“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?
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?
This year’s first edition of the Journal of Applied Security Research contains a case study that Adrian Beck and I authored on one apparel chain’s experience with switching from hard tags to sewn-in, soft tags. The article highlights the importance of visual clues and difficulty of removal in creating deterrence. An abstract of the article can be found at this link “The Importance of Visual Situational Cues and Difficulty of Removal in Creating Deterrence: The Limitations of Electronic Article Surveillance Source Tagging in the Retail Environment.”
While this study was conducted in only one retail chain, hundreds of locations were involved in the test and the results were consistent across geography, internal hierarchy, etc. Additionally, similar results were realized in another specialty retail chain around the same period of time. Hopefully, this article will add to the body of knowledge in our industry relative to EAS.
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.
In reading a recent issue of HR Magazine, I took note of an article on the role of the Human Resource department when it comes to video surveillance programs in the workplace. This article addresses the employment law ramifications of a video program and the special circumstances of video surveillance in a union environment. Some states – California, Connecticut, Delaware, and Massachusetts – have requirments to disclose workplace monitoring or risk a potential invasion of privacy action.
According to the recent fraud survey conducted by Association of Certified Fraud Examiners (ACFE), the most effective fraud prevention tactics were “non-accounting controls” such as hotlines and training and support programs for both employees and managers. The human factor also played a significant role in the discover of fraud. The most common method of catching a fraudster is a tip-off. In fact, tips expose fraud three times as often as do management reviews, internal audits, and account reconciliations.
For more information, click here.
There is a good post over at the Harvard Business Review blog about some research conducted on why employees don’t speak up in the workplace. This research doesn’t focus only on whistle-blowing or fraud scenarios but also on innovative ideas, concerns over marketing strategies, or witholding information that could help shape strategy for the organization. Potential retribution, lack of personal gain from speaking up, or viewing the effort as futile were all cited as reasons for what the authors call “organizational silence.”
If your employees are unwilling to speak up on business ideas, what are the chances they will speak up when faced with a higher stakes issue such as fraud, policy violations, or harassment issues? Our experience shows us that it is rarely sufficient to simply post a hotline number on a wall or on a business card and expect that employees will automatically call when they see an issue of theft, fraud, or harassment. The cited research also suggests that simply having an “open door” policy or a suggestion box is not enough to encourage employees’ input. An organization and its management must actively cultivate and seek out employee input.
Read the blog post here and let us know if we can help your organization improve its communication in both directions.
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?
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.
Here is a link to an interesting blog post over at www.retailfraud.com on the results of a recent study on EAS tag pollution. It is UK based and done by a vendor company, but does seem to ring true to many people’s experience in other parts of the world, as well.
The key call-outs:
- 57% of shoppers felt embarrassed by false alarms sounding on security tags in their bags.
- 72% of incidents were in full view of other shoppers.
- 77% of incidents nothing was said to the shopper when they had their bags checked
- 28% of case, shoppers were asked to go back into the store to have their bags checked while 26% simply had the tag de-activated and they were allowed on their way.
One difference in the UK is the more pervasive use of security guards at retail exits and, as a result, the majority of these interactions were conducted by security personnel, not retail employees. You can read the full post here.
I received a note this past week about a new survey by intelligence and investigation management software solutions specialist, ABM. The study, ‘ABM Investigation Survey 2010′, surveyed the opinions of 72 investigation professionals from a range of large organisations in the United Kingdom, including retail and consumer product specialists. The objective was to gain a clearer understanding of businesses’ ability to manage investigations by examining what changes have occurred over the last 24 months and their impact on cases.
According to their survey, more than half of businesses surveyed experienced an increase in theft (52%) and fraud (49%) over the last two years. Alarmingly however, investigation personnel numbers have decreased for one in four (25%) organisations, while budgets to investigate and reduce incidents have also diminished for three in ten (29%) organisations. Investigation teams continue to face the challenge to do more with less to help protect the bottom-line. Astonishingly however, despite these pressures, two in five (43%) organisations believe their investigative effectiveness has improved over the last two years.
Some of the findings include how criminal attacks on organisations’ profits increase and how US investigation teams more tech savvy than UK counterparts. The full report can be downloaded here.
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.
High unemployment. More people on food stamps. Fewer homeowners. Yet for all the signs of recession, one thing is missing: More crime.
Figures released Monday by the FBI show national declines in murder, car thefts and other crimes. But experts are scratching their heads over ebbing crime rates, which make this recession different from other economic downturns in the past half-century. Among the early guesses as to the reasons: jobless people being at home, where they can watch for thieves, and the American population getting older. Older people generally commit fewer crimes.
The FBI figures, preliminary tabulations from the first half of 2009, show crime falling across the country, even at a time of high unemployment, foreclosures and layoffs. Most surprisingly, murder and manslaughter were down 10 percent.
A devastated American economy did not translate into an increase in unethical behavior at U.S. companies, according to a new study from the Ethics Resource Center (ERC). Although the ERC’s 2009 National Business Ethics Survey report found that retaliation against employees who reported misconduct has increased slightly since a similar survey two years earlier, most other measures of ethical behavior improved. According to the report:
- Overall misconduct at U.S. workplaces is down. Fewer employees said they had witnessed misconduct on the job. This measure fell from 56 percent in 2007 to 49 percent in 2009.
- Whistle-blowing has increased. Most workers—63 percent—who observed misconduct said that they reported it. That’s up from 58 percent two years earlier.
- Ethical culture appears to be stronger. ERC’s measures of the strength of the ethical culture in the workplace increased from 53 percent in 2007 to 62 percent in 2009.
- Pressure to cut corners has decreased. Overall, employees who perceived pressure to commit an ethics violation—to cut corners, or worse—declined slightly, from 10 percent in 2007 to 8 percent in the latest survey.
- Perceived retaliation as a result of a report of misconduct rose, from 12 to 15 percent, over the two years.
However, the ERC report sounds a warning: “The lesson for organizations is that when more settled, prosperous times return, misconduct is likely to creep upward again” as the sense of crisis dissipates.
I’m not sure what to make of this report out of the UK conducted by SPSS/IBM. It seems to be focused towards the IT side of business but makes a claim early on that there has been “around a 16 per cent overall growth in fraud throughout the UK” during this recession. But, when you look at the statistics, only 12% of surveyed companies cited an increase in fraud while “82% asserted its constancy.”
As I have asserted in the past, it is important how we present our business case around our function. We cannot lead with questionable claims and statistics if we want to be taken credibly. Take a look at this report here and see if you can make more sense of it that I can…
RSR Research’s latest report, “Loss Prevention 2010: Retailers Battling Shrink in Tough Times” finds more retailers than ever reporting the priority of LP rising in their organizations. These findings are based on a survey of 83 retailers in the autumn of 2009. The report can be downloaded at http://www.retailsystemsresearch.com/_document/summary/1037.
A recent Harris Poll survey indicates that 96 percent of U.S citizens feel the federal government and law enforcement agencies should be able to use video surveillance in an effort to counteract terrorism and help protect U.S. citizens in specific public places.
Four out of five adults feel that in extreme cases, such as a terrorist attack, the government should be able to use any available means to protect citizens, and more than half (54 percent) of U.S. adults are even willing to put a portion of the government’s stimulus funds toward setting up video surveillance to help reduce crime. Read the full article here.
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.
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.
I was not able to get to this year’s Retail Council of Canada Loss Prevention Conference held last Tuesday in Toronto, but I heard great reviews of how well-organized and professionally it was run. During the conference, a new Price Waterhouse Coopers survey (conducted in conjunction with the RCC) was released with the latest loss figures from Canada. The details can be found at this link.
Caroline Kochman, Executive Director of the National Association for Shoplifting Prevention, has written an insightful column for the most recent RILA Asset Protection Report. At NASP, they talk to thousands of shoplifters each year and you can read what they think at this link…
Twenty-two major retailers lost more than $6 billion to shoplifters and dishonest employees in 2008, according to the 21st Annual Retail Theft Survey conducted by Jack L. Hayes International, a loss-prevention consulting firm.
On the upside, a record 904,226 thieves were apprehended, up 7.26 percent from 2007. Of them, 832,106 were shoplifters and 72,120 were dishonest employees, the survey says.
That breaks down to one in every 30 employees being apprehended for theft from their employer in 2008, based on more 2.1 million employees.
The survey found that more than $182 million was recovered, up 21.64 percent from the previous year. More than $113 million was recovered from shoplifters, while $69.8 million was recovered from employees.
“With the downturn in the economy, we have seen an increase in theft, which is having a detrimental impact on retailers’ bottom-line profits,” says Mark Doyle, president of Jack L. Hayes International. “These theft losses drive consumer prices higher and can force unprofitable stores to close.”
The average theft in 2008 was $202.28, up from $178.37 a year earlier.
The 22 retail companies participating in the survey had 19,151 stores and more than $570 billion in retail sales as of 2008.
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.