Loss Prevention Departments

Do loss prevention departments contribute to organizational effectiveness or should they be eliminated? Could the functions of an LP department be performed more efficiently by line managers or other departments, and would things run smoother if LP’s bureaucratic policies were eliminated?

These same questions are often asked about the human resource departments. Every two or three years someone writes an article suggesting that companies could save a lot of money and be more effective if they totally eliminated their HR department. The latest attack appeared in the Wall Street Journal (“Companies Say No to Having an HR Department: Employers Come Up With New Ways to Manage Hiring, Firing and Benefits,” April 8, 2014). The central theme of these articles is much the same: HR people don’t contribute to the bottom line, they don’t know what it takes to make a profit, they perpetuate worthless forms that waste time to complete, and the things they do could be done more effectively by line managers.

These attacks on HR are very threatening to some HR people and some companies actually take their advice and eliminate their HR departments. Nevertheless, these articles often serve a useful purpose in spite of their inflammatory rhetoric because they force executives and HR managers to strategically assess the HR functions and how they can best be performed. Bureaucratic procedures and unnecessary policies are often revised or eliminated.

A similar strategic assessment should occasionally be made regarding the functions of a loss prevention department. What does the LP department do and should some of these responsibilities be distributed more widely within an organization? Is loss prevention the sole responsibility of the LP department or does everyone share some of this responsibility? Involving others is essential to building a culture of integrity. Such a culture requires the involvement of more than just the LP department; all managers and supervisors need to participate in endorsing the rules, enforcing them, and modeling good behavior.

Training is an especially important function that could profitably be delegated to involve other people in the organization. Loss prevention training is extremely important and all employees need to understand the company’s policies and internal control procedures; but, should the LP department be the only group to present this training? Principles of persuasive communication suggests that this training would be more effective if it were presented by line managers or entry-level employees who have been asked and coached to present it.

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Occasionally it is healthy to step back and challenge the existence of a department. What does it do and who should do it? What are its policies and procedures and should they be revised? $

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