AP Fundamentals: Building an Effective Loss Prevention Program

Implementing an effective loss prevention program can be a challenging undertaking in today’s retail environment. With the multitude of different business priorities, increased workloads, budget limitations, turnover issues, technological considerations, corporate agendas, and the many competitive aspects of the organizational landscape, our ability to find a formula for success is tested on a frequent and consistent basis. Reliable performance and positive results aren’t simply expected; they are fundamental to the vitality of the organization.

An effective loss prevention program is one that ultimately yields the intended results: reduced shrink and increased profitability for the company. However, finding the right path is not always as simple as reading a compass and setting a course. There are multiple trails that we can potentially follow, and diverse approaches that companies may undertake in an attempt to reach these goals. There are even different ways that we can forge a common path; and a multitude of philosophies that can potentially guide our defined program objectives.

While one path may not necessarily be better than the next from a global perspective, certain styles may be better suited for a specific retailer and/or an explicit style of management. Each must then fit the individual needs and requirements of the particular company where it is utilized.

Aligning with the Goals of the Company

When building a successful loss prevention program, our ambitions and objectives must be attentive to the ultimate goals of the company and needs of the business. Our mission should be well defined, considering the values, beliefs, and key strategies of the organization and the best approach within the parameters of the organizational structure. Every company is unique. In addition to the obvious distinctions regarding size, location, customer base, product selection and other notable features, every organization is populated with diverse personalities, opinions, ideas, issues, opportunities, interests, and other dynamic characteristics that guide the company direction—and ultimately the loss prevention program.

But despite these differences, there are a variety of common factors that come into play when building an effective program, all of which are essential when constructing a plan that leads to achievement and success:

• A Clearly Defined Mission and Focus. The mission and focus of the department must be clear, understood, and supported by all team members and business partners. Well-defined goals help to ensure that the mission and focus is maintained in all initiatives and actions by team members. All goals and incumbent strategies must align with the organizational mission/vision/values.
• A Comprehensive and Clearly Articulated Plan. An effective program will include a means to identify wants, needs, issues and goals; evaluation approaches and metrics; and prevention initiatives and methodologies. We should have a clear Mission Statement. Clearly defined (but realistic) goals and objectives should be identified that are specific and measurable. A strategy for achieving each goal should be developed and evolved into a tactical plan, and metrics should be formulated that help determine how we are doing. The program should also be reviewed on a regular basis to evaluate and revise as necessary.
• Establishment of an Organizational Structure. The organizational structure of the department will be shaped by our goals and objectives, coupled with our tactical plan. What positions are necessary to implement the plan? What responsibilities do we assign to each position? Well-defined roles should be addressed, and comprehensive responsibilities outlined based on the program agenda and the available resources.
• Efficient Documentation and Reporting Procedures. As the size and complexity of the program increases, so does the need for written support and guidance. Effective design and accurate record-keeping are crucial elements that limit exposures and increase efficiencies. Well-documented activities and appropriate and consistent evaluation practices should be an ongoing aspect of the program.
• A Quality Staff Committed to the Program. Staffing should be sufficient to carry out designated tasks, capable of performing required responsibilities, adequately supported, and properly supervised. Training and development programs should be made available to support and encourage career growth. Recruitment staff should be trained and coached on departmental needs, program functions, and performance expectations.
• The Full Support of Upper Management. The commitment of upper management provides the legitimacy, motivation, and resources necessary to make the program successful. The loss prevention program must have the support of all levels within the organization and enforced at all levels of the organization as well. By the same respect, the LP mission should also support the primary objectives of the organization as a whole.
• Strong Collaborations with Others. Establishing sound working relationships with other departments and all our various business partners provides the cornerstone to any effective loss prevention program. Strategies must successfully integrate company goals and business objectives. We must encourage involvement in development and decision making, effectively communicate with all involved, engage feedback, and recognize effort.
• Adequate Authority and Resources. The loss prevention department must have the resources necessary to carry out program initiatives and the power and credibility to influence company objectives and drive results.
• Engaging Training and Awareness Programs. The overall success of the program hinges on the ability to promote training and awareness at every level of the company. Informed employees make better partners and strong advocates. Training materials that are interactive and cost effective can help build greater support for the program. These efforts are most effective when incorporated into other training requirements and stressed as an integral part of the company’s way of doing business.
• Appropriate Auditing and Internal Controls. Conducting consistent and thorough due diligence reviews is essential to ensuring that the program is efficient and effective. Auditing and monitoring of our programs and controls within the parameters of our business objectives will consistently contribute to a successful compliance program.
• Compliance Mechanisms. An environment that encourages questions and provides a means of reporting issues safely and confidentially is extremely important. Loss prevention must be accessible to everyone in the company and should provide guidance and direction on how to handle questionable conduct and difficult situations to resolve issues. “Whistleblowing” protections, Hotline programs, and other tools that can help facilitate such incidents protect our employees and the company.
• Accountability. The company should ensure that every employee understands that failure to comply with loss prevention policies and procedures will result in appropriate disciplinary actions, up to and including termination of employment. While the program must be supportive of business needs and appropriately flexible to company objectives, it must also carry the respect necessary to remain relevant to the needs of the organization and the “teeth” necessary to demand compliance.
• Feedback. Feedback should be provided on a frequent and consistent basis to reinforce the objectives of the program, the participation of the employees, the achievements that have been accomplished, and the challenges that lie ahead.

While each of these factors should be embedded into the fabric of a successful program, there are other aspects that will greatly influence how the program is received, accepted, and ultimately recognized as a core component of the company culture.

First, the climate in which the initiative begins will set a tone for everything that follows. We must be positive and upbeat in our presentation, open-minded in our approach, welcoming of constructive feedback, flexible where we can be, and firm where we need to be. The right atmosphere will avoid some of the potential turbulence that can result when introducing new ideas and alternative ways of accomplishing goals. We must develop processes that educate and open minds, manage conflict, establish credibility, and develop trust.

The people that are part of our team need to fit the program, believe in the program, support the program, and embrace the program. They must be willing and capable of carrying our message throughout the organization, possess the cooperation and diplomacy skills to work with others, creative and flexible in applying departmental initiatives, proficient with their skills and abilities, and competent in completing the tasks necessary to make the program successful. They must be accepted by the leadership that supports our programs, the different departments that make up the organization, and the teams that carry out the mission in the stores.

We must have policies in place that will support our projects, and the availability of resources that will allow our efforts to continue. We have to implement an information sharing program that supports our message and objectives. We must identify and develop partnerships, understand the laws and guidelines that support our initiatives, maintain open and efficient communication, counsel and direct, and remain contemporary on the latest ideas, issues and technologies. All of this must come together within the framework of leadership that gives us purpose and drives us forward.

Building a successful career in loss prevention has always been predicated on the commitment to professional growth and development. As the business moves forward change comes quickly, and our skills and abilities must evolve to meet the needs and expectations of a new professional standard. Especially when we consider the pace of change, we find that success is largely based on the refinement of the fundamental principles that anchor our skills and our decision making.