I’ll bet you never heard of “Sweethearting.” I certainly had not heard that name until I read an article recently on “The Bottom Line” (msnbc.com). Sweethearting is more commonly known as “shrinkage” (a.k.a. employee theft) in retail.
But what exactly is it? Well, it is kind of insidious. It’s price-matching when the company does not have a price-match policy; reducing the price of goods for friends and family; not charging people for certain items because they are cute, famous, family, or friends…you get the picture. And it happens far more often than you might think.
Did you know that employee theft accounts for billions of dollars in losses for retailers on an annual basis? According to the National Retail Federation, shrink is on the rise. A 2011 National Retail Security Survey revealed that “the majority of retail shrinkage last year was due to employee theft, at $16.2 billion, accounting for 43.7 percent of total losses. Retailers reported that 18.7 percent of cases involved collusion between internal and external bad actors.”
In the end, employee theft means higher prices for consumers and reduced margin for retailers. A lot of time, effort and costs go into trying to prevent shrinkage.
If you are a retailer, here are some simple suggestions when selecting people that can help make a dent in this problem:
- Improve the hiring process and ensure you are asking the right questions in the interview.
- Screen your candidates thoroughly. If possible, use assessments that screen for the characteristics you want in an employee – and some of those you don’t want.
- Teach people exactly what actions are considered “theft”. Sometimes someone who exhibits what they think is a random act of kindness, just simply was not aware that even little things like giving a family member your associate discount (if not approved), or giving a free beverage to an upset child (assuming the employee was not empowered to do so) - can add up to big losses over time.
Just a few days ago, some people I know were visiting a local convenience store. While there, the cashier overheard their little boy ask for popcorn. His father told him he could not have popcorn, but they did get two drinks. When they went to the counter to pay for the drinks, the clerk offered the child a free box of popcorn, and gave him a drink card (one of those that you get punched each time you buy a drink – buy 7 get one free). She punched all of “drinks” on the card except one, and handed him the card. She told him he just needed to buy one more drink and the next one would be free.
When being considered for hire, she likely interviewed extremely well and seemed very customer-focused – the perfect retail hire. She was someone who came across as doing a great job of building relationships and getting repeat customers. All of those things are very important – these are certainly important characteristics for anyone in a customer-facing position.
What do you think? Is this example good customer service or employee theft?