Curbing Retail Shrinkage with the Help of a Shrink

Opinion: In retail technology today, security is a chief concern, and CIOs are exploring any and all options-including a psychological approach for weeding out would-be thieves.

In retail IT circles today, no issue generates as much concern—if not outright panic—as does security.

You name it, were scared of it. Thats true when the topic is hackers trying to break in and steal credit card info, terrorists wanting to poison the apples, gun-toting bandits with their eyes on cash-register cash or the always-popular disgruntled employee wanting to steal their way to a nice, self-directed bonus.

Every time IT comes up with a technological defense against shoplifting or fraud, thieves come up with counters. More often than not, they are embarrassingly simple and obvious counters. An experiment with unit-level RFID discovered that a small, strategically placed piece of tape thwarts the anti-theft apparatus.

/zimages/3/28571.gifTo read about Ciscos multiple security problems, click here.

The most frightening of these threats is the most frequent: employees helping themselves or their friends to the merchandise. Unicru, a software vendor that creates human resources software, claims that it can attack the employee fraud problem by helping to identify likely thieves before they get onto the payroll.

David Scarborough is Unicrus chief scientist, and hes also a psychologist by training. Conceding that its a difficult puzzle to solve—because the kind of person who is likely to steal tends to be a person who is comfortable with deception and is often quite good at it—he nonetheless argues that it is possible.

Its generally accepted that at least half of all retail shrink is based on employee theft. To steal in plain view takes a person who is comfortable with taking risks, although the thief doesnt see it as truly risky. "They dont think in terms of risk," Scarborough said. "They think in terms of probabilities."

The typical criminal employee thinks that he or she has a carefully planned scheme, so getting caught is considered impossible or at least not likely. Therefore, the threat of getting caught isnt a deterrent. Its similar to a popular argument against the death penalty, which is that capital punishment would discourage certain people from committing capital crimes.

The people it would discourage—legislators, attorneys, executives—are people who wouldnt be inclined to commit capital crimes anyway. The people who would be inclined to kill for money never think theyll get caught, so the severity of the penalty doesnt influence them.

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Scarborough asks potential employees lots of seemingly innocuous questions about how they would react in various situations. The applicant who is comfortable with a lot of risks gets looked at more closely.

Another hint: the desire to conform to community standards. If everyone in town is cheating on their tax return, its a lot easier to justify cheating on yours. Despite generations of mothers asking, "If Johnny Smith jumped off the Empire State Building, would you do it, too?".... theres a safe feeling to doing what everyone else is doing.

In an applicant questionnaire, this can be addressed as easily as asking applicants whether they believe that most people are honest. If they say they believe everyone around them is dishonest, they get an even closer look.

Next Page: Tailoring applicant questions to the job at hand.