Why Amazon’s employee shaming tactics won’t help retailers combat shrinkage

Dave Lunn TellermateOnline retail giant Amazon have been in the news for all the wrong reasons recently, as reports emerged that the company is using shock tactics to deter staff from stealing from its warehouses. The “employee shaming” surveillance videos used by Amazon not only raise a whole host of ethical, moral and privacy issues, but there are questions around whether this tactic is even successful when it comes to combatting shrinkage.

For those who may have missed it, Amazon has been accused of showing surveillance videos of their warehouses where employees are seen to be pocketing a variety of items. The videos are being played out to staff with the words such as “dismissed”, “suspended”, or even “arrested” emblazoned across the screen. It is hoped that these videos will act as a deterrent to staff who may be tempted to secure a five-finger discount.

News media company Bloomberg report that former Loss-Prevention Executives at the company said that this practice was nothing new, stating that “the use of theft stories was widespread during their tenure”. And while some experts are calling Amazon’s scare tactics an evolution of older corporate loss-prevention tactics such as frisking or bag searches; many are claiming that this is just another example of Amazon failing in its duty of care to employees.

While there is a strong argument to suggest that these videos could actually deter theft; those businesses considering following Amazon’s lead should err on the side of caution. After all, while the surveillance tactics used may well deter employees from stealing inventory, they often fail to target the more common cause of shrinkage for brick and mortar businesses, cash loss.

Amazon-Surveillance---Insight.pngAccording to the Global Retail Theft Barometer, “most instances of employee theft occur at point of sale”. This means that employee theft is most prevalent not in your warehouses, but in your cash drawers. With clever cash scams being made to look like genuine transactions, even the best surveillance technology money can buy may not be able to help identify the true extent of internal fraud.

So if surveillance tactics aren’t fully addressing the problem, then how can you successfully reduce the shrinkage attributed to internal theft in your business? Is there a better way to deter employee fraud?

Creating a supportive structure

Of course, prevention is always better than a cure. The best way to target employee theft is to ensure that your employees don’t even consider it in the first place. It goes without saying that employees who feel engaged, respected and valued will be less likely to steal.
But unfortunately, there will always be one or two bad apples that will happily defraud your business, regardless of how well they are treated. In this instance, the solution could lie in intelligent cash management technology.

Tackling cash loss

Intelligent cash drawers look set to become the first line of defence for businesses when it comes to combatting cash loss. This new technology is helping organizations reduce shrinkage by alerting managers (and head office) in real time, whenever cash losses occur.

Rather than having to scan through hours of surveillance footage to try and identify the cause of a cash loss, Loss Prevention can now be made aware immediately that a loss has occurred; in which drawer, by what cashier, by what amount, and during which transaction. This allows a previously lengthy investigation process to be performed and often reconciled, within minutes. Alternatively, if a dishonest employee tries to “build up” the drawer throughout the day in order to steal the excess cash in the back office, this will also be flagged. As if that wasn’t enough. Intelligent Cash Drawers are also helping businesses streamline their operations by eliminating the need to reconcile drawers multiple times per day (during shift changes, when a customer believes they have been short-changed or at the end of day close out). This can not only reduce the risk of a cash loss happening through human error, but can save up to 30 minutes of valuable employee time per drawer by eliminating manual tasks. These fringe benefits give Intelligent Cash Drawers a clear advantage over surveillance tactics alone when it comes to combatting cash loss.

Being able to determine where a cash loss is happening, on a transaction by transaction basis, in real-time, not only helps businesses identify and deal with the cause of cash loss, but it helps protect honest staff too. Your business can identify the bad seeds and deal with them directly, rather than subjecting honest staff to the same catch-all deterrent tactics.

Instead of following in the footsteps of Amazon then, perhaps businesses should look to address the biggest cause of shrinkage – cash loss. Implementing innovative cash management technology to help shield against cash loss caused by internal theft, will go a long way towards protecting the business against those bad apples, while ensuring that they maintain their duty of care to employees. A sound investment.

Is the true picture of cash loss being covered up in your business? What effect does this have on your employees? Download the Ebook to learn how internal theft might be going under the radar your business…

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