Goodwill Industries of Southeastern Wisconsin and Metropolitan Chicago is one of the largest of more than 180 independently operating Goodwill agencies in North America in terms of annual revenue, number of programs, and the number of people in the community served. The organization currently employs over 4,245 employees working in sixty-nine program locations in twenty-three county territories. Approximately 1,500 of these employees are people with disabilities, which is the focus of Goodwill’s mission:
Goodwill provides training, employment, and supportive services for people with disabilities or disadvantages who seek greater independence.
The retail division with over 1,580 employees is the largest of the many divisions supporting the mission of Goodwill of SE Wisconsin. Other divisions include mission services, work services, Goodwill Great Lakes, commercial services, laundry, Goodwill Talent Bridge, workforce development centers, and data shield. Currently the retail division operates thirty-five retail stores, one distribution hub, and four remote donation centers.
The retail division is the only division at Goodwill of SE Wisconsin with a loss prevention department. The relatively new department was created after a needs assessment was conducted by the loss prevention consulting firm, Hilco Asset Protection Services. Based on their assessment, the vice president of retail, Vicki Holschuh, decided there was a strong need for an asset prevention program and took essential steps in creating the department. Hilco still remains an important resource to Goodwill for high-profile investigations, integrity shops, business abuse hotline, and auditing.
Creating a Loss Prevention Culture
In Goodwill’s new culture of loss prevention, the LP staff wears three hats. The first hat is supporting the mission of Goodwill, which is all about enhancing the dignity and quality of life of the individuals and families in the communities we serve. The second hat is to decrease losses suffered through proactive preventative programs. The third hat is investigations.
While wearing our second hat, it is important to understand that we must have the support of all management within the organization for these programs to be successful. Therefore, education and training is an essential focus of the LP department. Our overriding message is that every dollar saved via our loss prevention efforts is another dollar that can go toward Goodwill’s primary mission. This message is a crucial motivating factor for our staff.
For any organization creating an evolving loss prevention department, building a support system and first-rate working relationship within the corporate structure is essential. We are proud that we have successfully created strong relationships with all levels of employees. Upon this foundation we updated and created the many policies and programs necessary to protect the employees and the assets of the company
LP Audit Program
The word “audit” sometimes comes with a negative connotation. Most retail stores know when an audit will take place and make sure the auditor only sees the store at its best and not what the store really looks like if the audit was unannounced. Audits at Goodwill are undisclosed, so we can get a true feel of the scope of the store. In order to maximize the results of these audits, we focus not on what we can’t do, but what we can do to make a true difference.
We attempt to turn audits into an enjoyable, productive experience by actively speaking to the associates. When employees see loss prevention actively engaged in conversation with them and taking steps to respond to their concerns, they become more trusting and open to helping us understand issues that may need to be addressed in their location.
Of course, auditing is all about hitting targets and goals. Goodwill utilizes three audits, two conducted in-house, plus one by an outside vendor. The first audit is conducted quarterly in each store by the loss prevention team and is primarily focused on loss prevention financial categories.
The second audit is an assets protection audit that is completed quarterly by the regional store managers. Having our regional store managers complete this audit is important because it gives them an in-depth reality check of how much loss the stores are suffering and the importance of loss prevention policies. It also creates ownership in the audits.
In addition to these in-house audits, an outside vendor conducts an annual financial audit at each of our stores. Having an outside vendor has several positive benefits. First, they are a neutral party with no bias. Second, it provides a system of checks and balances that brings the whole scope of the multiple audits together. Finally, it holds loss prevention, stores, and regional managers accountable for the results.
It’s great to have audits that assess the stores’ performance, but what about follow up and holding stores accountable? Loss prevention audits have now been made part of the performance metrics of the store staff, which puts the ball in the stores’ court. Action plans are also written after the audit to guide the stores in the right direction to be compliant with company policy. Additionally, it’s always important to do follow up. Without weekly conversations and giving feedback to the stores, they can and do go back to their regular behaviors. Many stores possess their own issues and having store-designed loss prevention audits goes a long way in decreasing shrink.
Another part of our audit is review of the monthly communications. Loss prevention communications address hot topics, important issues, or any needs that surface from our audits. These communications are introduced by a designated supervisor in the store who has been picked by loss prevention to work with all employees. It is important that loss prevention checks the signoffs to ensure the topic is documented. However, it is more important to follow up with the employees in the stores and ask them questions about the monthly topic.
Challenges Facing Loss Prevention
Goodwill faces many challenges. One huge problem is that we do not have a traditional inventory. Since we do not count what comes in, we do not know how much is leaving out unpaid. There is no measurement of what we have on hand. Inventories conducted at the store consist of counting the clothing and prices for insurance purposes. Employee observation and known loss reports are two of the ways we assess our losses within the organization.
Another challenge that Goodwill faces is the court system. Oftentimes police officers have a hard time deciding if a loss has occurred since the product was donated. To some police officers donated goods are considered abandoned property because it has not been produced or priced yet. Goodwill is known for having very low prices, which results in a low case value. In a traditional retailer when someone shoplifts four shirts the case value could easily hit $80. Here at Goodwill that case value would be approximately $18. Many police officers understand our mission and every dollar counts, but others look at the case value as too low to bring to court. It is important to understand that a small dollar case may not justify time spent at court, but at Goodwill it is more than case value. It is about integrity and holding people accountable for their actions.
Goodwill has the same theft and fraud issues that any other retailer has, but the overall percentage of each type does vary. Like any other retailer, a majority of our theft is internal. Employee theft typically involves concealment of merchandise; passing merchandise to friends, family members, or another conspirator; or placing merchandise outside for later pickup.
Shoplifters who steal our merchandise are largely opportunistic in nature since the merchandise we sell will vary significantly on a daily basis. Jewelry, electronics, and clothing are the most popular items stolen. Individuals taking our items tend to have perceived financial problems and plan to either use the items themselves or sell them. They tend to justify their actions by telling us that since our items were donated, they should be able to take them without paying for them. Shoplifters are prosecuted and issued a trespass notice for all of our stores.
Theft in our stores tends to start with low-dollar items, including music CDs, movies, trading cards, and costume jewelry. Our investigations find that it is typical for those who are interviewed for theft to admit they started stealing by taking those smaller items and escalating upwards.
Other investigations have uncovered theft of collectables for resale in flea markets, other resale businesses, or Internet-based outlets, such as Craig’s List or eBay. In 2009 our Goodwill became part of eBay’s PROACT program. They have provided significant help with several investigations involving both internal and external theft.
Goodwill also experiences some cash theft. Unlike most retailers, our cash theft typically does not originate from our cash registers or cash office. As we receive donations, we frequently find that donors forget cash and change in their pockets. We document and attempt to get that money back to its rightful owner whenever possible. However, since donations are not marked with a name, sometimes there is no way to find the donor it came from.
When donations are being processed and cash is found, we require our staff to turn in the money immediately and document it. If the donor returns and is able to identify where the money came from, we return those funds to that person. Through our integrity shopping program, we have identified individuals taking cash and failing to turn it in. Since this money is considered a donation, the offenders are charged with theft.
Ticket switching seems to be more common than basic shoplifting. Dishonest customers will not only switch a higher priced ticket for a lower priced ticket, but also take advantage of our discount color coding system. Color tags on merchandise are changed each week the merchandise remains unsold providing an increasing larger discount. Customers will sometimes keep the price tag the same, but switch the discount color to get a larger discount. We have trained our cashiers to help detect ticket or tag tampering, and allowed our management teams to apprehend individuals for retail theft when they cause losses by switching tickets.
Our LP department uses several tools and resources to help prevent losses and conduct investigations. We have taken much more of a preventative approach and our awareness programs have reduced the number of investigations we have conducted. Our version of an integrity tip line has been very helpful in gaining intelligence from store associates who are passionate about our mission, while maintaining confidentiality and anonymity if they chose.
In Goodwill of SE Wisconsin in particular, at least ninety-two cents out of every dollar goes back to support individuals with barriers to employment. Since our associates work with individuals who have barriers in our stores, they see firsthand the impact their work has and it makes them angry when they see someone stealing from that mission. The tips from our associates are a great resource in uncovering problems at a store.
CCTV systems are one tool we use for investigating theft and fraud at our stores. Most stores have at least eight cameras strategically placed in areas that pose a higher risk for theft, such as cash registers, production and donation areas, and cash offices. We are working to replaced older digital video recorders with more powerful and user friendly PC-based systems. The PC-based systems have been easier for our store management teams to use and allow us to place covert cameras in a location and keep them invisible from the store-level management teams when necessary. They are also much easier to service if problems do arise.
We tend to utilize still color cameras instead of PTZ or IP-based cameras for cost efficiencies. While those resources would be helpful, we are able to accomplish our mission with the lower cost options. Our PC-based systems were purchased with the future in mind as they are fully compatible with PTZ and IP-based cameras if we ever choose to use those options. All of our camera systems are remotely viewable and manageable.
Integrity shopping is another resource utilized by loss prevention. These tests are used for many reasons. They evaluate an employee’s adherence to training, if there is a reason to believe procedures are not being followed, and to detect the probability of theft with the store as a whole.
As mentioned above, we do experience some theft of cash that is donated. We combat this by having an undercover investigator donate cash by leaving it in a purse, wallet, or pocket. When an associate finds the cash while sorting the item, we will monitor them to see what happens with the money. If they fail to turn in cash, we initiate an investigation. If they do turn in the cash, they are rewarded and recognized for their honest efforts.
Depending on the investigation we are conducting, integrity shoppers may donate valuable or popular merchandise, such as collectable video games, rare coins, or other high-value items. A dishonest employee may be on the look out for such items they know they can sell for significant gain.
We also use gift cards during our integrity shops. The shopper will give the card to an associate stating that they found it on the sales floor, bathroom, or vestibule. The cards are pre-loaded with a balance that we can track with CCTV and exception-reporting software.
Another integrity shop technique involves paying exact change for an item and quickly leaving before given a receipt. This would be done to check if an associate pockets the cash.
These various integrity shopping tactics tend to be strategic and targeted. However, sometimes they are also conducted on a random basis to help identify issues that we did not know existed.
The technology and investigative tactics that we use allows our small team to investigate issues efficiently and keep costs down. In addition, each member of the LP team has completed the Wicklander-Zulawski interview and interrogation training programs and has earned the CFI certification to ensure that proper interview techniques and protocols are followed.
Today’s Goals and Beyond
Prior to 2010, part of starting up the loss prevention function at Goodwill of SE Wisconsin meant that we were more task-orientated and reactive than we wanted. Getting through many of the start-up requirements and adding to our staff has allowed us to become much more proactive.
Today we measure success, not by the number of investigations we complete, but by the quality of our prevention programs. Investigations will always be an important function of our department, but not a key measurement to our success or failure. Each investigator is held accountable for the effectiveness of our prevention programs and for being a value-added resource to the retail store operations.
Currently we are in the process of establishing a loss prevention agent program at one of our high-theft stores. This target-store program will deal specifically with shoplifters, auditing the store’s LP program on a weekly basis, and increasing safety awareness within the store. If successful, this program will be expanded to other high-risk stores.
As Goodwill of SE Wisconsin expands and opens new stores, the loss prevention department will continue to grow and expand within the organization. By implementing strong loss control programs and growing the loss prevention culture inside the operation, loss prevention will help Goodwill deliver on its mission of helping the disadvantaged in our communities.
Why Would Anyone Steal from Goodwill?
Talk to anyone in loss prevention with Goodwill Industries and they will tell you they have heard this question before…maybe even from law enforcement. Because most people do not fully understand the mission and operation of Goodwill Industries, they don’t comprehend how important the retail operations of Goodwill are to its success. Like any other retailer, financial losses through theft and injuries hurt the organization and limit its mission.
Goodwill consists of a network of 180 independent, community-based, nonprofit agencies throughout the United States and Canada, with fourteen affiliates in thirteen countries. Goodwill is North America’s leading nonprofit provider of job training programs, employment placement services, and other community-based programs for people with challenges to finding employment. In 2009 local Goodwill agencies collectively provided employment and training services to nearly 2 million individuals with disabilities and those who lack education, job experience, or otherwise face challenges tofinding employment.
The donated clothing and household items sold in more than 2,400 Goodwill retail stores and on www.shopgoodwill.com, the first and only Internet nonprofit auction site, fund programs that fulfill this mission. As a result, every 45 seconds of every business day, a person served by Goodwill earns a good job.
Community-based Goodwill agencies build revenues and create jobs by contracting with local businesses and government to provide a wide range of commercial services, including packaging and assembly, food service preparation, document imaging and shredding, grounds keeping, and administrative support.
More than 83 percent of Goodwill’s revenues are used to fund post-employment support and other support services that generate opportunities for people to achieve economic stability and build strong families and vibrant communities.
Goodwill Industries International (GII) located in Rockville, Maryland, supports local Goodwill agencies by providing training and resources that can enhance their programs and services and grow their Goodwill organizations—including loss prevention and safety.