Retail Employee Theft – The Reality will Shock You

I just read the Annual Retail Theft Survey done by Jack L. Hayes International and found it mind boggling that over 1 million shoplifters and dishonest employees were apprehended in 2011 with over $6.0 billion in goods. This only represents 24 major retailers and those who were caught! What shocked me the most were the internal theft numbers. According to the survey, one in every 36 employees was apprehended in 2011 (based on over 2.8 million employees).  Clearly, retailers are challenged to hire honest individuals and once hired they’re having difficulty keeping them engaged and feeling loyal to the organization. That’s not surprising, given how high turnover is in the industry, how low pay scales are, and how disconnected employees are feeling these days.

Other surprises from the report:

  • 71,505 dishonest employees were apprehended in 2011, up 3.3% from 2010
  • Over $47 million was recovered from employee apprehensions in 2011, up 5.6% from 2010
  • On a per case average, dishonest employees steal 5.9 times the amount stolen by shoplifters ($667.77 vs. $113.30)
  • Of 19,165 job applicants (in a complementary study conducted), 19.3% or 3,700 were rated as “high risk” due to their admission of previous wrongdoings, and their attitudes regarding honest and dishonest behavior.

How much is this costing the industry as a whole? In the University of Florida’s 2010 National Retail Security Survey Report, retailers attributed 45% of their inventory shrinkage to employee theft. Assuming a total shrinkage dollar amount of $35.28 billion, this translates into an annual cost of $15.9 billion across the industry.

The problem is expensive, growing and difficult to manage. Outside of being as diligent as possible with pre-employment screening procedures such as multiple interviews, criminal conviction checks and honesty testing, what can be done to reverse the trend? Greater surveillance? Hotlines? Posters? Newsletters?  All of these things can contribute to keeping the problem at bay, however a permanent solution takes a more targeted and continuous approach.

Axonify clients have had substantial success in driving down employee theft with our interval reinforcement platform. Each day, their associates receive questions around loss prevention, safety and other topics that matter to the organization and when the employee shows a deficiency in a particular topic area (i.e. employee theft), they receive a training burst to reinforce the message. Our clients have driven down their employee theft numbers by as much as 60% by making associates aware of grey areas that they may not consider “true theft”, reiterating the consequences and severity of the issue and communicating the process and reward for reporting a dishonest employee.

We’ve discovered that when people are continuously reminded of the things that matter to their employer and the consequences for not abiding by the rules, there is behavioral change – both at an individual and organizational level. The fact is that there will always be employees out to rip off their employers, but if you can do your best to screen them out before they join and then engage and reward those individuals who “live in the grey” to do the right thing, you will see your theft numbers drop dramatically. We’re extremely proud of the work that we’ve done with our clients to help make that happen.

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