positions are being eliminated, cats and dogs are living together…wait, that last one was actually from the movie Ghostbusters

And, as a result, what has happened to shrinkage?  Well, if you believe the numbers in the National Retail Security Survey (see resolution #1 above), retail shrinkage in the U.S. came in at its second lowest level in the 17 or so years the survey has been done.  I say kudos to all the practitioners in our business who have continued to improve the way we do our business, who have leveraged technology, and have evolved their approach and response to the emerging threats listed above.

#3 – Demand that our industry associations fund research and education

I like our industry associations.  I participate in several of them.  I think they are well-intentioned and have expanded what they do for our industry over the past 15 years.  The staff members of the associations are hard working, helpful, and eager to serve the industry.  Their advisory boards are comprised of individuals who give a broad representation of the retail industry.  But, the one area where I think they need to step up is in the area of funding research and education in our industry.  The lack of rigorous study and research in our industry is largely the reason that we need resolutions one and two above.

There are models for how this could work and it does not have to be difficult.  The Europeans, working through the ECR framework, have figured out how to do this effectively with the process being driven by the retailers.  I don’t see any reason this can’t happen in the U.S.  However, this will only happen if practitioners demand it.  When I look at other large professional and trade organizations, they typically have more robust offerings to their membership in this regard.

#4 – Don’t create a new name for what we do

Retail security, loss prevention, assets protection, profit protection… I really don’t care what we call our industry (I know there are some that care passionately about it), but I do know that having multiple terminologies and nomenclature does not help others understand our profession.  Look at established professions like medicine, finance, IT, HR, and others.  By and large, they have established consistent labels for positions within their industry.  There is a clear distinction in medicine between a doctor, a physician’s assistant, a registered nurse, etc.  In finance, there is a clear distinction between a bookkeeper and a CPA.  I don’t hold illusions that we are going to reach consensus in 2010, but hope we don’t have more diffusion.

29
Nov

Economic Crime Goes Up in Recession?

In the October issue of Security Management magazine, there is yet another article, “Corporate Crime in Hard Times,” that tries to tie an increase in business crime to the economic downturn despite decreases in violence and property crime over the same period.  As is the case with most of these types of articles, they rely on whether crime is occurring during the period (e.g. “35 percent of American companies said they had been the victim of at least one significant economic crime from August 2008 through July 2009”) and perceptions of executives (e.g. “..the majority of U.S. executives (53 percent), perceived that the most likely reason for their increased risk of fraud could be attributed to increased pressure during these difficult economic conditions”).

Everytime we go into an economic downturn, I know to expect calls from newspaper reporters and TV producers wanting me to say that there will be more theft from both shoplifters and employees due to increased financial need.  Of course, I refuse because there is no way that we can know whether this occurs since we don’t have measurements to this very issue.  As for theory, there are some research studies that suggest employees are less likely to participate in workplace deviance when it is harder to replace their job such as is the case when unemployment is higher.

Still, the article does make some excellent points about the importance of employee awareness programs and internal hotlines in combating internal fraud.  Also, there are quite a few references to the PriceWaterhouseCooper’s Global Economic Crime Survey.

5
Oct

National Retail Security Survey – 2009

The final report for the 2009 National Retail Security Survey has been published.  As previewed at this year’s NRF Loss Prevention Conference, the shrink results from this report are tied at an all-time low of 1.44% of sales.  Despite the “sky is falling” mentality reflected in many articles and press releases over the past year and a half, retailers are actually seeing a decrease in shrinakge.  This mirrors what I’ve been hearing from loss prevention executives across the retail spectrum and what I predicted in our NRF panel this year the day before Dr. Hollinger released his preliminary report.

The last three years of this report reflect three lowest shrink figures in the eighteen years of this study.  Maybe it is time we start to celebrate some of the success we are seeing in our industry and take some of the credit?  What do you think?

27
Aug

New Videocast Series – Retail Solutions Online

We’ve recently started a videocast series at www.retailsolutions.com to highlight key factors that affect performance, how organizations sometimes confuse the issue and focus on the wrong thing, and how managers can work to identify key performance levers that will actually result in desired business outcomes.  The first videocast focuses on the difference between “awareness” and “peformance” and can be found here.

7
Apr

Incentives & Disincentives: Will They Affect Performance?

At last year’s RILA Loss Prevention conference in Orlando, I presented a general session where we talked about the various performance “levers” that exist and how they can be used more effectively.  There is a tendency for managers to push on the same one or two levers over and over again, even if they are not the ones that will have the most impact on performance.

In a previous posting (August 31, 2009), we discussed task clarification in some further detail.  In this post, we’ll look at one of the most commonly used performance management techniques – incentives.  We’ll also look at the intertwined issue of disincentives.

Incentives are such a strong part of management history that we have numerous idioms and sayings about them, such as “You can catch more flies with honey than vinegar” and the oft-used “carrot or the stick.”  According to one study, over 75% of American corporations use some type of incentive scheme ranging from stock options to “Employee of the Month” awards to piecework pay for factory workers.  In fact, they are so pervasive that we often take their effectiveness for granted.

As a result, when there is a performance gap in the workplace, we often turn first to the idea of providing incentives – a reward for the desired performance – or disincentives – a punishment if the desired performance is not achieved.  However, there are many “levers” of performance and incentives will only work if the causal issue for the performance gap is related to motivation.

Here are some examples of when incentives will not be effective in changing performance: 

  • The employee does not have the capacity to perform the desired objective
  • The employee does not have the knowledge or skill to perform
  • The employee does not have the needed materials, tools, or resources
  • When other incentives are more important than the one you are offering
  • When disincentives outweigh the incentives offered
  • When the incentives offered are not actually tied to the desired performance
  • When the incentive scheme incorporates too many different performance objectives
  • When the incentive scheme is so complicated that an employee cannot determine the link between their performance and obtainment of the reward

In fact, there is not even universal agreement that incentives actually work in the first place.  Writing in the September-October 1993 issue of Harvard Business Review, author Alfie Kohn, argues that, at best, reward programs produce temporary compliance.    But, when it comes to productivity, he cites over two dozen studies that “have conclusively shown that people who expect to receive a reward for completing a task or for doing that task successfully simply do not perform as well as those who expect no reward at all.”

Additionally, poorly designed incentives can backfire and produce undesired results.  In his book The Only Thing That Matters, Karl Albrecht describes watching an employee at a call center picking up a ringing phone and simply hanging it back up without talking to the caller.  When asked about it, the employee said they were measured and rewarded on answering the phone within 3 rings.

Shortly after starting as the Director of Loss Prevention for a retailer a number of years ago, I inquired about the dramatic drop in check write-off losses for the current year versus the previous year.  What I found is that the previous year’s write-off was the worst in company history and, as a result, the Senior Vice-President of Operations had sent out a memo to all management and all stores that this problem must be addressed and the financial results brought in line.

But, what we also found out was that check tender sales were way down and we were receiving a number of complaints from customers.  It seems that many store management teams, in their effort to address the check write-off issue, were simply refusing to take checks unless they could call the bank to verify funds were available.  At night, customers were sometimes being told, “If you have the money in your account, go to the ATM across the street and get the cash.”

You can imagine the impact these practices had on productivity, customer service, and, ultimately, on sales.  Clearly, these were not the results the Operations head had intended.

Alternatively, Nicole DeHoratius and Ananth Raman published a study in 2007 that showed how changing a store manager’s incentive in a retail setting can affect their attention towards shrinkage and loss prevention.  In the studied retailer, the company changed the emphasis of the store manager compensation plan to increase the weight given towards sales, thus decreasing the emphasis on the prevention of inventory shrinkage.  As most of us might expect, the company saw an increase in both sales and shrinkage.

Clearly, I’m not arguing that there is no place for incentives in the workplace.  Rather, when evaluating how you achieve desired performance, a careful analysis must be done that examines all the factors that influence performance.  Simply dangling a “carrot” or threatening the “stick” in isolation will probably not produce the lasting results you desire.

As always, I welcome your comment, disagreement, and dialogue.

11
Feb

The Top 5 Mistakes of Privacy Awareness Programs

While this article specifically discusses “Privacy Awareness” programs, the points made are applicable to loss prevention, shrink, and safety campaigns.  In working with companies on training and awareness campaigns, we have come into organizations and found they were previously falling into many of these traps.  We especially think that problems #2 and #3 on this list are worth considering:

  • #2 – Equating “campaign” with “program”
  • #3 – Equating “awareness” with “training”

For a training & awareness campaign to be successful and produce results, it has to be well thought out and not simply a checkbox that is ticked off.  You can read the full article here.

30
Dec

New Year’s Resolutions for Retail Loss Prevention

As we come upon the new year, I thought I might humbly suggest some resolutions for the retail loss prevention industry for 2010.  I’m sure some of them will be controversial but they are all made in the spirit of moving our industry forward.  Please feel free to comment.

#1 – Don’t make numbers up

In our quest to quantify what we do, let’s be careful about simply pulling numbers out of thin air or estimating numbers and presenting them as fact.  In fact, there are several parts of our business where we simply don’t have accurate numbers.  Let’s strive to change that fact, not make up facts.

#2 – Don’t make the case for loss prevention by acting like Chicken Little

The primary message I have gleaned from news articles about retail loss prevention during this past year is that things are really bad.  I mean, historically bad.  We’re talking drastically bad.  ORC gangs are hitting all the malls, shoplifting is up because of the economy, on-line auction sites are siphoning millions, if not billions, of dollars via fenced and counterfeit goods, there are no laws on the books that help us address these issues, retail theft is funding terrorism, our budgets have been cut, senior loss prevention positions are being eliminated, cats and dogs are living together…wait, that last one was actually from the movie Ghostbusters

And, as a result, what has happened to shrinkage?  Well, if you believe the numbers in the National Retail Security Survey (see resolution #1 above), retail shrinkage in the U.S. came in at its second lowest level in the 17 or so years the survey has been done.  I say kudos to all the practitioners in our business who have continued to improve the way we do our business, who have leveraged technology, and have evolved their approach and response to the emerging threats listed above.

#3 – Demand that our industry associations fund research and education

I like our industry associations.  I participate in several of them.  I think they are well-intentioned and have expanded what they do for our industry over the past 15 years.  The staff members of the associations are hard working, helpful, and eager to serve the industry.  Their advisory boards are comprised of individuals who give a broad representation of the retail industry.  But, the one area where I think they need to step up is in the area of funding research and education in our industry.  The lack of rigorous study and research in our industry is largely the reason that we need resolutions one and two above.

There are models for how this could work and it does not have to be difficult.  The Europeans, working through the ECR framework, have figured out how to do this effectively with the process being driven by the retailers.  I don’t see any reason this can’t happen in the U.S.  However, this will only happen if practitioners demand it.  When I look at other large professional and trade organizations, they typically have more robust offerings to their membership in this regard.

#4 – Don’t create a new name for what we do

Retail security, loss prevention, assets protection, profit protection… I really don’t care what we call our industry (I know there are some that care passionately about it), but I do know that having multiple terminologies and nomenclature does not help others understand our profession.  Look at established professions like medicine, finance, IT, HR, and others.  By and large, they have established consistent labels for positions within their industry.  There is a clear distinction in medicine between a doctor, a physician’s assistant, a registered nurse, etc.  In finance, there is a clear distinction between a bookkeeper and a CPA.  I don’t hold illusions that we are going to reach consensus in 2010, but hope we don’t have more diffusion.

28
Oct

The 3 Habits of Highly Irritating Management Gurus

This article takes a critical look at the business self-help genre and its visible “gurus.”  According to the article, these writers tend to have three characteristics in common. Lousy leadership “gurus” are marked by a tendency to overstate the newness of their ideas, a fondness for naming “model” companies and a willingness to market various “tools” that purport to reduce leadership to a few easy steps. “If management could indeed be reduced to a few simple principles, then we would have no need for management thinkers,” the author writes.

While I would not dismiss their work out of hand, as this article does, it is an interesting phenomonen that business leaders flock to the same well-worn management principles time after time after time.  It seems there is serious money to be made by taking a timeless principle and using a new metaphor.  The more simplistic you make it, the better.  If you write it as a parable (think Who Moved My Cheese) that is the best!  Perhaps that is why you can find legions of folks who have read The One-Minute Manager but hardly a soul who has read Drucker’s The Effective Executive or The Practice of Management

Read the full article at The Economist.

16
Oct

Employee Theft Attitudes: A Disconnect with Management

After posting Lencioni’s column yesterday, I went back and reviewed some notes from a presentation I saw a couple of years ago in London by Martin Gill, one of the leading researchers in the area of loss prevention and security.  In this presentation, Gill was presenting the findings his firm, Perpetuity Group, found from offender interviews they had conducted.

When interviewed after the fact, employees who had been caught stealing from their employers typically had a “positive” or “very positive” attitude towards their employer and said they had good work relationships with colleagues.  However, their negative attitudes included the view that there was poor communication between managers – often putting them in the middle of conflicting direction – and that “managers and supervisors did not always appear to take security seriously.”

 This research echoes findings that Hollinger and Clark made over twenty years ago.  In this current economic cycle, when payroll is more constrained than ever and managers have more on their plate than ever, perhaps the greatest challenge that any loss prevention group could face is how to keep their front-line management teams engaged with their employees and creating an environment that encourages honesty and discourages theft.

15
Oct

Loss Prevention Research Council: Impact Workshop

I had a chance to attend the LPRC’s Fall Workshop hosted at the University of Florida last week.  This is a group of loss prevention professionals, solutions providers, and academics that have come together under Read Haye’s leadership to advance the research agenda for the retail loss prevention industry and help all of us make decisions based on science, not mythology.

The LPRC has already produced several studies and has results from over 350 research projects on their website.  This is the type of effort that I continue to believe needs to be supported by our industry associations such as RILA, NRF, FMI, and others.  If you are interested in finding out more information on the efforts of the LPRC, visit them at http://www.lpresearch.org.

8
Oct

Loss Prevention Hiring: Ramping Up?

Several weeks ago we noted that hiring at the field loss prevention level seems to be ramping up and it looks like this trend is continuing.  Disney, Express, A&F, Dollar General and many others are looking for district, regional, and senior regional loss prevention managers and we are also seeing some postings in Mexico and Canada.  We would expect there to be a flurry of activity between now and the beginning of November when most retailers want to have everyone in place to focus on the holiday season.

5
Oct

New England ORC Conference

Several weeks ago, I had the pleasure of attending the New England ORC Conference sponsored by the retail associations of the various states in the area who have come together in cooperation on this issue.  Congratulations to Kevin Plante from Staples who was responsible for leading the coordination and planning of the conference.  It was a very well-run conference and it is my understanding that it was a record attendance.

During my remarks at the conference, I made the observation that we, as an industry, should feel good about the progress we have made on ORC.  It often seems that we come across as “chicken littles” on this issue when, in fact, we have made substantial ground.  The increased use of technology, information sharing across the industry, and coordinated efforts on legislation are all possible indicators that perhaps we are controlling this issue better than ever before.  Your thoughts?

31
Aug

Training & Awareness: Do Your Employees Know What to Do?

At this year’s RILA conference in Orlando, I presented a general session where we talked about the various performance “levers” that exist and how they can be used more effectively. There is a tendency for managers to push on the same one or two levers over and over again, even if they are not the ones that will have the most impact on performance.

One of the first levers we discussed was task clarification. This simply means, “Do our employees know what we want them to do?” Now, this may seem like a silly question to you. You may be saying to yourself, “Well, of course they know what we want them to do!” But, I suspect we have all used task clarification on a regular basis.

For instance, have you ever been in a meeting where you have been discussing a performance issue and the resolution of the meeting was that someone said, “We’ll send out a memo on this!” That, my friends, is task clarification.

Task clarification can be very effective if the problem is, in fact, that employees are unclear on what you want them to do or don’t understand your performance expectations. However, one of the points in my presentation is that task clarification will have little impact if your employees already know what you want them to do but don’t have the incentives, the proper tools or systems, or the capacity to complete the task.

In this post, I’d like to explore task clarification a little more closely and make sure that we use it in a way that is effective in changing the behavior of our employees. Isn’t that the goal of our training and awareness programs?

Effective task clarification has the following characteristics:

 It is specific to the task at-hand.
 It communicates to employees what you want them to actually do
 It identifies what model performance looks like
 It clearly communicates what is not acceptable

Let’s look at some of the training and awareness messages that companies use in terms of these four characteristics. For example, probably all of us have evangelized on the phrase, “The best deterrent to shoplifting is customer service.” This mantra has been communicated in training meetings, on posters, in videos, and on conference calls. Like many corporate mission statements, there is nothing there that you can argue with, but is it an effective training message?

Assuming an hourly associate gets that message, does it tell them what you want them to do? If they see a customer who looks “suspicious,” what are they supposed to do? If they see a woman stick a blouse in her purse, what are they supposed to do? If a customer comes out of the fitting room with fewer items than they entered with, what are they supposed to do?

And, just as importantly, especially in our business, what are they not supposed to do?

Here’s another example…many organizations have spent significant effort and time to get their employees to know their most recent shrink result and the goal for the current inventory period. Executives from the corporate office visit the store and ask employees, “Do you know your most recent inventory shrinkage number?” If the employee responds correctly, the executives are pleased, they tell the Store Manager and DLPM, “Great job!” and look forward to great results from the upcoming physical inventory.

But, is it possible that all those employees have committed the number to memory but have no idea what they are supposed to do to make the number lower? Is it possible that, left to their own, well-intentioned efforts, they might actually do things that you don’t want them to do?

When designing and implementing your training & awareness programs, focus on the behavior outcomes you want from your employees and make sure your communication has the four characteristics listed above and you stand a good chance to improving results.

26
Aug

Technology and Loss Prevention: Friend or Foe?

What amazing times we live in these days! I’m blogging this post from 35,000 feet on a Delta flight with wireless internet service. In the past hour, I’ve responded to emails from Japan, UK, Canada, and France that came in overnight, rebooked a flight on Delta.com, sent four text messages to cell phones from my email, and taken care of paying some bills from my online banking account. I remember when a “powerful” personal computer used one 5.25″ floppy drive to run your application (only one at a time) and the other 5.25″ was your “hard drive.”

What impact is technology having on our industry and our efforts to battle fraud and reduce loss? Most of us would have a gut reaction that it is a positive impact. We could support that by citing the use of databases to track cases and share information; POS exception reporting that helps identify fraud at the register; digital CCTV systems that allow us to look-in on stores in real-time or review high risk transactions from the convenience of our computer screen; or the ability to integrate access control, alarm systems, CCTV, and other systems.

However, a contrarian might cite the use of the world-wide web to launch attacks on corporate websites or data; increased ease of sharing information between criminals about targets and security measures; the tremendous vulnerability that PCI non-compliance can have on an organization; the emergence of internet auction sites and their role in disposition of stolen goods; or the potential negative impact on shrinkage when data integrity is accidentally comprised with implementation of new equipment, systems, or technology platforms in our organizations.

What is your view of the impact of technology on our efforts for the good or the bad?

4
Aug

The Sky Is Falling: Why Do We Celebrate Bad News?

Recently, I’ve noticed a trend in our industry that puzzles me.  It seems we believe the best way to get additional attention, funding, and staffing is to celebrate failure or bad news.  A headline in the recent Security Director News, a publication that I think does a great job, reads, “Industry agrees, it’s no surprise shrink is up.”  It details the preliminary NRSS results which show an increase in shrink from 1.44% to 1.52%.  Article after article in the mainstream media highlight “increased shoplifting,” “economy forces employees into theft,” and the like.

It’s not just theft and shrinkage that gets highlighted.  One industry website highlights how many people in our industry have been laid off and how many LP positions have been eliminated.  I’m sure it is not intended to sound gleeful, but that’s how it strikes me.  It reminds me of the way Howard Dean, chair of the Democratic National Committee at the time, got a lot of negative reaction to his almost celebratory attitude when bad news came out of Iraq during the early days of that conflict.

But, wait a minute.  There are lots of success stories happening in our industry despite the economy.  I’ve talked to a number of retail loss prevention executives who have come in with outstanding shrink results – some of them with all-time lows in their company.  Many other organizations have come in with reduced shrink dollars even though the percentage might be up due to 10, 20, or even 30% reductions in comp sales.  What about the NRSS results?  Keep in mind that 1.44% was an all-time low for the survey and the the 2008 figure of 1.52% is near the bottom of the range over the years Dr. Hollinger has been conducting the survey.

As for staffing and personnel issues, there is no doubt there have been reductions and position eliminations and it has had an impact on many of our colleagues.  Yes, some senior executive positions have been “eliminated” but some of those are through consolidations within the industry.  The good news is that there is some activity occurring within the industry, especially at the District and Regional positions and there are some great candidates out there hungry for the opportunity.

I’m not trying to be a Positive Polly here, but I do think we need to consider the face we present to the retail industry.  Do we want to play the part of Chicken Little or do we want to emphasize what we can and do contribute to our individual organizations and the retail industry as whole?