Shrink, as you know, comes from a variety of sources – from slipshod inventory management that results in spoiled merchandise to out and out theft by employees, vendors and customers.
There’s no doubt about it. Shrink, no matter what form it takes, hurts. The more shrink, the less profit. It could be said though that shrink from internal theft hurts more. It hurts on a personal level — Employees that you have vetted, hired and put your faith in are returning the favor by taking what is yours. It also hurts more financially. Statistics say that up to 80% of shrink comes from employee theft.
The question is what to do about it. The answer, unfortunately, is that there is no one magic bullet, but rather a collection of things you can do to take steps to prevent, then spot employee theft.
These things include
- Properly vetting employees
- Keeping both the front and the back of your store neat and organized
- Auditing regularly and reporting in such a way that you can trust your numbers and easily spot swings from one audit to the next.
- Active video monitoring of both the front and back of the store
- And more
According to an article by Richard C. Hollinger in Loss Prevention Magazine, “What is the Relationship between Wages and Employee Theft,” they also include paying your employees what they would consider to be a fair wage.
Hollinger cites a 1983 book, Theft by Employees, he co-authored with John C. Clark saying that over 30 years ago, they found that “employees who felt equitably paid were significantly less likely to steal from their employers. Alternatively, employees who were not satisfied with their wages were more likely to commit employee theft.”
Fast forward to today, he references another article, “Can Wages Buy Honesty” Journal of Accounting Research (50, 2012: 967-1000) that came to basically the same conclusion: “the more people were paid in comparison to others in relatively similar work settings, the lower was the occurrence of employee theft.”
Other findings include:
- High employee turnover, particularly managerial turnover, is often a precursor to theft.
- Up to 39% of the wage increase can be recouped in terms of reduced theft
- Well paid workers will work harder, be absent less and be more productive
While Quantum Services can’t have much of an effect on how much you pay your employees, we can have significant impact on helping your store improve operations through better audits, better reporting, and consistent feedback from our auditors to your store managers. We don’t just provide counts. We provide insight.
For more information on how to curb shrink read:
Give us a call at 800-777-9414 to get started. With the information our team provides you can tackle your stores’ shrink problems knowing you have numbers you can trust and the experience of 1.7 million c-store audits at your side.