LP Psychologist: Trauma-Informed Leadership for Loss Prevention Management

By John W. Jones, PhD

In today’s fast-paced business environment—particularly in the wake of a global pandemic that left scars both visible and invisible—leadership styles need to adapt to new business challenges, such as remote work, increased crime, and unsafe work environments. Loss prevention management is responsible for reducing operational losses, including issues like workplace violence, employee theft, and collusion with organized retail crime. Therefore, loss prevention teams need to work closely with human resources and operations to ensure that the highest-risk stores and locations receive a new form of leadership that is optimal for the post-pandemic economy. One emerging leadership style that offers promise is trauma informed leadership.

Trauma-informed leadership recognizes the widespread impact of trauma on employees, consumers, and communities. This approach aims to create a safe and empathetic organizational culture by adopting a nuanced understanding of the vulnerabilities and triggers of job candidates, employees, vendors, and customers who have experienced trauma. Trauma-informed leaders prioritize emotional intelligence, active listening, and a commitment to equitable treatment.

My research team recently made a presentation on trauma-informed leadership at the 2023 Conference of the Society for Police and Criminal Psychology. My coauthors were Gary Behrens, Dr. Michael Cunningham, and Brian Dreschler. This research examined the statistical relationship between a trauma-informed leadership mindset and job performance with 306 managers across the United States. In our study, high trauma-informed leaders were more likely to report supporting others with an awareness of and sensitivity to personal reactions to traumatic workplace experiences or stressful job events. These trauma-informed leaders tended to convey sincere and compassionate acceptance, offer support, and fulfill commitments to emotional welfare in a transparent, consistent, and fair manner.

Using a research measure of the trauma-informed leadership mindset, our empirical study documented that a stronger trauma-Informed leadership orientation was associated with higher rated leadership performance in general. Moreover, compared to leaders with lower trauma-informed leadership orientations, the stronger group of managers was more likely to create a supportive and safe workplace, remain hardy and resilient in the face of stress, engage in conscientious and trustworthy leadership activities, and suppress workplace violence.

The purpose of this column is to expand on how the strategic placement of trauma-informed leaders could support loss prevention management. The post-pandemic economy has changed the landscape of loss prevention in several ways. With the rise of remote work, digital transformation, and socially distanced environments, new forms of loss have emerged. Coupled with the emotional and psychological scars left by the pandemic, social tensions, and a challenging economy, employees and consumers alike are more vulnerable to making decisions that could result in loss for organizations. Although a few of the following bullets require more applied research, they at least serve as viable hypotheses as to why trauma-informed leadership is essential for loss prevention:

■ Rising Mental Health Concerns: The pandemic has aggravated mental health issues, with increased stress and anxiety becoming commonplace. Ignoring these challenges can result in higher instances of workplace violence and theft as people act out due to emotional or psychological distress.

■ Growing Digital Vulnerabilities: The shift to remote work and e commerce has amplified opportunities for loss, from digital fraud to employee data theft. A traumatized employee who is not supported properly may resort to unethical behavior as a coping mechanism.

■ Deteriorating Community Relations: With communities hit hard by the pandemic’s social and economic consequences, collusion with organized retail crime has become more tempting for some. Trauma-informed leadership builds relationships that reduce this risk.

■ Human-Centric Approach: A traditional loss prevention model can often be perceived as punitive, relying solely on disciplinary action to deter theft or violence. A trauma-informed approach seeks to understand the underlying factors that contribute to these behaviors, creating preventive measures that are conceivably more effective and humane in the long run.

■ Enhanced Organizational Resilience: Fostering an environment where employees feel supported leads to higher productivity, lower turnover, and ultimately, a more robust framework to prevent loss through both human and operational channels.

■ Store-Specific Crime Forecasts: Both retail and non-retail organizations are increasingly using site‑specific crime risk forecasting with their stores to help them develop tailored risk management strategies for stores in the highest-risk locations. Ensuring that trauma-informed leaders are assigned to these high-risk stores appears to be a prudent loss prevention strategy.

The following five program concepts serve to highlight how trauma informed leaders can take a slightly different approach to controlling loss. These post-pandemic leaders still have proven leadership skills and competencies at their disposal, but they can also tap into their trauma-informed leadership toolkit.

1. Employee Training and Sensitization Programs

Trauma-informed leaders might invest in training programs that focus not only on the technical aspects of loss prevention but also on emotional intelligence, conflict resolution, and recognizing signs of trauma among peers. This comprehensive approach prepares employees to handle potentially violent or risky situations with empathy, thus reducing the likelihood of escalation.

2. Open and Safe Communication Channels

Creating an atmosphere where employees can speak openly about their challenges removes the taboo associated with discussing mental health. This leads to early identification of issues that could manifest as theft or violence, allowing for proactive action. Of course, human

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2 Engaging in Effective Self-Care and Work-Life Balance

3 Being Supportive of All Employees

4 Being Empathic with Employees’ Needs and Concerns

5 Valuing Fair and Inclusive Behavior

6 Being Trustworthy and Ethical at All Times resources must be consulted at all times to ensure privacy protection.

Ensures physical and emotional safety in the organization, including open channels for reporting and discussing issues, and a focus on well-being.

Demonstrates the importance of self-care and sets an example for employees to maintain a healthy work-life balance and prevent burnout and mental fatigue.

Provides consistent emotional and professional support to employees, encourages dialogue, and is approachable for all staff regardless of their role in the organization.

Actively listens to and understands the unique situations and stresses that employees face, thereby tailoring organizational policies and procedures to be compassionate and realistic.

Promotes an inclusive environment where every employee, regardless of background, feels equally valued and heard. Ensures that policies are fair and equitably applied.

Maintains a high standard of ethics and integrity, inspiring trust among employees, customers, and stakeholders.

3. Enhanced Support Mechanisms

Offering mental health support through employee assistance programs, professional counseling, and support groups can serve as a safety net for traumatized employees, making them less likely to engage in activities that result in loss for the organization. It is hypothesized that trauma-informed leaders are more likely to promote and utilize these programs to ensure the safest workplace.

4. Community Outreach Programs

Being active members of the community can act as a deterrent to organized retail crime. Trauma-informed leaders understand that by supporting community programs focused on education, rehabilitation, and poverty alleviation, for example, they are indirectly reducing the pool of potential criminals in the future.

In cases where loss occurs, a trauma-informed approach to disciplinary action can help in rehabilitating the employee instead of simply ostracizing them. This is beneficial for both the individual and the organization in the long run.

A safe workplace reduces incidents of workplace violence and misconduct, leading to fewer losses related to legal settlements, medical expenses, and damaged reputations. Employees who feel safe are less likely to engage in risky behavior that may lead to losses.

A well-rested and mentally sound leader is better equipped to make rational decisions concerning loss prevention. Additionally, they set a positive example for employees, reducing instances where burnout or fatigue leads to poor judgment, theft, or fraud.

Supportive leaders help employees feel valued, reducing the likelihood of internal theft and fraudulent activities. This also helps in identifying and addressing issues before they escalate into major incidents, thereby preventing loss.

Empathy allows leaders to foresee potential problems and create preventive measures that are humane and effective. Employees who feel heard are less likely to engage in destructive behaviors like theft, violence, or collusion with external criminals.

Fair and inclusive workplaces tend to have higher employee morale and lower turnover, reducing the risk of disgruntled employees engaging in activities that could lead to loss or damage to assets.

Trustworthy and ethical behavior from the top down creates an organizational culture less susceptible to all forms of misconduct, from employee theft to fraudulent activities to collusion with organized crime.

In a post-pandemic world that is grappling with collective trauma, a trauma-informed leadership style offers a way to be both humane and effective in loss prevention management. Whether it’s through reducing the likelihood of workplace violence, curtailing internal theft, or preempting fraudulent activities, the six facets of trauma-informed leadership listed in the table play an integral role in creating a more secure, ethical, and productive environment.

Incorporating understanding, empathy, and active support into the very structure of an organization helps trauma-informed leaders build resilient teams, departments, stores, and districts that are not only less likely to contribute to loss but are also more engaged, more productive, and more loyal. While research is still needed to confirm some of the loss prevention possibilities shared in this column on trauma-informed leadership, this style of leading is surely going to gain momentum as a much-needed form of community responsibility that is simply good business.

John W. Jones, PhD, ABPP is the executive vice president of research and development at FifthTheory. He is a licensed psychologist in Illinois who serves as FifthTheory’s principal thought leader in the research, development, and delivery of personnel risk and talent management assessment solutions. Dr. Jones was the founding editor of the Journal of Business and Psychology and is the Chief Instructional Officer for FifthTheory’s Loss Prevention Psychology Institute.