Retailers Paying Employees to Rob Them
Commentary by Laurie Cozart, CPC, CEO/Co-founder, TeamSpringboard (http://www.teamspringboard.net/)
If you are like most retailers, you hire teens transitioning from the schoolyard to the workforce believing this will keep your costs low and your profits high.
The troubling reality of this practice is it often means businesses are putting the responsibility for achieving profits in the hands of under-trained and, all too often, unethical employees.
A survey of nearly 25,000 high school students by the Josephson Institute of Ethics found 62 percent admitted to cheating on an exam in the past year with 38 percent saying they had done it more than once.
Twenty-seven percent of the students admitted to shoplifting in the previous 12 months while 22 percent said they stole from a family member and 18 percent admitted stealing something from a friend.
The truly troubling aspect of the Josephson research is that the teens do not have a problem with their behavior. Most seem to have the misplaced notion that ethics have no place in the academic or working world. Some honestly believe if they lie, cheat and break the rules, they are more likely to succeed. In fact, 59 percent (66 percent of boys and 52 percent of girls) agreed with the statement “in the real world, successful people do what they have to do to win, even if others consider it cheating.”
Moving these students to the workplace means, in many cases, profits are quite literally walking right out the store door.
In a survey, our firm, TeamSpringboard, conducted with 500 young adult employees within a juniors clothing retailer, 41 percent admitted to stealing from their employer.
Thirty percent said they had given away merchandise to friends or family members, 35 percent stole for personal gain of either money or merchandise, 10 percent gave unauthorized discounts and 25 percent admitted to charging back their own credit cards using false refunds. Forty percent said they had lied about their education and experience to obtain employment, compete for a promotion or negotiate a raise.
So what can retailers do to keep more of their profits and their teen and young adult workforce at the same time?
The answer is ethics training and workplace skills development. Unfortunately, most retailers do not spend nearly enough time training new hires, with two to three days being the norm. The same is true even for managers. Eighty-five percent of small businesses that hire young adults put them in supervisory positions.
So with only two days of training a new manager is put in charge of customer service, sales, money transactions, inventory and, most alarmingly, the mentoring and supervision of other young adults. Does this seem reasonable?
Savvy employers are realizing the need to allocate more of their budgets to on-board training. Studies show increased job training can increase productivity by 22 percent. A truly comprehensive training approach that includes developing jobs skills, workplace ethics and behavior management supported by continued coaching increases productivity by 88 percent.
Many retailers do not believe they have the resources, human or financial, to do the type of training described. It’s clear they can’t afford training as usual. Studies show that ethics and skills training improve morale and confidence. Keeping your employees honest, productive and living the company vision has dramatic effects on your bottom line. The money spent on training is returned three fold with increased sales through increased productivity, decreased employee fraud, reduced absenteeism, improved communication and less employee turnover.
Moderator’s Comment: In your experience, do most retailers realize how much their employee training programs are costing them at store-level? Are there
any retailers with new employee and on-going training programs you would hold up as a model for others to emulate? –
Laurie Cozart – Moderator
I’m with Al. Sure, most teens haven’t lived long enough to graduate to such ethical adult activities as tax evasion, marital infidelity, or insider trading. Pay people well enough and they’ll be disinclined to steal. Oh, well, that works for salaried workers…ceos require extra supervision; they sometimes steal even after being over-compensated. Of course, if they’re caught and prosecuted their personal net worth might go up.
I bet the numbers cited in that report aren’t much different from the equivalent numbers 20 years ago. Virtually all young people cheat — it’s part of growing up. (And then in later years, they lie about not doing it, as evidenced by the survey here.)
There’s a cure for this cheating — it’s called maturity. And many teens first get a taste of it through a steady job. Yeah, sure, it takes some kids longer than others to drop their bad habits, but the ROI of hiring teens in a retail setting (and for society as a whole) is very positive.
Signed,
PF (reformed cheater)
I think the problem is that ethical behavior is not rewarded. An employee who does not steal makes the same minimal wage as one who does. Employers will get what they pay for. If they spend nothing preventing shrinkage, or even provide economic incentives that inadvertently promote shrinkage, it will happen.
See Adam Smith. I think he wrote something about everyone acting in their own best interest…
I’m sure these store level training programs do have a cost involved. I’ve worked at all levels of retail and have seen fraud committed to various degrees. At the executive level, the stakes become so much higher. Payoffs, kickback schemes, embezzlement, insider trading etc, can go just as unnoticed as if someone were taking pens and post-it notes home. Often, just as it is done at store level, executives will even flaunt the fraud, disguising it as legal business activities to include SEC filings with the details. The costs are always passed on to the consumer. I’ve found that the employee-owned retailers seem to have the least amount of fraud. When someone steals, he steals from his coworkers. I’ve heard a few stories about how justice is carried out behind the store when someone is caught.
In a small retail environment, internal controls are impossible to put in place and enforce. Because a small retailer cannot afford more highly trained workers, we are at the mercy of taking the best of the worst. In my experience, it’s not just the teenagers that are committing crimes but just about anyone you hire to handle money. The closest thing I have found to internal controls is to try and make complicity necessary if a theft is going to take place. Alas, even that doesn’t work. Every time I catch a thief, there is always some employee who pops up and says, “Yeah, I thought he was stealing.” When asked why the owners were not informed, the answer is always, “I didn’t think it was my place to say anything” or “well, I wasn’t sure he was stealing.”
My solution is covert cameras and a strong policy of pressing criminal charges against anyone I catch. It’s not foolproof but it addresses a very serious problem that man hours spent on trying to teach ethics would not accomplish.
I honestly don’t think that effectively teaching ethics is even possible. If the person hasn’t learned some ethics and morals by the time they enter the workforce, the workforce trying to successfully teach them ethics is a waste of time.
As to the question of ever stealing anything or cheating on an exam in one’s LIFETIME, I’d like to meet some of these people who haven’t. Perhaps their memories have faded, or they are the Pope or something. For us baby boomers, think back to those days so long ago, what we did when we were teenagers and how our hard working parents seemed so ridiculous. Of course teenagers are going to misbehave – they are teenagers!
So, for retailers, it’s a case of realizing that they can hire teenagers more inexpensively than “regular” workers, but they need to spend more time with them, assign mentors, and communicate (both give and take) what the company is all about, what is the mission, what’s the corporate philosophy, what the company does for the community. It’s an opportunity to hire young workers, make them part of the team, and even learn a bit about young people and their culture.
To leveritt…
Lisa, let us know if you need a note for your boss. RetailWire certainly qualifies as employee training. We can guarantee good return on your investment in time spent with us ; )
I’m ashamed to admit that, although I value the thoughts others take their valuable time to share, I usually don’t make the time to participate in surveys. Well, this one hit a nerve and I feel compelled to contribute.
I believe that, basically, most employees regardless of age want to do a good job. In large part what motivates employees to treat their employers with respect–and this includes honesty–is being treated fairly and with the same respect they are expected to show their employers. In more than 25 years of managing people, I have become absolutely convinced that employees earnestly want to know what is expected of them and desire in return to be held accountable for excellent behavior and performance. They also want to be recognized and properly rewarded for their achievements and they need to know and believe that what they do and accomplish makes a difference. This is, incidentally, what we are supposed to be teaching our kids so that they grow up to be honest, responsible adults.
If we have good systems to reinforce good performance and behavior, we are likely to get more of it more often. Isn’t this really just Human Behavior 101? Part of articulating what is expected and valued should be well established in good initial and ongoing training and reinforcement.
It is always difficult to place a monetary value on training yet we all know intuitively that it ultimately results in increased profits, even if we cannot always measure and prove it. In today’s world, it is very sad to see that when times get tough and companies tighten their belts, trainers and training programs are among the first expenses to be cut. Often times we are also seeing the most experienced productive workers (who are also usually the most highly paid) “laid off” and replaced with inexperienced new hires earning cheaper wages who usually need more time, effort and direct supervision from managers. In this regard, I agree with mfbenson that you get what you pay for. This applies not only to the cost of providing fair wages; it applies to what we invest in training our employees. In my opinion, eliminating training and trainers along with replacing more costly albeit experienced workers with cheaper less experienced workers is alarmingly short sighted and results in more long term loss of quality, experienced and efficient employees which ultimately leads to loss of profits.
I spent 18 years as a manager in what has now became a monolithic telecommunications provider. After two mergers, I had had enough of seeing essential positions and services cut in the effort to boost stock prices to position the companies for yet more mergers.
I am actually amused by some of the current media image campaigns that cost enormous amounts of money and are focused on convincing disillusioned consumers that these telecommunications providers suddenly now care about their customers. Is it so amazing that there is now such fierce competition for subscribers and the level of customer service is still relatively appalling?
In Tom Peter’s first book, he asked something like, “What ever gave American companies the idea that customer service is not important?” I wonder what ever gave American companies the idea the employees are not important!
Invest in good employees and quality programs; demonstrate your loyalty and commitment to the education and skill development of your valuable human resources and you will indeed earn what you pay for!
I’m reading RetailWire instead of working. Does that count?
It goes beyond physical theft. Most teenagers truly believe that intellectual property is free for the taking, as long as it can be downloaded. Any mention of “theft” after music is downloaded is met with genuine astonishment.
If a young employee hasn’t been taught ethical behavior by his or her parents, their first employer hasn’t a prayer of doing it, either. Instead, the employer’s job becomes finding youngsters who already have ethics and putting them in positions of authority.
Do you, like me, also wonder what role employee unions should be playing in reducing employee theft? Do they, in order to protect and reinforce the integrity of their organizations (quit snickering), coach and/or train their members to be the best, most ethical employees they can be?
Regardless of age, workers need to be trained. Customer service couldn’t be worse than it currently is (she said, tempting fate), and it is not a function of age. Yes, I shoplifted when I was 11, but ironically (perhaps), I never stole from someone I worked for. It just seemed wrong – biting the hand that feeds me, etc. But I did mature. I don’t believe there is any cost that won’t be improved by an investment in training.
Currently I’m re-reading the book, “Fast Food Nation,” and I am reminded of how those in the food industry have often taken advantage of this same group of employees. Even for those just entering the work force, doesn’t there need to be mutual respect between employer and employee in order to flip a good burger, or simply push a button to get the robotic chef started? Ethics training is crucial for both sides of this question.
Just last night I ordered some food for takeout. When I picked it up, I added a salad to the order but the clerk (teenage girl) didn’t add it to my bill. When I tried to pay her for it, she said, “Oh that’s okay, we’re busy.” I could be wrong, but my guess is that she learned that kind of unethical behavior from her parents. The only thing her employer did wrong was hire her. It’s pretty hard for an employer to teach morals if it’s not being taught at home.