The Importance of Loss Prevention, and Security within Businesses - Essay Example

?The Importance of Loss Prevention, and Security within Businesses Prior Learning Portfolio – Analytical Essay One James Longobardi MS1 REVISED It was the passion that I learned from my family that first made me interested in the law and in justice, and it was my job at Best Buy that taught me about loss prevention. From my earliest involvement in loss prevention and security it held a special interest for me. In part this was due to how closely it aligned with the values that I had grown up with, and in part I was fascinated by the level of detail and observation that was required. Theft is an important issue in any industry or setting, such as within hospitals, bars, schools, retail or manufacturing. As a consequence of this the field of loss prevention has developed and has become important in almost every setting. Since beginning my job at Best Buy I have learned a lot about the role that loss prevention plays in retail, as well as methods of being effective in my role. I am currently the manager of the Security and Loss Prevention department at Best Buy. This role has provided me with many opportunities and challenges and it has allowed me to understand the challenges that are associated with security as well as its importance. I have also had the opportunity to do a summer internship at a County Prosecutors Office and to work part time for them following the internship. This gave me the chance to see the police in action and to understand some of the process that occurs. This essay will examine some of the concepts that I have learned in my role Loss is an important aspect of any business. The term refers to the loss of profits due to a wide range of situations such as credit fraud, shoplifting, internal theft, or package theft where some or all of the contents of a package are stolen but not the package itself. Package theft can refer to stealing the contents of the package within the store, or more organized, broader applications such as stealing small packages from shipping containers. Because of this, within any retail store security is extremely important as a method to minimize loss through this means. Different businesses use different methods and strategies of approaching this, and there is no single, universal method of maintaining security. This is because security can be broken in a number of ways, most notably through credit fraud, corporate corruption, and through theft. Theft can occur in a number of different ways and can be the consequence of actions of either staff or customers. As such it is important to have adequate measures of security in place and to ensure that these remain working at their full functionality. Two important parts of loss prevention are avoiding loss that occurs from customers through theft and decietful behavior as well as internal loss from staff and those that have access to business information. Both forms of loss are important, and as a consequence security is important for the functioning of any business. This essay will examine the use of physical security, security actions plans and internal investigations as means of detecting and regulating theft and fraud. Specific examples of types of theft will be examined, as well as a case example of how security is managed in a large business firm. Losses in retail contribute to significant decreases in the profit a store is able to make. Theft plays a significant role in this, with $107.3 billion lost globally in 2010 as a result of theft . The National Retail Security Survey in 2009 reported that an average of 1.44% of all sales nationwide are lost as a consequence of shrinkage . The term shrinkage refers to the amount of products that are lost between the point of purchase or manufacture, and the point of sale. This loss occurs in a number of ways such as through damaged products and misplaced items. Store managers and those in authority look at many ways of reducing shrinkage of all forms. In 2008, around 35% of this shrinkage was attributed to shoplifting, while 44% was attributed to theft by employees . As a consequence, managing shoplifting and employee theft is a crucial area that requires close monitoring and careful managing in order to minimize losses and maximize profits. Theft appears to be in a downward trend, with the rates of theft more than five percent lower than the previous year; however theft is still occurring at significant levels across the retail industry. While theft itself is lower than last year, attempted theft has not seen the same decrease . As a consequence the decrease in theft is in part occurring as a result of increased efforts and money spent in financing security. Physical Security The use of physical security within the store is one method through which theft is reduced. Physical security can be called by a wide number of titles, and in some cases these represent differences in their roles. Some terms that are used for physical security personnel include: store security, loss prevention officers, loss prevention agents or store detectives. Security may be direct employees of the retailer or they may belong to a security firm that contracts in staff. An investigator is a special application or special type of physical security. Their primary role is to patrol the store, keeping an eye out for any consumers that are exhibiting suspicious behavior. If they observe actions that they deem suspicious then they will follow or keep an eye on the consumer and watch for further suspicious behavior. They focus on knowing the area to which they are assigned very well and have the ability to put learned security theories into practice. An investigator needs to posses the ability, at any given moment, to pinpoint potential suspects from the everyday customer. Generally an investigator is not identifiable physically in anyway, they do not wear a name badge and are not in uniform. It is important that they understand the manner in which the business that they work in is set out and the hierarchy of management. This is important for understanding who to report to and when as well as knowing where employees should or should not be, which helps in the identification of employee theft. For any physical security that a company utilizes, whether it is internal or external, it is important that the security staff understand the parameters in which they are to operate. Different companies manage people caught stealing in different ways and it is important that security staff understand what their limits are and what their authority is. If their role is ambiguous this can cause confusion and employee dissatisfaction. In addition, false accusation of customers can reduce customer loyalty as well as alienating and angering them. Security Action Plans Security action plans are an important part of security within a store and they involve the visible security on the shop floor as well as security that is not so evident, such as people who monitor security camera footage and those who are responsible for delegating tasks to security. The first phase of security action plans is the role of control. This involves the establishment of clearly defined policies under which the entire security team will work. Generally, these plans also involve creating and instigating a system of reporting so that the successes or failures of the plan can be observed and any required changes can be made as a result. The next part is planning, which involves the creation of contracts and agreements at the operational level to ensure that all the people involved in security are clear as to their roles and responsibilities. Finally, the plans need to be implemented which involves implementation at the level of personnel, management, control of access and of information technology (IT) applications. The advantage of using a security action plan is that it creates clear parameters and goals for staff to operate under, and make it evident what is expected of them and what responses they need to give under different situations. Internal Theft/Corporate Corruption Internal theft is a major factor for any company. Monitoring dishonesty in employees is difficult, as there are many different ways in which employee theft can occur. For example, employees may steal from the register, or aid customers in stealing. They may be involved in accounting fraud, stealing products from the store or from stock, or in the manipulation of data. One method of determining whether internal theft is occurring is the use of honesty testing. This is generally done by an investigator and involves the purchase of a number of products by the investigator who pays the exact change required. The investigator makes a note of what the register read for the previous sale and what it reads following the purchase that they are involved in. In addition they note at what points the cash drawer is opened and whether it was left open following the transaction. If the drawer is left open following the transaction this gives the employee the opportunity to remove cash from the drawer without it being recorded. Generally, items purchased through this form of testing are later credited back to the store though members of management so that low level employees are not aware that they have been investigated . This method is used to monitor for casual levels of employee fraud, but when serious fraud is suspected, an internal investigation is often used. The aim of an internal investigation is to examine and reveal any theft or corruption that is occurring within the company without compromising the integrity or reputation of honest employees. As a consequence these investigations must be carefully planned and sensitive to the needs of the employees. Typically, a specific case of employee theft or corruption is suspected before any action is taken, and this forms the basis of the investigation. It is often helpful to provide employees with an anonymous way of reporting information, as they may feel pressured by colleagues not to give up anything that could be compromising. Many businesses use hidden cameras throughout their stores, and these can be used during an internal investigation to review the actions of employees. However, care has to be taken that any use of hidden cameras does not violate the rights of the employees. Other information gathered in an internal investigation can include written evidence, evidence stored on a computer and interviews with staff and witnesses. When performing an internal investigation it is important that all evidence is documented. The evidence is used to prove to a judge, if criminal proceedings are filed, that the investigation was legal and did not breach any human rights. There are many different forms of dishonest practice that occur at businesses. This has been the case as long as businesses have been in operation, but this has increased in prevalence and severity as the economy has become strained and people are being faced with lower income, trouble finding or maintaining jobs and shortages of the money needed for luxuries in some cases, and necessities in other cases. Some examples of common types of theft are given below. These may be instigated by an employee, consumer or an organized group that may contain both types of individuals. Theft at the register The employee operating the register has numerous opportunities to steal from the company without their actions being immediately obvious to the employer or the systems that are in place. One method of this is to take advantage of customers that don’t want receipts, such as those who buy a single item like a drink or a packet of cigarettes. After the customer has left the employee will void the sale and either pocket the cash or take note of the amount, taking the cash for all such instances out of the till when they balance it at the end of the day. Theft can also occur in cooperation between staff and customers. Here the cashier scans items in a decietful manner, passing some items by the scanner without scanning them, entering the bar code for a lower cost item, or keeping a low cost barcode on them and scanning this instead. One area that shoplifters target is self-checkout devices. These are checkout machines, often many in one area, where customers are able to process their own goods by scanning barcodes and weighing and entering product name or a code for products which do not have barcodes. The aim of these machines is to reduce the manpower that is required to serve customers and as a consequence increase the speed and efficiency in which customers can be served at. Because of the increased role of the customer in processing goods and the resulting decreased role of staff, it is relatively easy for shoplifters to steal items, especially through scanning and paying for some items and not others. One method of decreasing the prevalence of this is to have one or more security staff around the area of the self-checkouts, monitoring the behavior of customers, in particular, looking for abnormal behavior or body language which can be an indicator that a customer may be being decietful. One problem that occurs with an alarm system in a self-check-out center is that problems with the machines are so common that alarms tend to be ignored by security staff, giving shoplifters an advantage. Financial fraud Businesses, especially small businesses are vulnerable to losses through financial fraud. In 2010 alone, small businesses lost $8 billion as a consequence of financial fraud. Financial fraud occurs mainly through hacked bank accounts and hacked credit cards and can be instigated by either employees or customers. A large portion of the cost to the businesses came as a consequence of lost business, insurance payouts and legal fees . In small businesses fraud by employees or friends of the company is common as there are not as many tight controls as are present in a larger company. Often financial information such as bank account information is stored in the same location as product and marketing data. As a consequence, it is easy for people with access to covertly manipulate or take advantage of the data. Another way financial fraud can occur is through the introduction of viruses or Trojan horses into the system. This can be done remotely, and allows those in control of the programs access to financial data and transactions of the company. For companies to protect themselves against this form of fraud one effective method is to use antivirus and antispyware software in order to remove any malicious software from the computer. It is important that this software is kept up to date to be the most effective. Even with protective software in place, malicious software can still get onto the computer. As a consequence good practice is important, such as not downloading attachments from unknown sources or following links that you do not know the source of. Shoplifting Shoplifting is a very common method of theft and the products that are stolen vary widely in value and in size. Some shoplifters steal a few small items while others take greater risks, aiming for bigger, more obvious products. Companies introduce a number of methods to reduce shoplifting such as the introduction of electronic tags to expensive products and clothing which will give an alert if the customer leaves the store without purchasing the product. In general, no matter when theft is observed it should not be tackled directly unless the individual is expressly qualified to do so. The best response to observing theft is to collect as much information as you can and contact the authorities. This ensures the protection of the people involved, as the danger that is posed by the thief is unknown. This is the recommended course of action by most stores and by the police, even if it means the thief will escape. Case Study: Best Buy Best Buy is a multinational corporation that has a large number of branches within the United States. They sell a wide range of products, with a strong focus on electronics, but also selling other products such as furniture, appliances and musical instruments. In addition they offer services dubbed as ‘Geek Squad Services’ which include a wide range of services for different types of electronic devices, such as computer setup, MP3 player and iPod services and GPS installation and car services . Best Buy stores are often large, and the value of many of their products means that they are a frequent target for thieves, both within the company and exterior to it. Employees that are involved in security at Best Buy are known as Asset Protection Specialists (APS). They are involved in helping employees if they need any assistance, being involved in regular inspections throughout the store as well as being actively aware of whenever loss is occurring and watching for suspicious activity. This focus is very important and allows the store to manage and minimize the amount of loss that occurs. Best Buy has a strong policy on responding to people who are caught shoplifting. Employees are instructed not to directly confront thieves but rather to follow the proper channels and guidelines. This policy caused significant contention in Broomfield, Colo in 2009 when two students working at Best Buy were fired for tackling a shoplifter. The shoplifter had been observed leaving the store with products he had not paid for in his hand. The two student employees reacted instinctively by tackling the thief and knocking him onto the ground. The man then pulled a knife and broke free, cutting the store manager who had arrived on the scene . It is likely that the store fired the two employees in an effort to prevent any legal consequences from their actions, as they did not prove at the time that the man was a shoplifter even though it was clear that they were attempting to act in the best interests of their store. Although the employees could have proved that the man was shoplifting, because they did not do so prior to tackling him, there was the risk that the man was innocent. Best Buy and many other retail companies require their employees to record details and physical descriptions of alleged thieves but not to interact with them directly. Only trained security staff have the knowledge and training to respond correctly in this kind of situation. Currently, I am the manager of the Security and Loss Prevention department at Best Buy. I progressed to this role from initially working in sales, through various other roles and as a consequence have learned a lot about the way the store works, the different procedures involved in different departments and the different methods of dealing with theft, both from within the organization and from outside of it. As the manager of the Security department, my role is primarily organizing and supervising employees within my department. I actively supervise my staff, often walking the shop floor, watching how they go about their jobs as well as looking for any evidence of unusual behavior that they may have missed. I am involved in making sure the correct decisions and actions are made when shoplifting occurs, and ensuring incidents such as the example examined above do not happen. It is more important to secure the safety of our employees than to risk this in order to capture a single shoplifter. At the end of the day our staff are much more valuable assets than anything gained by catching a thief. My involvement in security is not limited to supervision. I am also involved in the development and implementation of security plans. Every time our plans come into revision, either because of changes in company policy or something that has occurred that needs to be addressed, I sit down with a number of my key staff members and we discuss what the best methods of approach are, what changes need to be made and how best to integrate them into the current system. One focus of my role, which as of yet has not played a large part, is that of employee dishonesty and theft. I have addressed this in some detail in this discussion, but my own experience with this is limited. If employee dishonesty is suspected then it is my role to consult with the heads of the departments which are involved and determine whether an internal investigation is necessary. If such an investigation is needed then I would play a significant role in this, especially in terms of encouraging my own staff to cooperate and to be completely honest. Thankfully, there has not been the need for an internal investigation of any staff while I have held this position. Loss prevention is an important part of the management of a business, as significant profits are lost through theft. Theft can occur from within the company or outside of it by a variety of techniques such as shoplifting, financial fraud and theft at the register. There is a range of techniques that businesses use to minimize losses from shoplifting. These include the use of physical security, electronic security tags and internal investigations. A significant portion of Best Buy’s staff is involved in security. This is an important factor for any company, as decreasing theft can result in a significant increase in profits. Whether security is managed from within the company, as is the case for Best Buy, or is contracted in from an external company, it is an important factor in company operation. Through my role as manager of the Security and Loss Prevention at Best Buy I have learnt a large amount about the role that these factors play in a business and their importance, and I hope to learn more through study and further experience. Works Cited Read More