Taking Ownership of Shrink

One of my greatest pleasures when working as a management consultant was that I was always learning as our team moved from company to company. Here’s a great example of one of my “lessons learned”.

For over 20 years, our firm used a unique, computerized, confidential survey program in our attempts to pinpoint losses. In this program we evaluated and measured employees’ responses to 100 questions, while implementing this survey at multiple store locations simultaneously. The locations selected were always similar in size and scope, but quite different in operating results. While one group of stores was successful in financial results, the other group was not. The survey measured twelve critical management and operational factors including Internal Controls, Climate of Honesty and Management Involvement. 

 Internal Controls: Over the years, our extensive studies of internal dishonesty have taught us that employees’ perceptions of the effectiveness of crucial internal controls are particularly important in controlling and preventing internal dishonesty. The less effective employees perceive a company’s internal controls to be, the greater the propensity for internal fraud and theft to occur within that particular location.

 Climate of Honesty: Climate of Honesty is respondents’ perception of the culture or “atmosphere” within their location as it relates to such factors as morale, equity and fairness, management’s honesty and integrity, teamwork and cooperation.

 Management Involvement: This portion of our program measures the perceptions of employees as to what actions management regularly takes to prevent internal dishonesty, theft, and losses in general.

 The Results: For two decades, this unique program has consistently found that employees working in locations with higher than average losses and fewer profits perceive internal controls to be weaker, coworkers’ attitudes towards theft more tolerant, and management’s involvement in preventing losses to be seriously inadequate when compared to those working in more profitable locations.

 Quality Leadership: After extensive research on honesty in numerous organizations, my associates and I concluded that location management has an enormous influence on the conduct of their employees and that the amount of identifiable dishonesty within a company serves as a barometer to help measure the quality and integrity of management.

 Bottom Line:   We have learned that a few honest managers who really are alert and always on top of things when doing their jobs can keep a hundred employees honest, while just a couple of managers who are disinterested, unethical, or dishonest will allow internal dishonesty to grow and flourish.

Remember . . .

– Honest managers who are alert and “on top of things” tend to foster a climate of honesty among employees.

– Morale is contagious. When most of your staff is happy, the company thrives.  $


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