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Start with a Good Cause: Loss Prevention Strategy Examples

In today’s retail business environment, everyone is seeking a competitive advantage. It could be in technology, people, business practices, or newly developed programs. The best strategy in the world, however, becomes meaningless if it is not executed properly.

I have been fortunate to have a high degree of success at executing and measuring the success of each loss prevention program I have developed. In fact, the level of department execution has often been praised in board meetings, store management gatherings, and almost always singled out in performance appraisals. This generally goes under the sections of planning, organization, implementation–you know, all of those management categories that human resources loves to put in the yearly performance appraisal process.

Because of this success, I have often been asked how the department was able to reach such a high level of execution. The standard response almost always goes something like this: “We have great people in the department,” or “Store operations are doing an outstanding job with the program,” or “We have senior management’s support.” Then there is the one I like best: “It’s a great program.” Obviously, the latter is not used very often.

- Digital Partner -

While some semblance of these is true, I have recognized that in order to drive loss prevention program execution, especially in complex retail environments, you really need a cause, one that can easily be recognized and shared by others in the organization.

Building a Cause: Loss Prevention Strategy Examples

Nothing is more influential in successfully executing a loss prevention program than identifying and rallying around a cause. This may sound silly, and you will not read this in many textbooks, so please bear with me on this point.

Read all of the survey data conducted by human resource firms or social scientists and one thing clearly stands out. The majority of associates are motivated by much more than a paycheck. If the paycheck, bonus, or reward program cannot get them to execute, the chances of getting them to support a company initiative, especially from loss prevention, will be short-lived at best. This becomes especially evident if traditional management approaches of being tough, direct, or worse, auditing for compliance, become part of the execution strategy. Many loss prevention strategy examples support this idea. Here’s one:

Not long after accepting a high-level loss prevention position, I was given a directive by the president of the company. The directive was due in part because of an increase in some high-profile internal theft cases that our department had recently resolved. We were also experiencing record-high shortage results during the same time frame.

The directive was to take the worst 20 percent of our stores as measured by our inventory shortage results, and immediately execute a reward program for the detection, apprehension, and prosecution of any associate caught stealing from the company. I was told to make the reward $10,000 per conviction (no, I did not add a zero).

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I tried unsuccessfully to execute a different strategy, but like a good soldier, I followed my orders. Within one week, we had a contract with a hotline service provider and had developed and placed posters in the store break rooms, receiving, back office, and cash areas. The signs were 24 x 36 inches in size and read “$10,000 reward for information that leads to the arrest and conviction of any associate caught stealing from our company, phone 1-800-xxx-xxxx to report suspicious activity.”

On the face, this seemed like a logical strategy. After all, we were identifying some serious internal theft problems, our shortage results were at an all-time high, and as we know, those darned associates must be the ones responsible because that is the survey data indicates.

Unfortunately, after nine months, we did not receive a single hotline call. Not one. In fact, no one even called the number to test to see if it was manned. The results were disappointing to some, but predictable, nonetheless.

Why wouldn’t associates turn in other associates for stealing? The answer is simple—they had no cause to rally around.

- Digital Partner -

Tom Peters probably summed it up best in his book Leadership Is Confusing as Hell when he states:

“If you want people to care, really to care, then enlist them in a cause that they care about: People enlist on behalf of a cause. They do the impossible for a cause. For a business, however, they just work. What’s your cause?”

Based on the results cited above, turning in your fellow associate, arguably, was not a good cause. Needless to say, the $10,000 reward posters came down and the program was discontinued, but not before being identified as a failure. Hotlines don’t work, or at least, that is what the organization believed.

Shortly thereafter, however, the loss prevention department executed a comprehensive awareness program that included a hotline for reporting dishonest activity that would later be identified as “extremely” successful. What was the difference?

Understanding Your Audience

Prior to developing any program, it is essential to understand your target audience, especially if you are attempting to modify associate behavior or change an organization’s culture. Not all associates are motivated by the same things, especially when taking into account generational differences, income levels, ethnicity, educational levels, and other demographics.

Prior to executing our awareness program, which included a hotline, we conducted a series of surveys that we hoped would give us the ability to measure the attitudes and behaviors of our targeted audience: the associates themselves. We combined this with a series of focus groups. By doing the research, we learned that our associates would not make a hotline call to turn in an associate for theft. They cited that receiving money for such a thing didn’t feel right and would be looked upon negatively by their peer group if they ever found out.

What they did say, repeatedly, was that honesty and sincerity were “in” and they had a low tolerance for people who were stealing. Many commented that honesty and people with integrity were “cool,” and they were emphatic that dishonesty was not. They also repeatedly talked about other issues that were integral to a successful program:

  • They did not understand how to handle theft situations, especially if they witnessed one.
  • They did not know how to handle a situation where they were approached to do something wrong.
  • They did not believe that stealing from the company had any consequences, let alone the possibility of a criminal conviction.

As mentioned above, we eventually executed a theft hotline as part of a new, comprehensive awareness program, but it was based on honesty and integrity and the company’s core values, not rewards. We also told the associates, through multiple messaging, that “We care about you” and “We don’t want you to make the wrong choice.”

It is important to note that these themes and messages were based off feedback from the associates. In the end, they identified our “cause,” which was “We want our environment to be free from those individuals who are stealing in our stores. It’s not cool, and we need your help to identify them and weed them out.”

Additional messaging advised that they may be approached by others and asked to do something wrong (theft), but we cared about them and didn’t want them to make the wrong choice, one that could affect them (criminal conviction) for the rest of their lives. Within the first nine months of the program, we had over 100 hotline calls and even more tips that went directly to our store managers.

The point here is simple: if you want to execute a good loss prevention program, you need everyone in the organization to recognize that it is a good cause, a worthy cause, and one that will affect them, personally.

Loss Prevention Strategy Examples for Getting People on Board

Gordon Eubanks, former president and CEO of Oblix Inc., once said, “Strategy gets you on the playing field, but execution pays the bills.” Some that might argue that a plan or program is only as good as the process and people used to implement it. Although this may sound like a cliché, it is absolutely true.

It is also essential that the following take place if any loss prevention program is to be implemented successfully.

  • Spend time with the executive management team (strategic planners) talking about your strategy and how it will align with corporate objectives.
  • Develop a cross-functional team of supportive individuals that can help identify the causal factors of shrink or whatever problem a company may be encountering and the initiatives needed (countermeasures) to combat them.
  • Present information on the loss prevention program as often as possible and at all levels of the organization, including board meetings, operations manager meetings, and all store manager meetings.
  • Work with senior managers to receive an unwavering commitment of support for those loss prevention initiatives needed to achieve your goal.

Senior Management Support

Why are senior management support and unwavering commitment so important? Because no matter how good a loss prevention program is, no matter how much excitement it generates, there will always be pockets of resistance toward change. Some of the resistance will make no sense, but recognize that change is hard and unfortunately some may view the initiative or the loss prevention people themselves as a threat to their turf. This becomes increasingly apparent in companies that are involved with start-up loss prevention programs or those that have identified loss prevention or shrink reduction as part of a new or renewed strategic initiative.

For example, at one company I initially had a terrible time getting support from a key operational executive. I had developed a solid working relationship with most of the executive management team, especially those in operations, but it became apparent that this individual was simply not going to support any initiative that our department developed.

I would later learn confidentially from his peers that his concern was not with the new initiatives, not with the new LP staff, and not with me. His concern was with the results that he believed the new LP initiative would achieve. He knew that if successful, they would improve the profitability of his stores and his concern was that the organization would look at him, personally, as being a bad executive, one who could not get his arms around shrink.

Cross-Functional Skill Sets

Good loss prevention executives must work hard at developing cross-functional skill sets as they will always be working with and through other people, groups, teams, and departments to attain their strategic goals.

One way of doing this is to set up cross-functional and/or cross-business teams to work on key issues and processes. These are often labeled in organizations as “shrink task forces” or “operations improvement team” or “profit enhancement committees.” It is important that the following guidelines are followed when setting up these committees in order to achieve a level of success.

  • Those represented on the team are key players that have the authority and skill sets to work on key issues and processes within the organization.
  • The team size must be manageable. Too many people can prevent a consensus on what action or best countermeasure should be taken. Usually, eight to 10 people, depending on project size, is optimal.
  • Provide the team with the internal and external resources to perform their task successfully.
  • Set timetables for the team’s project and ensure updates are presented, frequently, to senior staff and the board of directors.
  • Give the team sufficient authority to act.

One of my first experiences in working with a cross-functional business team involved identifying an electronic article surveillance (EAS) strategy. Departments and individuals that formed the team are listed in Figure 1.

Figure 1.

There were eight departments working together on this project. Their mission was to identify a technology, install the equipment, train the end users, measure the financial impact (ROI), and follow up to ensure the program was executed at a high level. By working together, this team of individuals encouraged cooperation and not competition. They were also involved in goal setting for the overall program.

This same model can be used for other loss prevention programs, including such things as the selection of a digital CCTV system, an associate awareness program, a POS exception-monitoring program, or a pre-employment screening program to name a few. It has been my experience that most departments want to be involved in loss prevention for a wide variety of reasons, but unfortunately, they are not always given an opportunity to do so.

The point here is to involve other departments so you can develop cross-functional capabilities, have a clearer understanding of your organization’s strengths and weaknesses, and establish a broader network of colleagues to assist in executing programs to achieve your department’s as well as the company’s strategic goals.

Test for Success

Nothing is more important, in my opinion, than testing programs that have been developed to see if they will have the desired expectation. Unfortunately, many companies perform tests as nothing more than a pre-requisite prior to a corporate rollout. When this occurs, there is little regard to whether or not the loss prevention program will have the desired result or will culturally be accepted by the organization.

Testing a program in a single store, district, or region provides the following benefits:

  • Provides an opportunity to benchmark so you can measure your improvement.
  • Helps determine how the change (new program) will affect the end user.
  • Promotes buy-in, up front and along the way, especially if the program is successful.
  • Provides an opportunity to measure and identify early wins and to create a genuine excitement about something new and effective.
  • Helps identify unanticipated obstacles, which will allow for adjustments in the program, especially as they relate to technological issues or operational processes.
  • Lets you solicit input from team members, who are end users, then take the appropriate action necessary to resolve them.
  • Allows you to make an educated determination if the program itself should be rolled out to other stores, districts, or regions.

A program failure occurs when there is a difference between what is expected and what is occurring. Not all programs developed by loss prevention will be successful, for a wide variety of reasons. Some organizations do not have the personnel to execute, while others may not have the culture that allows for success regardless of what others in the industry are doing.

One final point, the truly effective loss prevention executive will always recognize that no strategic plan is perfect, regardless of how much time and energy is put in the planning process. What is important is that the executive and the team adjust the plan to accommodate unforeseen changes, or willingly admit that it simply will not work and should be discontinued if the program is not achieving the desired result.

Communication and Information Delivery

Loss prevention executives are often so familiar with issues and topics that they assume others in the organization understand them as well. Unfortunately, this is not always the case. In this situation, the proper execution and full potential of a newly developed loss prevention program is difficult to achieve.

One way to minimize this risk is to clearly communicate the new program to the target audience while keeping key players, such as senior staff and store operations, updated on progress.

The good news is that never before have loss prevention executives had such a wide variety of information delivery systems available to them. In fact, there are so many ways to communicate that many companies’ today employ full-time communication experts or coaches; while others ensure that nothing is communicated unless it goes through an approval process (gate keeper) first.

High-Impact, Skillful Delivery

Effective communication requires thoughtful systematic planning and the ability to gain access and use of those communication tools available to you. Most importantly, successful LP executives understand the importance of a high-impact, skillful delivery.

Let me provide one example of how I communicated the awareness program mentioned earlier, which by company standards was a radical change at the time. Please recognize that this article is not on awareness. I simply want to illustrate what delivery methods were used to launch a single program in order to ensure its successful execution.

After a full year of developing and testing the loss prevention program, when it came time to launch it into stores, we made use of the following communications tools:

  • Teaser notes were forwarded once per week via email to regional, district, and store and loss prevention managers. A single email was forwarded each of the six weeks prior to the program execution date. The teaser notes were one-liners and read something like: “The way you view loss prevention will change dramatically on xx/xx/xx,” the program launch date. The next week read “Internal theft is about to drop dramatically in your stores beginning xx/xx/xx.” Another read, “Finally, innovative solutions to an old problem will begin on xx/xx/xx.” This created a lot of excitement in stores, their respective districts and regions. In fact, our telephones were ringing off the hook with curiosity, especially from store managers.
  • Memos were sent to store managers identifying the new program, how it would be implemented, and the measurable impact we believed it would have on their business. Copies went to everyone in operations, human resources, and senior staff.
  • An awareness presentation lasting about 45 minutes was given to each regional manager, their team of district managers, and all store managers by a loss prevention representative one week prior to the program start. This was an exact duplicate of the presentation the VP of loss prevention gave to senior staff and all operations executives one month earlier.
  • Videos were produced; one for the store management team and one for the hourly associates. The video covered all program components, but more importantly why the program was rolling out (our cause), what we hoped to accomplish, and how it would impact them.
  • Awareness program components shipped to stores one week in advance with fluorescent yellow markings on the outside that read “LP awareness program; save for store manager.” Inside were all program components, including monthly posters, paycheck attachments, quiz cards, prizes, videos, and more. All components had fluorescent yellow stickers attached to them with specific instructions on how each was to be used. This was supported by the video.
  • An awareness manual was developed that outlined each individual month and what each store manager, assistant store manager, and department managers roles were. Again, this was supported by the video.
  • The company newsletter allowed the new program to be the lead article the same month the program was executed. This article included photos of training sessions in stores and feedback from those associates who went through them.
  • A follow-through survey was forwarded to each store manager, 90 days after the program was initiated, allowing them to rate the program in twelve different key result areas, including ease of use.
  • The company intranet was used as a resource for loss prevention program manuals, forms, and poster concepts, along with re-order capabilities.

An Essential Component of Any Loss Prevention Program

Communication is the central process for executing any loss prevention program. In fact, it is the single most important tool for transacting the responsibilities of any program, especially those that are new and involve some type of change within an organization.

Although some would argue that all of the communication delivery systems described above might not have been necessary, I would argue differently. I believe that loss prevention departments must be held to a higher standard in every area, especially in communicating our message.

People want to know first, what the cause is, or why any new program or change is important. When this is communicated successfully, you can be assured that the programs developed are also being executed to their fullest potential, and begin measuring your return on investment.

This post was originally published in 2004 and was updated January 24, 2018.

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