Deterrence is always the most cost-effective way to deal with shrinkage due to theft and fraud in any business, yet it is often a last consideration, occurring only after there is hard evidence, through detection of loss, that there is a problem.
Deterrence can be equated to keeping a customer, as opposed to finding a new customer. The cost of retention of your assets through simple methods means you do not have repeat losses prior to preventing an occurrence of theft or fraud.
Many of the techniques to deter loss are simple and straightforward, incurring little or no expense outlay. They should be part of running your operation, whether it is retail, restaurant, hospitality, processing, manufacturing, warehousing and transportation or trades.
The most definitive steps should be the result of reviewing the “Opportunities” section of the M.O.I. Inventory and implementing risk mitigation using the measures to counter the opportunities that are discussed. The next step should be to examine the “Indicators” section to see if more risks are revealed through analyses.
Deterrent measures flow from a well-regulated and ordered business, which also is at the heart of business efficiency.
The ogres, Rules and Regulations, may seem punitive or authoritarian, but they need not be. A proper training and follow-up regimen for all staff present company rules as a process for good operation, leaving no doubt on behalf of the staff of expectations and, in turn, reducing angst or anger over unknown rules.
Rules and regulations that are expanded upon in a comprehensive training manual or video blend into the concept of expectations. What can the employee expect of the company, and what can the company expect of the employee.
Staff awareness of their roles also can expand into training them i8n the understanding of external loss control, whether it is at the hands of customers, sales representatives, suppliers or delivery personnel. An annual loss prevention seminar provides refreshers and enhances your deterrence efforts, even if staff are not expected to involve themselves in actual detection and apprehension. Clear channels of communication, with anonymity guaranteed, or a reward system both work to motivate staff positively to deal with internal or external threats.
For both staff and external persons, the presence of vigilant and knowledgeable people who can react to a loss situation also acts as a deterrent. Signage, warning of bag checks, security, cameras and consequences of deviance should be presented in a positive, yet firm manner, reinforcing that loss is a cost to the consumer and staff.
Integral to theft and fraud deterrence is to take away temptation. Of course, anonymity for customers and other thieves provides opportunity and reduces risk, so involve yourself with all the people who come in contact with your business. Customer service and good human resources relationships are the keys to this effort to eliminate temptation. But removing all temptation to steal may also serve to reduce all motivation to buy, so balance the two carefully.
Simple steps, like neat, well-faced and blocked shelves not only disallow the person from taking from a spot where the item may not be missed but create a visual reminder that the business is organized and on top of their inventory management.
There should be flow and order to your displays and storage areas, as well as flow and order to the movement of stock. Think of the efficiency with which IKEA manages a huge retail warehouse.
The ordering process should not be a knee-jerk reaction to shortages, but should follow a structured perpetual inventory management system, like the Mini/Max inventory control program.
At your shipping and receiving doors, order is vital. Proper logs for everything and proper handling of incoming and outgoing stock reduce risk. But even as much as is possible, receiving door hours and the timetable when salesmen, drivers and others are allowed in the area should be defined clearly and enforced.
Bag checks, while intrusive, are effective for customers, tradesmen and staff.
Lastly, for any behaviour management system to be effective, it must be both immediate and proportionate to the action. It is accepted fact that one of the reasons the judicial system fails or is weak is because punishment, if it happens often is less than the potential reward of a crime and happens long after the crime has taken place.
We all know that when we overindulge in ice cream or alcohol, we will pay a price later. However, the immediacy of the reward outweighs the future punishment.
A bank robber may only get a few hundred dollars, but he also knows that he has a vey good chance of never being caught.
So, punishment must occur quickly and be significantly greater than the potential immediate gain. Punishment for shoplifters is not easily meted out, but for most of your regular customers, the threat of being publicly apprehended is a deterrent, so floorwalkers need to be active and proactive.
But punishment is not the best method for motivating. Reward is. For staff, that can be some sort of shared bonus for successful loss reduction. It can be recognition for a good job. It can be a group benefit.
For individuals, those rewards are meaningful, one on one. When there is a group reward or loss of reward because of an obvious failure to act, the lack of reward to the group applies social pressure to the few who have failed to contribute, but the success of the individuals in a group bonds the group together when they share a reward.
Immediacy and effectiveness: two tools that are underutilized in deterring theft.
Operant Conditioning
B. F. Skinner, a noted psychologist specializing in behaviour modification, is the father of the concept of operant conditioning. Many of his principles apply to the understanding of theft-prone behaviour. The idea of reward and punishment is at the core of theft, with the reward prompting deviant behaviour and the imminence of punishment acting as a damper on that behaviour. When the reward outweighs the risk, theft and fraud are more likely to occur. When the reward is immediate and the punishment distant, the probability of deviance increases dramatically.
However, an even more relevant concept is the effect of the schedule of reinforcement (punishment & reward). Where punishment and/or reward are delivered on a regular fixed ratio, fixed interval or continuous pattern, withdrawal of the reward will see the behaviour extinguish more rapidly than if the timetable consists of variable times or frequencies.
If a chicken gets a food reward every time it pecks a lever, it will peck often. Once you stop providing the food, the pecking behaviour will stop quickly. If the bird is rewarded every ten times, or every ten minutes, on a fixed schedule, the bird will try to use the lever to get food for a while but will eventually stop. It will, however, take longer than if the reward had been delivered continuously.
If, though, you have been providing food irregularly (e.g. between one and ten times the bird pecks, or every 10 to 60 seconds), it will peck frantically at first, but the behaviour will not extinguish easily.
How does this apply to theft?
If a shoplifting customer sees another shoplifter being arrested, they may stop briefly, then experiment again if they see no more apprehension activity. If they find that they are given opportunity often, with no risk of detection, they will again steal. However, if they observe an aggressive and continual theft response by management, their behaviour will diminish or extinguish. Similarly, employee theft will either remain or extinguish, depending on the frequency and intensity of the response toward other employees.
For theft deterrence, a barrage of mirrors, cameras and security devices are like the continuous reinforcement: the plethora effect gradually wears off and deviance decreases. However, if you have cameras in one location, then another, then relocated to another, that randomness and irregularity will force the thief to respond to varying risk and also alert them to the active presence of surveillance. It forces the reluctance to steal to remain dominant. Where you use covert cameras but have a visible TV monitor that shows some, but not all of the cameras, that also tells the thief of the risk of hidden devices.
Many cities use signal light cameras to catch speeders and those that run red lights. But the cost of cameras at every intersection is prohibitive, so most jurisdictions use about twice as many camera housings and warning signs at these intersections as they have active cameras. That means the risk of having a camera as you approach is about 50/50, which is a strong deterrent. Random, yet enforced. However, when towns move to a higher ratio of dummy locations to actual cameras, risk diminishes and scofflaws increase.
A variety of surveillance and deterrence systems, without overdoing the quantity, provides excellent deterrent for theft and fraud.
Deterrence is an ongoing process, though. Almost as quickly as you plug one loophole, a dedicated thief will find another. Involve your staff in identifying these opportunities for theft and risks to the business, and reward them for doing so.