In today’s knowledge and service economy, successful business organizations recognize the importance of on going development, education, and training. But, thoseworthwhile goals are not always easy to achieve due to structural obstacles endemic to organizational growth or downsizing, economics, or other market influences. This article explores how one company’s loss prevention group found a way to adjust their strategy to both overcome obstacles standing in the way of their development programs and to employ developing technology to achieve their loss prevention goals.
Buy Or Build?
To buy or build solutions has always been a question faced on a regular basis in the information technology (IT) industry when tackling their objectives and projects. This question is often asked when considering whether it is better to buy a solution from a third-party provider, such as software, systems, or enterprise applications, or would it be better to build the solution themselves? When faced with this decision, some of the factors that must be considered include the following:
- Price–How much would it cost to purchase this from outside the organization versus how much it would cost to develop internally?
- Resources–Are the internal resources and expertise available to do this on our own?
- Timeline–How quickly is this needed? Can we meet the timeline internally and, alternatively, can the third-party meet the timeline?
- Level of Customization–Is an off-the-shelf solution sufficient or do we need to have a high level of customization? If so, can the third-party offer that?
At the same time, does customization increase cost and chance of problems? Is a combination of the two the best way to go?
There are certainly pros and cons in each of those dimensions when answering the questions. But, this is not only an IT question. This basic decision is faced in many other departments and contexts.
For instance, your training department, when challenged to provide customer service training, may ask whether it would be better to buy training, such as workshops, outlines and booklets, and web-based programs, from a third-party provider or would it be better to build the training program using internal resources. They, like the IT group, must consider the potential trade-offs relative to price, timeline, resources, and level of customization.
Staffing and Succession
Those seem like pretty clear and tangible examples, don’t they? But, how about the issues of staffing and succession planning? Is it better to hire from the outside for regional and executive-level positions, or to develop them internally? This is, basically, another version of the “buy or build” question and was the issue facing the loss prevention group at Circuit City in the mid-nineties.
At the time, their strategy was to hire only “seasoned” loss prevention candidates who could “hit the ground running.” After all, what choice did they have? Like most loss prevention departments in the specialty retail sector, there were not hierarchical structures or positions in place that allowed for entry-level candidates to enter the department, develop their skills, and climb the ladder into increasing levels of responsibility, as is often the case in the department store or mass merchandise segment.
In those “big-box” industry segments, it has been common that an employee could start with the loss prevention group as a store detective…or even a security guard, door greeter, or fitting-room checker…then aspire to the investigator position or assistant loss prevention manager position, and, then, up through the department structure. By its very nature, specialty retail rarely has entry-level positions or stepping-stone positions to the district or regional levels. Circuit City was no exception.
As a result, the company was typically buying the expertise from other companies rather than developing it in-house, either by hiring former police officers, polygraphers, or established LP professionals. At the time, the drawback to this approach was that without a clearly defined, uniform training program, the adage that “old habits are hard to break” came into play. Many of the new hires found it difficult to break out of their comfort zone of those things that had made them successful previously, instead of learning and utilizing all of the investigative reports and tools now at their disposal.
Realizing the limiting nature of this strategy, the company sought an alternative, taking into consideration the dramatic growth plans facing it. “At the time, we knew we were going to have a lot of positions to fill over the next several years and hiring exclusively seasoned personnel from the outside was expensive, time-intensive, and did not allow for building bench strength,” says Chris Johnson, a store support center loss prevention manager for the company.
“In response to the business needs at the time, we sought to change our approach and began looking for a structure that would allow us to bring in less experienced candidates from the loss prevention community such as single-store security managers. We also had regular inquiries from store operations employees who had experience at Circuit City and were interested in pursuing loss prevention,” says Johnson.
A New Approach
After considering their options, Circuit City decided to look to their in-house loss prevention 800-number hotline as a management development tool. Utilizing the existing hotline that operated out of their Richmond, Virginia, headquarters, would allow for continuation of that function, as well as provide other value-added services to the department.
“Once we made the decision to expand the scope of the hotline, we knew we wanted to use these positions as springboards to become loss prevention administrators (LPAs), our entry-level field position,” explains Johnson. “Being based at our corporate office, we would have the ability to put them through loss prevention training programs when the phone wasn’t ringing.
“In addition, it was even more beneficial to have the time for these employees to learn about the Circuit City culture, how the loss prevention function worked, and be exposed to field activities through the phone calls that came in on the hotline.”
Johnson adds, “The next thing we realized was the need to develop and implement a training program for these positions. This resulted in the creation of the position of a loss prevention training manager, a position I formerly held. By working closely with Pat Gurganus, the corporate division LP manager responsible for the hotline function, we were able to ensure that the specialists who staffed our hotline were ready for a field loss prevention position when there was a need. We did, on occasion, hire from the outside, but at one point between 50 to 70 percent of our field staff came through these developmental positions at corporate.”
Building Blocks
Under Johnson’s direction, the program became more structured to ensure the building blocks of success were addressed. “Actually, the input of people throughout the organization is what has always contributed to the development of our program. We sought input from current loss prevention staff, operations, human resources, and, most importantly, from graduates of the program who have gone to the field,” says Johnson. “All of that input is then evaluated and ‘tweaks’ are continuously made to the program, resulting in our current model and use of technology.”
Over the years, Circuit City’s program has continued to focus heavily on areas such as:
- Overview of departmental objectives and structure,
- In-store operations training on how to run the register,
- receiving processes and controls, cash office, and cycle counts,
- Investigations and case resolution,
- Building productive relationships with corporate partners such as merchandising, store operations, and human resources,
- Administration issues such as processing of paperwork, budgeting, and expenses, and
- Field and store report review and action. What various exception and transaction reports are available and how are they used?
Another staple of the company’s training is participation in Wicklander-Zulawski interviewing and interrogation seminars. “We believe strongly in the value of the Wicklander-Zulawski training and ensure that all of our new hires have been or go through their two-day course,” says Johnson. “Additionally, part of their yearly performance evaluation process requires that their next level manager actually observes them conduct live interviews.”
Evolution to e-Learning
This successful program continues to evolve and change to ensure its relevancy and effectiveness. Under the direction of Phil Foussekis, assistant vice president loss prevention, who came on board at Circuit City in 2000, the department continued to look at new areas to explore.
“When we reevaluated our training and development program, we saw a lot of great results, but also some issues with the willingness of the specialists to uproot and move at least twice in a short period of time,” says Foussekis. “Plus, it was expensive, at an average overall cost of $60,000 per trainee. We had to look at what our actual need was and what we were trying to accomplish. We wanted greater uniformity and consistency in the training process and to ensure better execution. But, the bigger question was, ‘Can we accomplish these objectives in an even more efficient and effective manner?’”
At about the same time, Circuit City was moving to an e-learning platform powered by DigitalThink, one of the leaders in the industry. It was clear to Foussekis and Johnson that this could be the solution needed to take the development program to the next level. Over the course of the next two years, they proved it.
“E-learning is now the backbone of our development process,” says Johnson. “It really gave us the best of two worlds. We were able to both adapt existing e-learning curriculum developed for store management personnel, and develop new loss prevention courses to provide a consistent training roadmap. Ultimately, we ended up with a clearly defined program that addressed the old-habits-are-hard-to-change issue.”
When a new loss prevention associate starts, they get a development plan consisting of various modules, courses, and electives that is initially set based on their position. “However,” Johnson notes, “the training curriculum can be adjusted by the next level manager to account for an individual’s prior experience, strengths, and needs.”
At that point, the training content is made available to the associate 24 hours a day, seven days a week for their use when they want to learn. Of course, they do have a timeline for completion, but their supervisor can monitor their progress on-line, seeing what courses they’ve started, what they’ve completed, and how they are scoring.
As a result, new associates now only spend one week at the store support center headquarters for corporate orientation and a wrap-up operations workshop at the conclusion of their training period. All other training occurs in the field while they are meeting their peers, business partners, and learning the operations process in stores.
Not Just for New Hires
The other advantage of the e-learning platform is that it has opened up a better process for on going development of staff. “By expanding development of the courses into other areas such as human resources, operations, finance, and management skills, we are able to offer further professional development for our staff. In fact, I’m taking several courses myself right now to improve my skills portfolio,” says Foussekis. “We really see hundreds of possibilities for improving the knowledge of our workforce, giving them ongoing challenges, and helping them develop skills that will advance their career.”
Johnson notes that the system is never really finished. The evolution and improvement of the system is facilitated by a “training feedback” feature on the system that allows participants to give feedback on courses, how they can be improved, and, importantly, if anything has changed in the field that has not been updated in the course.
The Future
According to Foussekis, the return on investment of this training evolution is being realized in several areas. “By utilizing the e-learning technology, we’ve been able to move the training process to the field, return to hiring more experienced district and regional managers, and shorten the initial training period to approximately four weeks,” he explains. “This allows us to reallocate funds previously spent on training, relocations, and related expenses to other areas, such as investing in combining tools like exception reporting, remote dial-in Digital Datacatch, and personnel and inventory management systems to maximize our investigative potential.”
Circuit City plans to continue to develop and evolve this system, but Johnson offers one note of caution to others who might look to develop this type of system: “As sophisticated as our investigative systems are and as comprehensive as our e-learning modules are, they can’t replace the coaching and mentoring that can only be provided by the regional managers and division directors.” For instance, people skills such as influence, leadership, and conflict resolution may have an e-learning component, but require the interaction and guidance of a mentor. He concludes, “We view it as a support process to a necessary people process.”
