In 2017 retail shrinkage increased to an average of 1.44% from a rate of 1.38% in 2016 according to the National Retail Federation’s 2017 National Retail Security Survey (pg. 8). Shoplifting accounted for 36.5% of shortage and employee theft about 30% (a decrease from the 2016 rate of 35.8%) (pg. 8). Before I am ready to hoot and holler over the decrease in reported internal theft, I note that “administrative and paperwork” related shrink climbed from 16.8% in 2016 to 21.3% in 2017. I am a bit skeptical of the numbers since the decrease in internal theft is almost the same as the increase in administrative shortage. Even if the numbers are true it is disconcerting to think nearly a third of all store losses are due to dishonest employees. When a third of losses are caused by dishonest workers the question has to be asked, “Who are stores hiring?” The CEO and founder of Loss Prevention Systems Inc., Bill Bregar has apparently asked this question because his company has introduced an applicant management system as well as pre-employment screening and drug screening. It is the goal of Loss Prevention Systems Inc. to help stores reduce shrinkage. By assisting stores in their hiring practices, employee related criminal activity can be eliminated.
The applicant management system is a one-stop shop for tracking job applicants and potential candidates a store owner or manager may be interested in. Paper applications are a messy method for keeping records on candidates for new job postings. Papers get lost, placed in the wrong folders or left out on desks which can have security implications and are simply cumbersome to handle. An applicant management system is an online database that provides employers with the ability to conduct the handling of candidate profiles in a single location. For example, it can allow an employer to set up questions that will help weed out unqualified people from the job pool by their responses. Forms for applicants to sign such as an agreement to drug screening and background checks can be electronically signed and submitted. Email correspondence can be completed with specific candidates through the system. Having been involved with job searches and the requisite paperwork I know that there a numerous headaches that can be avoided with such a system in place.
I do not think it is coincidental that a number of categories listed in the survey under “Employee Integrity Screening” including drug screening and criminal conviction checks dropped in overall use by retail. According to those retailers that were surveyed:
• The use of criminal conviction checks dropped by 4.1%
• Businesses conducting drug screenings (laboratory) were lower by 15.1%
• Driving history checks went down by 13.1%
• Those using pre-employment honesty testing was lower by .5%It was interesting that categories of screenings that actually went up were:
• Verifications of employment history by 11.6%
• Education verifications increased by 7.9%It makes no sense to me that businesses would choose to decrease criminal background checks and drug screening of job candidates.
In an article “Should You Hire Someone With A Criminal Record?“ in Kellogg Insight, there was a cause for concern for retailers found by the authors of the study the article was based on. In a section of the article, “Trouble in Sales”, the writer notes, “The researchers saw no difference in customer service jobs. But when they examined sales positions, they found that employees with criminal records had a 28% higher risk of being terminated for misconduct than coworkers without records.” https://insight.kellogg.northwestern.edu/article/should-you-hire-someone-with-a-criminal-record With the heightened risk of employee theft from those who have criminal backgrounds it would behoove retail owners to do MORE pre-employment screening not less.
In part 2 of this article we will continue the discussion on the importance of using an applicant management system to not only stay organized but to ensure the best people are hired. Criminal history and drug use does play a role in the increase in shortage and profitability of stores. Managers and owners must understand the impact it has on the store as well as the reasons some retailers are moving away from drug testing and pre-employment screening. In the meantime, know that having the right people on staff makes a big difference in store productivity and sales.
Get more information on an applicant management system, contact us or call 1.866.914.2567 today.