Shrinking Shrink

Consider this: When shrinkage occurs, the average case value (value of the goods stolen) for an employee is $902.53, while a shoplifter averages $114.02. Which of the two should you be most concerned about?

Both, certainly, but as the above illustrates, employees are stealing far more from you than your customers are.

Although a certain amount of employee theft is unavoidable, according to Kelly Evely Ansboury, a director of Beachwood, Ohio-based IntelliCorp Records, there are ways to reduce the probability and percentage of employee-caused shrinkage. The answer lies not only in conducting the proper background checks, but doing it before the employee is hired.

“I can’t emphasize that enough,” said Ansboury. “While most of our retailer clients will do employment screening on a pre-hire basis, one of our largest routinely screens post-hire—and that’s not something I would recommend.” The reason, explained Ansboury, has as much to do with morale as with the potential for theft.

“If I have accepted a job, my assumption would be that any and all checks have been run and I have been cleared for the job,” she said. “To find out later that is not the case, and especially to be released after I have been hired, is not the best practice.”

“At the same time,” said Ansboury, “the risk for theft can’t be ignored.

“The motivation behind conducting checks post-hire has to do with the fact that in retail it isn’t all that uncommon for people to accept a job and then not appear for work,” she explained. “So some retailers feel they save money by waiting to screen after it appears the employee is going to stay.”

A further rationalization for delaying the screening, she explained, is that the employee is supposedly undergoing training and is therefore closely supervised, eliminating risk of theft. Unfortunately, such reasoning flies in the face of reality.

“We’re talking about retail here,” said Ansboury. “The reality is that there is opportunity for shrinkage before the screening result comes back.”

Typical background checks include a criminal component, identity verification and a credit report—but these vary according to position.

“If an individual is going to have access to money, you have every right to pull a credit report,” said Ansboury. “The combination of screening services will vary by job.” What doesn’t vary, she said, is searches by job category. “It is imperative that all searches run for each job category be standardized.” if a retailer runs an identity-, criminal- and credit-check for the clerk position, then every clerk—regardless of store or state—must have those checks run.

Retailers that are negligent in hiring and/or retention practices risk huge liabilities. According to Ansboury, two events in particular—a national grocer was ordered to pay $1 million each to two children who were sexually assaulted by an employee, and a manufacturer was held liable when a contracted door-to-door salesman sexually assaulted a potential customer—exemplify what can happen when a retailer doesn’t run the proper background checks. “Or, what happens when, in the case of a first-time offender in which a background check wouldn’t have provided an alert, a retailer doesn’t establish a standard system for screening,” she added.