Use of Security Personnel

Reduction of Employee Theft in a Retail Environment - Barry Masuda

Shrinkage of certain products carried by a New Jersey-based discount electronics and appliance retailer reached unacceptable levels in 1990. The security department, headed by Barry Masuda, studied the problem in-depth and found that the items most at risk of being stolen were camcorders and VCRs.

Masuda suspected employee theft of these items in the warehouses. Despite the use of locks, guards, alarms, and closed-circuit television cameras to physically protect the merchandise, securing the warehouses themselves from thieving employees was very difficult. The retailer had warehouses in four stores and a much larger one at the distribution center. All of the warehouses had many entrances and exits.

A bigger problem was that many employees had access to the locked storage area where the camcorders and VCRs were kept. Inventory was not taken frequently enough to link thefts with any particular person. For example, if an inventory was taken in March and again in April, and in that month ten camcorders disappeared, how could the thefts be blamed on anyone if many employees had gone into the storage area?

The solution was to count the camcorders and VCRs every day. This "preventive audit survey" worked better than expected. Any missing items could be linked to staff working that shift, and guilty employees were fired. Not only did shrinkage of camcorders and VCRs drop to 0%, there was also a reduction of employee thefts of other non-targeted merchandise.

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