November - December 2011 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V10.6 November – December 2011

LOSS PREVENTION

MaGaZiNE

LAAORCA

TAKING A BITE OUT OF ORGANIZED RETAIL CRIME

MANAGING LOSS IN THE RENT-TO-OWN INDUSTRY WHY SMART LEADERS DO SUCH DUMB THINGS TRAINING EMPLOYEES TO WRITE GOOD REPORTS

Powerful Deterrent Proven RO I

Finding Bad Apples Has Never Been Easier Gulfcoast Software Solutions, LLC Clearwater, FL 33756 (727) 441-2131 www.gulfcoastsoftware.com

CoNtENtS 6

PUBLISHER’S LETTER Year in Review By Jack Trlica

ON THE WEB

RETAIL SPONSORS

LOOKING BACK Ten Years of LP Magazine

INTERVIEWING Did You Do It? By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

ACADEMIC VIEWPOINT 2010 NRSS Executive Summary By Richard C. Hollinger, Ph.D.

Managing loss in the rent-to-own industry

ASSOCIATIONS IN ACTION Protecting People, Property, and Brand Reputation By Rhett Asher

EVIDENCE-BASED LP Options Are Good By Read Hayes, Ph.D., CPP

FUNDAMENTALS Corporate Greed Versus Giving Back By Mike Marquis, CFI

SOLUTIONS SHOWCASE - i3 International - Alpha

INDUSTRY NEWS - Phones in DIY Chains - 3Biometrics Eliminates PINs, Thwarts Internal Theft at KFC By Robert L. DiLonardo

CALENDAR

PEOPLE ON THE MOVE

CERTIFICATION Weis Markets Award LPQ and LPC Scholarships By Gene Smith

ANNUAL INDEX

ADVERTISER DIRECTORY

VENDOR SPONSORS

PARTING WORDS What’s in Your Gift Bag? By Jim Lee

17 laaorCa taking a Bite out of organized retail Crime Los Angeles Police Department’s partnership with retail.

By Adam Paul, Contributing Writer

A conversation with Bobby Templet, Rent-A-Center.

By James Lee, Executive Editor

39 Why Smart leaders do Such dumb things

Eight critical thinking errors that contribute to unethical behavior.

By Patrick Kuhse, Speaking of Ethics

49 ten Steps to training Employees to Write Good reports

A supervisor’s guide for teaching proper report writing.

By Liz Martínez, Kaplan College

November - December 2011

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PUBliSHEr’S lEttEr MaGaZiNE 700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax

Year in Review

EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com

lease indulge me as I mix both personal and professional observations in this article. This year has been a significant year for a number of reasons. At the beginning of the year, we started our tenth year of publication. At the end of the year, I reached a dubious milestone. All this in a year where the economy seemed to rebound…or not…well, maybe. Ten years of publishing LP Magazine has been a privilege and a challenge. We launched our premier issue in September 2001. Despite the economic turmoil that followed the terrorist attacks of September 11th, we successfully built both our readership and advertising base due to the support of a great many individuals in our industry. Our original editorial board of eighteen key loss prevention executives provided their direction and credibility, several of whom are still sitting on the board, including Dan Doyle, Paul Jones, Bob MacLea, Randy Meadows, Claude Verville, and Keith White. Thanks to these individuals as well as all the other executives who have participated on our editorial board over the past ten years. We were fortunate to have several accomplished individuals contribute columns and articles that provided insight on important issues in the industry. Again, several of them still contribute today, including Bob DiLonardo, Dick Hollinger, and Wicklander-Zulawski. Many thanks to these and all the many writers and LP professionals who shared their experience with our readers. Without the support of solutions providers who bought into the vision of the magazine as both a means of promoting their products and services as well as promoting the education of the industry, we wouldn’t exist. Thanks to several companies who continue to support the magazine, including ADT; ChoicePoint, now LexisNexis; Contact Inc.; InstaKey; Learn It Solutions, now Enabl-u; LPjobs; Palmer, Reifler & Associates; and Vector Security. A special thanks goes to two individuals who have worked hard in very different ways to make the magazine a success—Bonnie Dodson on the advertising side and Fabi Preslar and her team on the production design side. While ten years seems like a both a long and a short time, sixty years is definitely a long time. That’s the milestone I reached this November. Turning thirty, forty, and fifty was not hard for me, but sixty was. Internally, I still see myself in my 30s and my father in his 60s. Maybe that’s why I see my father in the mirror every morning. Despite my misgivings leading up to sixty, my wonderful wife made the occasion special by taking us to Pebble Beach and walking the course with me. Thanks to Cindy (right) and our good friends Sharon and Jim MacKenzie for joining us. Mac and I both marked Pebble Beach off our bucket lists. Everybody tells me that sixty is the new forty. Hopefully, that’s true. One thing I know is true, I’ll always be younger than Jim Lee. That means I still have time to figure out how to beat him on the golf course. All the best to our readers and supporters. May 2012 be a productive, profitable year for you both personally and professionally.

Jack Trlica Editor and Publisher LossPrevention and LP Magazine are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher. Reprints or PDF versions of articles are available by contacting the publisher. Statements of fact or opinion are the responsibility of the authors and do not necessarily represent the opinion of the publishers. Advertising in the publication does not imply endorsement by the publishers. The editor reserves the right to accept or reject any article or advertisement.

November - December 2011

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EXECUTIVE EDITOR James Lee JimL@LPportal.com CONTRIBUTING EDITORS Adrian Beck Robert L. DiLonardo Walter E. Palmer, CFI, CPP, CFE John Selevitch Amber Virgillo CONTRIBUTORS William A. Alford, CFE Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Mike Marquis, CFI Gene Smith Shane G. Sturman, CFI, CPP Kelby Woodard David E. Zulawski, CFI, CFE ONLINE EDITOR Matt Richardson MattR@LPportal.com CREATIVE DIRECTOR Larry Preslar DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 ADVERTISING

ADVERTISING MANAGER Bonnie Dodson 828-479-7472 office, 704-943-5797 fax BonnieD@LPportal.com WEST COAST REPRESENTATIVE Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES

CIRCULATION MANAGER Matt Richardson MattR@LPportal.com NEW OR CHANGE OF ADDRESS www.myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 1088 Lowell, MA 01853 LossPrevention aka LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal.com. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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oN tHE WEB

Editorial Board

columns

Leo Anguiano Vice President, Loss Prevention & Risk Management, Central Parking Corp.

there are a number of articles on the magazine website you may have missed. check out the following articles. How Steve Jobs Inspired Loss Prevention Technology By Malay Kundu Concealment = Shoplifting By Natt O. Reifler and Marisa C. McIntyre, J.D.

Jim Carr, CFI Director, International Loss Prevention, Rent-A-Center

Risk vs. Gain Theory By Herman O. Laskey, Jr., LPQ, CFI

Ken Cornish Vice President, Retail Operations, The Kroger Co.

ASIS Councils: Non-Retail Experts Providing Value to Retail LP Executives By Bill Alford, CFE

Daniel Doyle, CFI Vice President, Loss Prevention & HR Administration, Bealls

E-Receipts Exposed By Tom Rittman

Weekly e-Newsletter for the retail LP Professional

the magazine recently launched a newly redesigned e-newsletter with a more frequent distribution schedule. Now going out weekly, the newsletter offers: ■ current loss prevention, retail, and technology news, ■ original content from magazine staff and contributors, ■ People on the move listings, ■ Helpful links, and ■ a little fun to brighten your week. If you are not receiving our e-newsletter, visit the magazine home page at www.LPportal.com and click on the links under cUrreNt NeWSLetter to read the latest issue or to sign up. If you would like to contribute to the newsletter or have any comments, contact us at newsletter@LPportal.com.

Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp

archived Webinar

2010 Global Retail Theft Barometer Sheds Light on Strategies for Cutting Shrink Professor Joshua bamfield, author of the centre for retail research’s fourth annual global retail theft barometer, sheds light on this year’s findings and offers his insights as to what the survey results mean for retailers’ loss prevention strategies. In addition to such important statistics as sources of theft, high-theft product areas, and costs of retail crime, this 45-minute webinar also focuses on specific actions retailers are taking to reduce shrink, increase sales, and improve their bottom line. Available at www.LPportal.com on the webinar page. Sponsored by

November - December 2011

Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Monica Mullins Vice President, Asset Protection & Safety, Wal-Mart Stores U.S. Tom Roan Group Vice President, Loss Prevention, Macy’s Tim Shipman Director, Corporate Investigations and Crisis Management, Food Lion Mark Stinde Senior Director, Asset Protection 7-Eleven

Bill Heine Senior Director, Global Security, Brinker International

Paul Stone Vice President, Loss Prevention and Risk Management, Best Buy

Frank Johns Chairman, The Loss Prevention Foundation

Bill Titus Vice President, Loss Prevention, Sears Holdings

Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe

Bill Turner Senior Director, Retail Operations, Cole Haan

Paul Jones Senior Director, Asset Protection, eBay

Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's

Mike Lamb Vice President, Asset Protection, The Home Depot Bob MacLea Senior Vice President, Loss Prevention, TJX Doug Marker Vice President, Loss Prevention and Safety, Michaels Stores

Chris McDonald Senior Director, Loss Prevention, Dollar General

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Stanley E. Welch Vice President, Director of Loss Prevention, JCPenney Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.

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November - December 2011

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Join these great companies as an LP Magazine corporate sponsor. Email JackT@LPportal.com for more information. LP magazINe | November - December 2011

looKiNG BaCK oN 10 YEarS oF lP MaGaZiNE

because companies’ ceos and cFos are increasingly demanding investment-grade data, more and more retailers es are moving to factORC loss e Report, n) and ified Crim 3.5 billio 05 FBI Un rglary ($ loss 20 bu , based e t it’sprevention n) th ing to oblem, bu ($7.6 billio pr t g ef Accord tin th cala auto is an es ly exceed developed rly ORC strategies think. ndividual n). Clea e might ($5.1 billio w as on larceny not as ne through research.

“From a values perspective, our company has done a tremendous job of solidifying the core values we have as an organization. one of them that hits home is humility and respect.” – Paul Stone, Best Buy

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LPport

Professional criminals have turned retail theft into a lucrative business and transformed what law enforcement used to refer to as petty theft into a new form of organized crime. 7 ruary 200

Jan

Feb uary –

1/12/07

12:41:23

January-February

March-april

May-June May – June 2007

January – Febuary 2007

LPportal.com

V6.3

V6.1

EXCEPTION REPORTING

ORGANIZED RETAIL CRIME

Setting the Stage for an ORC Strategy

“If you truly want to be a loss prevention innovator, remember that you can bring things to one industry from another. take advantage of your past experience.” – Carol Martinson, SUPERVALU

12 12

2007

Historic

the philosophy at J.crew has always been “less is more.” While we outsource technological expansions and additional departmental training, nearly all of our programs have been a grass roots campaign developed in-house.

“We’re a firm believer in key performance indicators. as the business changes, we have to make sure we change accordingly. We have KPIs on shrink, safety, and environmental that day in, day out, week in, week out, we measure in the stores.” – Tom Fricke and Mike Lamb, The Home Depot

Finding the Rotten Straw in the Field of Haystacks

ADDING VALUE AND ROI WITH YOUR DC LP TEAM | J.CREW PROFILE REMODELING LP AT HOME DEPOT | MANAGING EVERY DAY

MANAGING ASSET PROTECTION AT SUPERVALU | CARGO THEFT SERVICE-BASED LEADERSHIP | 2007 RESOURCE GUIDE LPM 0107-15.indd 1

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1/12/07 12:39:06 PM

President Gerald Ford dies.

Gunman kills 32 at Virginia Tech.

Setting the Stage for an ORC Strategy by John Talamo Interview with Carol Martinson of SUPERVALU Cargo Theft— A Costly Epidemic by Barry Brandman Are Happy Employees More Productive? by Ed Rehkopf 2007 Loss Prevention Resource Guide November November -- December December 2011 2011

Bridge collapses in Minneapolis.

Challenging Assumptions—Putting LP under the Microscope by Bill Titus Interview with Best Buy’s Paul Stone Executing the ORC Strategy by John Talamo et al “Selling” LP Services— The Ace Hardware Story by James Wilhelm Avian Flu Pandemic! by William Alford ||

LPPortaL.com LPPortaL.com

5/1/07 11:30:42 AM

Exception Reporting—Finding the Rotten Straw in the Field of Haystacks by Cathy Langley Interview with Tom Fricke and Mike Lamb, The Home Depot Adding Value and ROI with Your DC LP Team by Chris Batson Profile of Specialty Retailer J.Crew by Nicole Accardi Get in the Habit of Managing Every Day by Bruce Tulgan

2007 “We can identify product loss right down to the SKU level, which allows us to look at loss by supplier, by category. this helped us identify our highest loss suppliers. So, just as we have target stores, we started to identify our target suppliers.” – Ian Carter, B&Q

“the key to disaster recovery and crisis management is having a plan, working the plan, and communicate, communicate, communicate.” – David Rydeen, Papa John’s

organizations must encourage free-flowing communication without fear of retaliation. managers must create an atmosphere where dishonesty is unacceptable and only ethical behavior is rewarded.

July-august

September-october

remote video monitoring has been the driving force of the company’s successes in reducing shrinkage, protecting customers and employees, heightening human resources capabilities, streamlining procedural policies, and improving overall working conditions and morale for zale employees.

retailers are partnering with product-protection solutions providers to develop a variety of customer-friendly solutions that are designed not only to protect the merchandise, but to help sell it, too.

November-december

September – October 2007

July – August 2007

LPportal.com

V6.5

V6.4

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REMOTE MONITORING OPERATIONAL COMPLIANCE

Inspecting What You Expect

Transforming LP and Operations at Zale Corporation A U.K. SPIN ON LP | LESSONS FROM LOW-SHRINK RETAILERS COMBATING CARGO LOSS AT AAFES | DESIGNING OUT CRIME

BENCHMARKING SHRINKAGE | BUILDING A CULTURE OF INTEGRITY SAFETY AND SECURITY AT PAPA JOHN’S | AWARENESS PROGRAMS LPM 0807-BOOK-.indb 1

The Bombay Company files bankruptcy.

7/6/07 4:30:40 PM

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Movie Gallery files bankruptcy.

Operational Compliance— Inspecting What You Expect by Mike Keenan Interview with David Rydeen of Papa John’s Six Steps to a Successful LP Program (Part 4) by Dan Faketty Is Your Corporate Culture Creating Dishonest Employees? by Millie Kresevich Benchmarking Your Performance on Shrinkage by Adrian Beck and Walter Palmer

8/31/07 6:22:07 PM

Checkpoint acquires Alpha.

Transforming LP and Operations at Zale Corporation by Dena Palmer Interview with Ian Carter of B&Q How Store Environments Affect Crime and Loss by Caroline Cardone and Read Hayes Lessons from Low-Shrink Retailers by Adrian Beck and Colin Peacock Combating Cargo Loss at AAFES by Stephen Boyd

Promoting Sales While Preventing Loss by Fiona Branton Interview with Bill Turner of Nike Targeting Return and Other Retail Fraud by Michaela Gleason Pre-employment Screening—Current Practices in the Retail Sector by Walter Palmer Risk Management Solutions for e-Commerce by Tom Donlea

LP LPmagazINe magazINe || November - December 2011

“our LP program is based around controls, training, awareness, and, when necessary, investigations and apprehensions. We are not in the shoplifter apprehension business; we just do not do it.”

13 13

INTERVIEWING by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

Did You Do It? D

id you do it? Well, did you? Did you remember to ask? Did you forget or just didn’t think he would say anything? Or maybe, why bother because we can’t interview on implications anyway. Or, maybe you didn’t ask correctly. How many times have you gotten an implication from a dishonest associate? Sometimes getting an implication is as simple as asking who else is taking money or merchandise from the company. But, did you remember to at least ask for that admission? It is a heady experience to get a confession, and it is easy to forget to ask for implications. If you forget to ask, what are you leaving on the table? When you look at an employee population that is predominantly between the ages of 18 and 35, about 30 percent of your cases will potentially reveal implications of other associates’ dishonesty…almost one in three. Service Merchandise Corporation reported a 20 percent implication rate in the 1980s, and Wicklander-Zulawski statistics put the number at about 30 percent with the vast majority falling between the ages of 18 to 35. The 16 to 25 age range has consistently held first place rank for arrests since records were kept beginning in the mid-1800s. By their mid-30s most people begin to settle down and change their focus from thinking only about today to planning for the future. They begin looking forward to a career, family, and a home, making risk-taking behavior, such as stealing, less desirable.

Implications

Many companies choose not to interview on implications. But even if you can’t interview, you have identified a thief and their preferred methods of theft. Might that give a direction to an investigation? But, did you remember to ask? And, if you did ask, did you really try to get an admission? There is generally strong resistance to providing information about another’s wrongdoings. Giving up oneself is one thing, but to implicate another, well that goes in the face of everything we have been trained not to do. Our parents told us not to be tattletales. “Quit telling on your sister and get along!” We have all had others expose us for confiding another’s misdeeds. Rarely, was there applause for telling on another. The police face this difficulty all the time. In Illinois, high school students withheld the information that their classmates helped kill another boy’s parents. A murder in a motorcycle club was unsolved for thirty years until several members decided to come forward to testify against the killer. Gang

Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (www.w-z.com). Zulawski is a senior partner and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com.

November - December 2011

members and neighbors refuse to help police resolve street shootings. It’s the code of the street—snitches get stitches. It doesn’t take a psychologist to understand how negative reinforcement, social pressure, and the fear of retribution can shape one’s behavior. Our language even reinforces this resistance with unflattering names, such as informant, snitch, or nark, for those cooperating in an investigation. Is it any wonder why we face a workforce who has an ingrained resistance to reporting or implicating a dishonest employee?

Overcoming Resistance

So how does an interviewer overcome the individual’s inbred resistance to telling on another? One of the biggest reasons people confess is they believe their guilt is known. Thus, there is little to be gained by continued resistance to conceal information already known. The interviewer who delivers a carefully constructed introductory statement has already gone a long way toward convincing the subject his dishonesty has been discovered.

Encouraging the development of implications will increase the organization’s productivity in developing new cases in a proactive fashion. The subject’s belief he has been caught is a tenuous one that is constantly being tested. Every statement made by the interviewer is evaluated by the subject for consistency and truthfulness. Just asking, “Do you know of anyone taking merchandise or money from the company?” can shake the feeling of being caught. Why would he ask that if he already knows? It is much better to ask the employee, “How many employees do you know who are taking money or merchandise from the company? Is it more than five?” If the employee hesitates the follow up question is used, “Is it more than five?” The follow up question achieves a denial that is the equivalent of an admission—“I know of others, just not five.” It is interesting that asking an assumptive question to obtain an admission does not seem to cause a subject to question the interviewer’s statements in the same way as a closed question of “Do you know of any others taking money or merchandise from the company?” does. It may be the way the question is phrased. The continued on page 16 |

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question appears to ask about something known, rather than something unknown. Something unknown to the investigator should be protected and instinctively the subject denies.

Using Rationalization

Even when an assumptive question is used to ask for an implication, there may be a reluctance to give the information, so the interviewer uses rationalization to support the subject’s self-image. The cornerstone of reducing resistance during any interrogation is the use of rationalizations. Whenever resistance to making an admission arises, the interviewer turns to rationalizations as a means to minimize the seriousness of the issue or focus the attention of the subject on the resolution of the situation, rather than its seriousness. Using stories as illustrations, the interviewer talks about other peoples’ actions and how they impact innocent bystanders. The interviewer then focuses on the unfairness of having someone’s deeds reflecting poorly on another. It is often effective for the interviewer to incorporate peer pressure and its power to influence as a persuasive technique. However, there is still a lingering doubt in the person’s mind—“Is someone going to tell the person I informed on him?”

Limited Confidentiality

Offering a limited confidentiality can overcome this resistance. The interviewer should offer limited

Are You

confidentiality to the subject to overcome this final point of resistance. Offering this assurance has a calming effect on the subject: “Mike, no one is going to go back to this person and say you said this or that. This is going to be kept confidential, and we are not going to tell anyone else unless they have a need to know.” This limited confidentiality should be honored. There is no reason to identify where information came from, and in most cases, there will be independent corroboration from the investigation indicating the associate’s dishonesty.

Lack of Emphasis

Besides forgetting to ask, the biggest reason implications are not obtained is the lack of emphasis placed on them during the interviews. It is not unusual in interviews we have reviewed for companies that implications were not sought by the interviewer or they were an afterthought given only marginal effort. Most interviewers are focused on substantiating the investigations by obtaining admissions confirming what they already know and forget about asking for the implication. Management must set an expectation that the organization’s interviewers are to ask and attempt to obtain admissions relating to the knowledge of other employees stealing. Without this emphasis and encouragement, it is unlikely that there will be a change in the interviewer’s habits and work product. Encouraging the development of implications will increase the organization’s productivity in developing new cases in a proactive fashion. There is already a tremendous expenditure by most companies to identify dishonest employees and failing to take advantage of this fertile ground during interviews would seem to be a terrible waste.

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November - December 2011

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cover FeatUre

LAAORCA

taking a bite out of organized retail crime By Adam Paul Inside photos by David McKale

LP magazINe | November - December 2011

LAAORCA

y many accounts, organized retail crime (ORC) is the 800-pound gorilla of modern-day retail theft. No longer are professional thieves interested in maintaining low profiles by keeping thefts small. Criminals now extensively and meticulously preplan daring raids with multiple individuals involved, often employing sophisticated technology and strategies previously reserved for high-profile thefts like bank heists. These organized criminals can hit a retail store and make off with tens of thousands of dollars worth of goods in minutes, then go on to hit multiple stores in the same day, and multiple cities in the same week; altogether stealing millions of dollars worth of goods in a very short period of time. Up until recently, these ORC hits often caught loss prevention and store personnel off guard, since mechanisms for rapid communications between competing stores and with law enforcement did not readily exist. Thankfully, that is largely changing with the increase in retail-law enforcement partnerships nationwide, one of the first of which was LAAORCA, the Los Angeles Area Organized Retail Crime Association, created to squelch organized retail crime in the Los Angeles basin.

The “O” in Organized Retail Crime

How organized is organized retail crime? According to Detective Kent Oda of the Los Angeles Police Department (LAPD), they are very organized. Oda, a 26-year veteran of the force and currently assigned to the Commercial Crimes Division, has witnessed multi-store, multi-city operations that utilize sophisticated criminal tactics. For example, the thefts typically involve multiple “boosters”—the thieves who actually steal the targeted items. Also involved are personnel who act as “mules,” the same term used in drug trafficking to signify individuals who transport the stolen property. A high-end ORC operation can involve many individuals, such as getaway drivers, multiple boosters and mules, and lookouts, as well as the use of disguises or distractions to deter store personnel and the employment of sophisticated countermeasures to defeat store loss prevention equipment.

The boosters may employ a range of equipment to help them accomplish the thefts, including sophisticated smuggling girdles or specialized lined merchandise bags intended to defeat electronic article surveillance (EAS) tags, and they usually rent getaway cars or use cars with paper plates to avoid detection. These criminals target stores with laser-like precision, staking them out and casing well in advance, arming themselves with a large amount of intelligence before making the strike. They target specific hot products, such as baby formula, cosmetics,

The idea behind LAAORCA is a simple one—retailers can pool information and share it directly with law enforcement, who can then prosecute the crimes far more swiftly and easily than they ever could in the past.

over-the-counter (OTC) drugs, DVDs, and other items that are expensive, yet have a small footprint for easy theft. The impact to an individual store only can be massive, but when taken as part of a larger picture, the losses are staggering. A well-organized group of ORC criminals has been known to strike as many as ten stores in a day and forty stores in a week. Their crimes take place across multiple cities and jurisdictions, making it hard for law enforcement agencies to track them. The individuals involved in these crimes are hardened veterans. LAPD, for example, rates boosters by levels, with Level 1 being the least organized. A Level 1 booster typically works alone and often steals casually or to support dependencies—your classic serial shoplifter. A Level 2 booster also usually works alone, but adds the element of stealing for resale. Level 2s are also known to travel to perform their thefts, all of which are the hallmarks of people that steal for a living. A Level 3 booster works as a member of a team, and steals almost purely for resale, as well as traveling far out of the area to conduct widespread crime. It’s the Levels 2 and 3 career professionals who comprise the majority of the scourge known as ORC. ORC isn’t pure profit for the criminals involved; they have expenses just like any other business. Stolen property is usually shipped via extensive freight networks across the country and even internationally, usually for resale. The goods are usually fenced through an elaborate network of brick-and-mortar retailers, many of which are small “mom-and-pop” stores, or via online stores or auction sites.

A Danger and an Expense

The officers behind LAAORCA inside the Los Angeles Police Department are (left) Captain Bill Williams, head of the Commercial Crimes Division, and Detective Kent Oda. They were recently named two of “2011’s Most Influential People in Security” by Security magazine. November - December 2011

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In some cases ORC may additionally represent a health hazard to consumers who unwittingly buy stolen product at discount stores used to fence the goods. Baby formula and OTC pharmaceuticals are two examples. Both are perfect targets for ORC since they are relatively expensive, have small footprints, and are in high demand on the fenced market. Criminals steal these products and often store them improperly, potentially causing a health hazard. The loss of tax revenue is another side effect of ORC that is often lost on the general public. Every product that’s stolen is done so tax free. The hundreds of millions of dollars’

LAAORCA worth of product stolen each year represents a significant loss of tax revenue that does not go to cash-strapped local and state governments to support legitimate public services. Another ugly facet of organized retail crime is that it is not only highly lucrative, unfortunately it’s a crime that’s often lightly punished. A criminal operative with no prior record who is caught stealing $5,000 worth of goods, for example, can expect a sentence as light as probation, not much more than a slap on the wrists. Contrast that with stealing the same $5,000 from a bank in the form of a robbery, which carries a minimum sentence of twenty-five years to life, and it’s easy to see why criminals have migrated into this sector. Oftentimes, ORC is a gateway crime to other illegal activities, such as drug trafficking, and the more experienced criminals usually dabble in a host of other illicit operations.

Enter LAAORCA

Recognizing the need to fight ORC in a proactive rather than reactive mode, the Los Angeles Police Department decided to take action. LAAORCA was founded by

LAPD’s own Captain III Bill Williams, head of the Commercial Crimes Division, as well as Detective III Kent Oda, and a host of retailers, including CVS/pharmacy, GAP, JCPenney, Lowes, Rite Aid, Target, Vons, and Walgreens. The idea behind LAAORCA is a simple one—retailers can pool information and share it directly with law enforcement, who can then prosecute the crimes far more swiftly and easily than they ever could in the past. It’s the simple act of information sharing that makes LAAORCA so successful. Through LAAORCA, retailers in the LA area now have a forum to openly discuss ORC, share information, case studies, surveillance video, and other intelligence on criminals who may be terrorizing multiple retail chains. Law enforcement can now receive this intelligence as it occurs, and immediately corroborate it with another retailer to piece together emerging crimes as they happen, as opposed to weeks later. According to Jason Gonzales, investigations manager for Rite Aid’s Western U.S. region, “LAAORCA has helped to pave the way of cooperation at many levels.

LP Magazine | November - December 2011

Many companies that are competitors are now working joint investigations and communicate regularly. The relationships that have been established through this process are phenomenal.” Competitors now routinely fight common problems with LAAORCA’s help, according to George Torres, ORC manager for CVS/pharmacy. “CVS has worked closely with our competitors to combat ORC,” explains Torres. “Recently, with the support of LAAORCA, an overnight burglary crew was apprehended that specifically targeted pharmacy and front store product that affected CVS, Rite Aid, and Walgreens throughout California.” While co-chaired by Captain Williams of the LAPD and CVS’ Torres, and with Detective Oda acting as its primary coordinator, LAAORCA is much more than just an police department program. Currently, LAAORCA boasts a membership of over 850 individuals representing 170 different retailers and over seventy law enforcement agencies…not all of them in the Los Angeles basin. It’s a massive partnership

LAAORCA on a large scale, which is why Captain Williams believes it is so effective. “ORC is not just a city of LA problem; it is a regional, national, and international problem,” explains Williams. “The synergy developed by the various law enforcement and retail partners working together is essential and a significant weapon to help defend and fight this scourge called ORC.” When you’re dealing with criminals who conduct operations nationwide, a very long reach is necessary. Individual retailers have also gone to great lengths to participate and allow their personnel to fully integrate into the model. Take CVS/pharmacy as an example. “Our director of corporate investigations, Jim Lynch, and our national manager of organized retail crime have allowed me the latitude to represent LAAORCA,” says Torres. LAAORCA is a model for fighting organized retail crime and has spawned several similar law enforcement partnerships like it across the country, including ■ BAORCA—Bay Area Organized Retail Crime Association, ■ CCROC—Cook County Regional Organized Crime task force, ■ SDORCA—San Diego Organized Retail Crime Alliance, and ■ SNORCA—Southern Nevada Organized Retail Crime Association. LAAORCA’s success has recently been recognized nationally as Captain Williams and Detective Oda were named two of “2011’s Most Influential People in Security” by Security magazine, which is a highly coveted honor among security professionals.

LAPD’s Mission Control

LAAORCA brings some big guns to bear on ORC, and due to the size and power of its charter member, the Los Angeles Police Department, the organization has some capabilities not currently extant in other such partnerships. One of these key capabilities is RACR, the Realtime Analysis Critical Response Division and LAPD’s mission control. A casual stroll through the facility leaves one in amazement. Like something straight out of an international spy thriller, RACR boasts a large central room filled with desks and computers, all facing a towering screen that feeds news and information from all over Los Angeles and the nation. Both

climate-controlled and hardened, the facility is staffed by as many as forty personnel during surge operations, all the while manned 24 hours-a-day, 7 days-a-week, year round. RACRs primary function is to receive intelligence and be the primary resource center for the deployment of department resources from individual personnel all the way up to entire divisions. RACR is immediately available to LAAORCA for the rapid receipt and dissemination of real-time

“ORC is not just a city of LA problem; it is a regional, national, and international problem. The synergy developed by the various law enforcement and retail partners working together is essential and a significant weapon to help defend and fight this scourge called ORC.”

– Captain Bill Williams, Commercial Crimes Division, Los Angeles Police Department

The Realtime Analysis Critical Response Division (above) is LAPD’s mission control that operates 24/7 year-round to gather intelligence and disseminate it to both law enforcement and retail members of LAAORCA. November - December 2011

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organized retail crime occurrences, making LAPD’s response lightning fast. RACR also boasts a staff of dedicated detectives who aren’t assigned case loads so they can respond to requests for service 24/7, transforming LAAORCA into a fast-moving organization that effectively never sleeps. As crime occurs, LAAORCA and its retail partners can immediately track crime trends. A group of criminals that was previously stealing from numerous retail chains at once is now suddenly linked to all of the chains in an instant, allowing the descriptions of the individuals, their methods, and any other pertinent information to be immediately disseminated to the entire membership in seconds.

The Retailer’s Perspective

LAAORCA provides retailers with an unprecedented opportunity to share information among themselves and also have a voice inside one of the largest law enforcement agencies in the country. Prior to the formation of LAAORCA, information was often only shared vertically, that is, between the individual retailer and the law enforcement agency they were contacting to file crime reports or request service. Unless that agency decided to share the information with another retailer, that vertical pipeline remained intact and unbroken. LAAORCA adds a new pipeline, a horizontal one, in which information can be shared with retailers as well. There are two primary methods by which this occurs. The first method is LAAORCA’s proprietary database, with a membership of 850-plus members who are thoroughly vetted beforehand. These members are comprised of retail loss prevention professionals as well as law enforcement agents from a variety of agencies. The database is a forum where retailers can share information such as surveillance photos and videos, criminal methodology, and crime events so that law enforcement can more easily be aware of emerging crime trends. The time savings to loss prevention professionals is unparalleled. A store loss prevention agent can literally upload a photo or description of a suspect and other retailers will have the same photo potentially moments after the crime has occurred so they too can watch out for the suspect. “As a registered member, you can submit

LAAORCA

Gastronomy. The Gallileo III restaurant in Washington, D.C.,

an incident, which is then shared via email with other members of LAAORCA,” says Rite Aid’s Jason Gonzales. “Your contact information is also available should any LAAORCA members want to discuss the matter further. This also allows others to establish if other law enforcement or retailers have experienced similar occurrences.” Secondly, LAAORCA holds general meetings every six weeks. Attended by as many as 130 people, these meetings are an interactive way to disseminate information and have individual retailers warn each other of ORC happenings. The meetings are highly structured, usually beginning with a 15- to 20-minute education piece on a particular crime, followed by a 60- to 90-minute investigative portion, in which retailers and law enforcement can compare notes. There are no interruptions and no lunch breaks, ensuring the maximum amount of productivity. These meetings are so effective that they can even result in the solving of some crimes—many criminals have been identified by other retailers simply by the exchange of information. “At our last meeting,” says Captain Williams, “a retail loss professional member was trying to identify a suspect committing thefts at several locations in the south land and needed help in identifying the suspect. Well, a LAAORCA member in attendance recognized the suspect and was able to help connect the dots for the other member. That happens quite often at our meetings.” The meetings also encourage lots of retailer cooperation as well, according to Gonzales. “At the conclusion of these meetings, the attendees typically gather and exchange contact information to help foster partnerships relating to ongoing or future investigations.” Retailers are also noticing that LAAORCA is a breath of fresh air, compared to similar partnerships in the past. “Usually, there is a disproportionate retailer-to-law enforcement ratio with these types of organizations,” says Michael Draper, senior investigations manager for JCPenney. “Because of the influence of Captain Williams and Detective Oda, LAAORCA was able to increase the level of law enforcement participation. As a result, the exchange of intelligence between retailers and law enforcement has greatly improved.” Additionally, LAAORCA is completely free of charge to the retailers. “LAAORCA is not expensive. There is minimal expense to the LAPD,” explains Captian Williams. “I deploy a detective part time as the coordinator. However, it had to be the right detective. One who is motivated and has the initiative, personality, and experience to do this important job. That is why I assigned the position to Detective Oda.” The veteran detective takes his responsibility seriously. “Retailers can make an appointment with me anytime to discuss their case,” says Oda.

Achieving Significant Results

The efforts of the LAPD in bringing together retailers and law enforcement through LAAORCA is paying off. “As a founding member of the organization, we believe in the program and have benefited from it tremendously,” says JCPenney’s Draper. “LAAORCA is one of the greatest success stories in the fight against organized retail crime”—a strong endorsement. George Torres of CVS concurs. “We are impressed with the organization’s results.” LAAORCA has generated a flood of tips, intelligence, information, and ultimately, arrests and recovery, some of which are of staggering

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proportions. Detective Marc Zavala of LAPD’s Commercial Crimes Division, along with his partner, Ricky Hernandez, have participated in a number of high-profile cases. As Zavala describes it, LAAORCA is “someone to tell their [the retailers] problems to.” And LAPD is listening. Example Number 1. Zavala was tipped off by a LAAORCA member regarding three semitrailers of stolen cosmetics. The store loss prevention agent utilized the LAAORCA connection to get in touch with Zavala. Interestingly, the trailers were stolen from stores in Utah, demonstrating LAAORCA’s nationwide reach. The retailer recognized some of the stolen product on the Internet, where it was in the process of being e-fenced. Detective Zavala and his partner tracked the product back to the Southgate area of Los Angeles, to a mom-and-pop store. They searched the premises and found that the stolen merchandise was being held in even more locations. The detectives seized over $1,500,000 worth of stolen merchandise. It’s hard to find a better example of the

LAAORCA network in action, but Zavala is quick to point out there are many other cases like it. Example Number 2. Zavala was called by a high-end Beverly Hills retailer who suspected that one of their own employees was stealing product. The employee was shipping stolen merchandise to his cousin, who was fencing the stolen product. The detectives started watching the suspects, ultimately arresting both of them, but in the process uncovered an even deeper network. The cousin of the thief was connected to an elaborate ring of eight other professional shoplifting boosters, who were also arrested. The total amount recovered was over $2,000,000 worth of stolen merchandise and gift cards. The source of the tip? The retailer was a member of LAAORCA, and immediately reported the thefts. These examples illustrate why retailers are so ecstatic. “We believe this collaborative process is, for the first time in recent memory, putting pressure on the organized criminals groups, which we hope will lead to less criminal activity,” says Jason Gonzales of Rite Aid. LAAORCA is a proven model, a melding

of real-time intelligence and investigative muscle that’s brought to bear on organized retail crime. It works not simply by the free dissemination of information, but by the fact that a partnership with retailers is a force multiplier for the department. In essence, each of the hundreds of loss prevention agents at each retailer are like an extension of the LAPD itself, and they work together seamlessly to attack ORC. LAAORCA is busting organized retail crime rings faster than ever in an age where these criminal enterprises are rapidly growing due in part to the sagging economy. Curiously, these thieves either don’t realize or don’t care that rampant theft makes the economy worse for all of us. Thankfully, LAAORCA, the killer whale that never sleeps, watches their every move, patiently waiting for the opportunity to take a significant bite out of organized retail crime. ADAM PAUL is a business writer based in Los Angeles, California, and a new contributor to LP Magazine. He can be reached at AdamP@LPportal.com.

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ACADEMIC VIEWPOINT

2010 National Retail Security Survey Executive Summary T

he final report of the 2010 National Retail Security Survey (NRSS) recently has been released in its nineteenth edition and has been posted on the web. This column is an executive summary of the major findings of this report. This year, despite the fact that we are still mired in sluggish economic times, we can proudly report that 140 retail corporations sent in questionnaires. Not all surveys were fully completed, which caused some missing data problems. However, this response level includes 40 more firms than participated last year. This study would not be in

The financial losses inflicted on the retail industry remain even more significant in their size and scope. One only can speculate how much more profitable this industry could be if these many sources of inventory shrinkage and other forms of financial loss could be significantly reduced. its nineteenth year of reporting retail loss prevention statistics if it were not for the many loss prevention executives, directors, and managers who believe in the importance of this research effort and support it annually. For this we are quite appreciative. While the data are reported anonymously, we can assure the reader that the 140 corporations that have responded to our survey represent the vast majority of the top 100

by Richard C. Hollinger, Ph.D. Dr. Hollinger is a professor in the Department of Criminology, Law, and Society at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey (www.crim.ufl.edu/srp/srp.htm). Dr. Hollinger can be reached at rhollin@ufl.edu or 352-392-0265 x230. © 2011 Richard C. Hollinger

major retailers in the country. We believe that a good deal of this 40-company increase over last year’s response is due in part to the decision to convert the questionnaire from paper-and-pencil survey to an online format. If you are a regular reader of our report, you already know that there are always more similarities in the NRSS findings from year to year than differences. This is to be expected in a stable, mature industry that does not fluctuate dramatically in its loss prevention practices and asset protection procedures. However, there are some notable differences in this survey from the previous year’s results. Overall Shrink Rate. This year the overall inventory shrinkage rate of 1.49 percent was somewhat higher than reported in last year’s survey. Despite this slight increase, the reader should note that over the past few years, inventory shrinkage continues to remain at the very lowest levels observed in the nearly two-decade history of this survey. We believe that this is remarkably good news and demonstrates clear and consistent progress in the war on reducing retail losses in spite of the present economic slump and the threat of organized retail crime (ORC). The news is not all good, however. Although the shrinkage percentages are at significantly lower levels than observed during the very early years of the survey, the dollar value that this loss represents continues to remain at record levels due largely to an increase in U.S. gross retail sales. In other words, this huge $35-billion dollar loss is largely the result of moderate growth in the retail economy, not significant increases in inventory shrinkage percentages. High-Shrink Segments. Supermarket/grocery stores, off-price/outlet stores, furniture, specialty accessories, men’s and women’s apparel, and discount stores all reported significantly higher than average shrinkage levels. This is largely due to the especially high desirability of merchandise sold in these particular chains, which makes theft much more attractive to organized retail gangs, amateur shoplifters, and employees. Low-Shrink Categories. Alternatively, the lowest shrinkage stores—auto parts, tires, and accessories; women’s apparel; drug store/pharmacy; books, magazines, and music; department stores; sporting goods and recreational products; home center, hardware, lumber, and garden; household furnishings and housewares;

November - December 2011

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entertainment/media/games/music; shoes; children’s apparel; convenience store/truck stop; office supplies and stationary; men’s apparel; jewelry and watches; and electronics, computers, and appliances—generally have the most sophisticated security systems and additionally require customers to pay for merchandise before they are allowed to physically acquire their purchases. Store Location. Stores that are typically located in strip centers reported a below average shrink rate at 1.39 percent, while stand-alone stores and those located in enclosed malls reported slightly above average shrink rates (1.50 and 1.52 percent respectively). Shrink Source. Stability was seen once again in the respondent’s assessment where they attributed the source of their retail inventory losses. In fact, both employee theft (45 percent) and shoplifting (31 percent) remained at virtually the same proportions as reported in last year’s survey. Employee theft was the highest in places like household furnishings/housewares, shoes, and office supplies stores. Shoplifting was the highest in off-price/outlet stores; accessories; children’s apparel; books, magazines, and music; men’s and women’s apparel; jewelry and watches; and women’s apparel stores where the number of sales associates available to deter this crime is often the lowest. LP Budgets. Fortunately, this year we finally can report a slight increase in LP budgets as a percent of total sales. Specifically, we found that 0.46 percent of retail sales were earmarked to fight the battle against loss, with most of this money going to fixed payroll expenses. With limited LP budgets and even less money for high-tech countermeasures, more of the day-to-day responsibility for loss prevention is being shifted to overworked store managers, untrained sales associates, and inexperienced LP personnel. Diversity. Unfortunately, the diversity of LP personnel this year appears to be decreasing, most notably among women and African-Americans. However, diversity among Latinos and Asian-Pacific managers is increasing. The percentages of women, racial, and ethnic minorities are still well below national averages across the entire retail LP industry. Prevention Tactics. Efforts are still being committed to pre-employment screening of applicants. During the coming year, the “hottest” screening countermeasure is expected to be criminal-history checks, followed by honesty testing, and computer-assisted interviews. Employee loss prevention awareness is also receiving increased attention using the latest media and technology. Use of training videos as a loss prevention awareness strategy is expected to be the “hottest” awareness program this year. Asset control measures remain the integral part of all loss prevention programs. POS exception reporting, along with refund controls, are the hottest two new techniques planned for increased use in the coming year. As was the case last year, the newest technique against loss in this category of countermeasures is the implementation of sophisticated computerized

exception-reporting software systems, many linked to high-speed broadband IP monitored CCTV cameras. Among the various LP technologies available, the switch to digital CCTV cameras and recorders is all but complete. The “hottest” new LP technology is remote IP CCTV video and POS exception-based closed-circuit TV interfaced systems. Internal Theft. When we looked at the most likely causes of inventory shrinkage, both sales associate turnover and heavy reliance on a part-time workforce are again the two most obvious correlates. As in past years’ research, the NRSS examined the formal response to those detected for internal dishonesty and external crime. Apprehension and termination are the most common responses to employee theft. While prosecutions are threatened in most every firm, this year actual criminal prosecutions nearly doubled. More rapid detection of dishonest employees seems to be keeping the reported dollar loss totals down from last year. And as for shoplifting, apprehensions and civil recovery are the most common responses reported. Gift Cards. This year, we tried again to collect baseline data on gift card losses with marginal success. Missing and incomplete information continues to be a serious problem in studying this phenomenon. Although the dollar losses were higher than in 2009, we will have to wait for future years to get more stable comparison numbers before we can suggest any trends. Burglary and Robbery. Lest we forget, burglary and robbery are still major and very dangerous sources of financial loss in the retail store. Burglary cases result in more average dollar loss to retailers each year and outnumber burglary cases (3.56 burglaries versus 0.52 robberies per $100 million in sales). Financial Losses. Every year retailers incur staggering monetary losses as a result of employee theft, shoplifting, administrative error, vendor fraud, and cash, check, and credit card charge-backs. These statistics show that last year was no exception, with a $35.28 billion of lost profits forfeited to inventory shrinkage alone. The two largest problems continue to remain employee theft ($15.9 billion) and shoplifting ($10.94 billion). The financial losses inflicted on the retail industry remain even more significant in their size and scope. One only can speculate how much more profitable this industry could be if these many sources of inventory shrinkage and other forms of financial loss could be significantly reduced. Given the declining percentages of annual retail sales being dedicated by senior management to fighting this war on retail crime, the professionals in loss prevention and asset protection have been assigned a daunting task as they continually try to “leverage technology” and deal with reduced staffing. Clearly this report demonstrates conclusively that those companies that commit more resources to pre-employment screening, staff awareness programs, asset controls, and finally, loss prevention systems will be those that have the best chance to win the growing war against retail crime.

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intervieW

a conversation with bobby templet of rent-a-center

MANAGING LOSS IN THE RENT-TO-OWN INDUSTRY By James Lee, Executive Editor

Interview

The term “shrink”is not even in our vocabulary. We look at a series of different items called “rental loss lines” on the P&L. An example of that is a product that has gone through its life cycle and is no longer rentable. If we can no longer rent it to a customer, we may choose to try to cash sell it. But in some cases we still have value associated with that product, and it has to be written off to what we call “junk.” EDITOR’S NOTE: Bobby Templet (pronounced tom-play) is vice president of loss prevention for Rent-A-Center. He has thirty-plus years of loss prevention experience with Footstar, Blockbuster Video, and Kmart. EDITOR: Tell us how it happened

that you became the head of loss prevention at Rent-A-Center. TEMPLET: When the previous company I worked for sold off their retail divisions as part of their bankruptcy proceedings, the entire LP department was eliminated. As

I began looking for my next opportunity, one of my vendors told me that he knew that Rent-A-Center had just lost their head of LP. The job wasn’t posted anywhere, so I did my research, found out that the hiring manager was the VP of HR, and got my information in front of her. I didn’t hear anything back immediately, which didn’t surprise me, but out of the blue, received a phone call from someone I had previously worked with who was now with Rent-A-Center. That person told me, “The vice president of HR here asked if I knew you. I told her you had done great work with our previous company, and we should really talk to him.” That was fortunate for me and goes to your networking and the relationships you’ve built during your career. I was asked to come in for an interview with the HR executive on a Friday, which I did, but unfortunately something came up, so I was asked to come back on Monday. After a two-hour interview, she asked me to come back on Wednesday to meet with the president of the company. She called me Thursday and offered me the job, which at the time was senior director of loss prevention. So, in less than a week, I went from looking to landing a new position. EDITOR: You mentioned something very important, which is the relationships we develop within the industry. Not just with other LP practitioners, but relationships with vendors and other retail operators are also very important. TEMPLET: That’s absolutely correct. In my case, it was a combination of a vendor who gave me the lead and a woman I interacted with in the benefits department of my previous company. In both cases apparently I created enough of a positive impression that one was willing to pass information along to me and the other would vouch for my work. EDITOR: When you started with Rent-A-Center, did you inherit a large organization with programs and strategies already in place? TEMPLET: The answer to that is an emphatic “No.” When I got here in September of 2005, we had roughly 2,700 locations located in all fifty states, Puerto noveMber - DeceMber 2011

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Rico, and a few stores in Canada. The entire department was comprised of three LP managers and two administrative people who all worked out of our field support center in Plano, Texas. EDITOR: And what is it today, some six years later? TEMPLET: Rent-A-Center by its nature has grown through acquisitions. We since have acquired the third largest rent-to-own company at that time, which brought our total count to about 3,400 locations. After combining overlapping stores, we are now at about 3,000 traditional store locations, with some additional expansion into Canada. EDITOR: Do you have any other international locations? TEMPLET: We opened five stores in Mexico in the fourth quarter of last year, and we’re on target to open about 40 more stores this year. We should have approximately 100 stores open by the end of 2012 and believe Mexico could be a 1,000-store opportunity for us. We looked at several other countries at the same time, but felt that Mexico gave us our best opportunity because of the name recognition we had due to the proximity to our stores along the border. That got us started, but now we’re moving much further south of the border to Monterey, San Luis Potosi, Tampico, and elsewhere in Mexico. EDITOR: If you believe what you hear in the media, the challenges you have in Mexico must be significant, or at least different than what you have in the states. TEMPLET: Everyone in the business world has heard about the different challenges associated with doing business in Mexico. To address those challenges we have had to evaluate every aspect of our business to ensure we meet the needs of our customers. As you might imagine, it has kept us on our toes. EDITOR: Before coming to Rent-A-Center, you held jobs that took a traditional view of shrinkage and the objectives for loss prevention. My understanding

Interview is that loss at Rent-A-Center is a completely different animal. TEMPLET: You are exactly right. In fact, the term “shrink” is not even in our vocabulary. We look at a series of different items called “rental loss lines” on the P&L. An example of that is a product that has gone through its life cycle and is no longer rentable. If we can no longer rent it to a customer, we may choose to try to cash sell it. But in some cases we still have value associated with that product, and it has to be written off to what we call “junk.” The biggest category of loss for us is what we call “skip.” That’s where we rent something to a customer who chooses to stop making payments. If we cannot find the customer and exhaust all of our efforts to recover it, we have to write that product off as skip. Another example of loss is when product is in need of repair. Because we have ownership of it until the rent-to-own period ends, we provide free service on those products. In some instances the cost to repair exceeds the remaining value or revenue potential on a product, so we

remove it from inventory in a category called “service estimate refused.” So, from our perspective, loss prevention is more about how to maximize profit based on controlling these categories by working with our stores to do the things that are in the best interest of the company relative to product life cycle and managing both our on-rent and idle inventory. EDITOR: Do you have internal

investigators who do the skip tracing, or do you use outside services? TEMPLET: Actually, the stores have the responsibility to manage the accounts associated with that store. From the time they rent a product, they are responsible for collection of weekly or monthly rental payments as well as contacting the customer to recover product if payments aren’t made. The stores will go through a series of activities to try to get that collection or get the product returned. Based on local laws, stores can even initiate criminal or civil actions related to lost product. When they get to a point where they’ve done everything they can

at the store, then we write it off of our inventory because we don’t anticipate it being recovered. At that point there is a small group of collection specialists here in our field support center that looks at those accounts to consider additional collection efforts, but the vast majority of effort is done at our store level. EDITOR: It sounds as if loss prevention is more about managing operational issues that lead to protecting profit and reducing loss more than traditional retail LP strategies. TEMPLET: That’s pretty accurate because we know that development of the relationship with the customer at the front end is extremely critical and sets up everything that comes downwind. If you think about our business, a customer walks into our store and walks out with a product that may be worth hundreds or even thousands of dollars, on the condition that they give us the first week’s payment, which may be only $29 or $39. We have to have a lot of confidence that we’ll be able to work with this customer

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LP Magazine | November - December 2011

Interview see the gaps, how do we address them? How do we get in front of issues? Finally, our fourth cornerstone is investigations. We still have the traditional role of investigating both internal and external issues. Both LP and our business partners here understand that the more time we spend on the first three, the less disruption we create in the business by having to do the fourth one—investigations.

The biggest challenge for us is burglary. We average more than one burglary a night every night throughout the country. Being in a strip-center environment and having product that people want, makes us a target. At the same time, shoplifting is not a big problem for us. to collect those rental payments or get the product back. So from an LP standpoint, we spend a lot of time teaching, training, and working with the stores to ensure that accounts are set up properly. EDITOR: How then do you define your department’s objectives? TEMPLET: We have four cornerstones of what we do for the company. The first cornerstone is physical security. That means how to set up the stores from alarms, CCTV, safes, and product-protection strategies to protect our people, products, and property. The second cornerstone is data analysis and risk exposure, where we look for trends and patterns that may indicate potential loss. The third is training. What did we learn? How do we make certain that those things are being applied? When we

EDITOR: With 3,000-plus stores and a relatively small staff, how do you accomplish those objectives? TEMPLET: I’ve talked primarily about our traditional rent-to-own business where we have about 3,000 stores, but we have several other business models. At this point we have almost 3,900 total touch points where we’re doing business with customers. My average field LP person right now is responsible for about 300 of those touch points, so their span of control is fairly large. Because of that, we had to develop a way to stay front and center with our people to give us the opportunity to communicate different types of messages. In October of last year we rolled out a new awareness campaign branded “TheLINE on Loss Prevention,” where we educate and train our coworkers about how loss impacts our top and bottom lines. The program is extremely comprehensive including education on safety, internal audit, fleet maintenance/ safety, and store operations best practices. The brand is also perfect for tackling the subject of ethics and what it means to “cross theLINE” for the company and employees. We definitely felt it was vital to have an in-store presence that reminds all employees about the importance of considering the impact of loss in their everyday activities. With the introduction of TheLINE on Loss Prevention, we’re accomplishing that goal, and we’ve seen significant participation numbers that reflects its acceptance in the stores. EDITOR: What communications vehicles do you use? TEMPLET: First, we worked with our awareness solution provider to create a strategic communication plan noveMber - DeceMber 2011

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since we were rolling out a brand new program to our entire store base. We felt it was important to not produce poster pollution, but to essentially create a new communication vehicle through our store managers each month about loss prevention. With this goal in mind, we crafted a program with three key components. One, a monthly leader’s guide for store managers that guides them through the monthly topic and how to discuss it with their coworkers. Two, an in-store awareness center that emphasizes our brand and houses monthly printed pieces. And, three, an online portal where employees will eventually receive their training and answer quiz questions each month. We also use video within the program to keep employees engaged and interacting with the print and electronic components. Considering this is a new program for us, we wanted to strategically roll out each phase so it was easily digested and didn’t interrupt store operations. We’ve implemented the store-level discussion about our educational messages each month, videos supporting the monthly topics, and the in-store awareness centers. We just started the electronic phase by testing our online portal in four of our sixty-two regions. This feature, branded “onLINE,” is more interactive and ensures we obtain an accurate measurement of those stores that are actively involved in the program and those that need some extra attention. January 1st we will roll out the electronic portion to all 3,000 store managers, and by mid-next year we will engage each of our 19,000 coworkers with the monthly quiz topic. This final phase will produce actionable data so we can retarget, repackage, or reemphasize different training points or messages in a flexible way. We’re proud of our planning to methodically roll out the program in sections to ensure positive feedback from everyone involved, and we look forward to this final phase of reaching each coworker, every month about an important topic to not only loss prevention, but the company as a whole. EDITOR: You currently report

to the CFO, correct? How is it

Interview different reporting to the chief financial officer as opposed to a senior-level operations person as you did in the past? TEMPLET: The differences are very interesting. As I said earlier, when I first started here, the person who hired me was the vice president of HR, but that relationship lasted only a few weeks when she chose to leave the company to pursue another opportunity. So, I was suddenly thrust into a new relationship with the executive vice president of operational services. That particular position had a lot of tactical-type departments reporting to him—risk management, product services, real estate/construction, fleet, and others. A lot of our conversations centered on the tactical aspects of what needed to be done and how were we going to do things. It was great because it taught me how to get things accomplished in a very diverse company. When that person retired recently, I was assigned to report to the CFO.

Now the discussions are much more strategic. Why are we doing it? What are we getting out of it? Much more a return-on-investment mentality. Although I was thinking and discussing some of those things under my former boss, the nature of the discussions was very much different. Now with the CFO, I have learned a considerable amount in a very short period of time on a totally different perspective and direction of our business. EDITOR: Given you are not using a traditional shrink calculation, how do you know when loss prevention is winning? TEMPLET: We still monitor, track, and work against our total loss line, which is a very important key indicator in our company. However, if you look at our financial results over the last couple of periods, we are running historically low total loss lines. Although many things factor into those results, our LP efforts over the last few years have had an impact.

LP Magazine | noveMber - DeceMber 2011

So, from a scorecard standpoint, we can see we’re getting payback for the investments that we’re making. EDITOR: One of the added challenges that you have are the exposures that come with having stores in strip centers or free-standing stores in challenging neighborhoods. Talk about the problems associated with that. TEMPLET: The biggest challenge for us is burglary. We average more than one burglary a night every night throughout the country. And yet, that rate is significantly down over the last couple of years. Being in a strip-center environment and having product that people want, makes us a target. At the same time, shoplifting is not a big problem for us. But burglary remains a significant challenge that a lot of strip-center retailers have to deal with. EDITOR: As a matter of fact, you participate in a group of retailers that shares information about

Interview the challenges of retailing in a strip-center environment. Talk about the nature and value of that group. TEMPLET: A couple of years ago I began participating in a group called the Strip Center Loss Prevention Information Exchange. As the name implies, the basis for our group is information sharing. If someone has a problem or something has happened in a particular area, members know that they can put a question to the group and get multiple responses from senior LP executives in less than 24 hours. Even though our business models are very different—from electronics to clothing, general merchandise to footwear—the challenges of protecting our stores are similar. In fact, the different business models provide a very broad perspective of what others are doing. The information and support I get from this group is undoubtedly very important to my decision-making and how I present ideas to my senior leadership team. Conversely, I get a reality check from the same group of people if I suggest a concept that maybe needs to be rethought or repackaged before going forward. [See sidebar at right for more information about this group.] EDITOR: In interviews like this,

it’s always interesting to hear how LP executives got their start in the industry. Tell us your story. TEMPLET: Funny you should ask. I started my career with Kmart many years ago when the world of loss prevention was really a different place. I was your typical high school check-out operator, stock clerk, pretty much anything that needed to be done, I did. We had a loss prevention manager that I got to know who was in his mid-to-late 40s. As we got to know each other, he started using me to chase down shoplifters because I was younger and a lot faster than him. He would put me out in the parking lot, and if the shoplifting apprehension didn’t go as intended, my responsibility was to chase them. Remember this was in the old days of loss prevention. That would never be allowed today and is unacceptable under any conditions, but we’re talking twenty-five years ago when I was young and dumb. When that fellow was promoted to district manager, he

asked me if I was interested in getting into loss prevention as a career. I took him up on the offer and haven’t stopped since. EDITOR: I think it is important that

you emphasized how inappropriate that is today because we still hear about LP and store personnel chasing shoplifters and sometimes getting hurt or even killed. TEMPLET: Unfortunately, that’s true. But I think it goes beyond just being young and dumb. It requires really communicating expectations and the right and wrong ways to meet those expectations. When you have people who are young, aggressive, who want to be successful and please their boss, sometimes they will make bad decisions if we haven’t educated them appropriately. They think they are doing the right thing, but it gets out of control. As an industry, we need to do a better job of educating our store personnel

on the very serious repercussions this can have on them and the business. EDITOR: No doubt about it. Finally, let me ask you about any mentors or people who influenced you during your career. TEMPLET: Two people come to mind. The first person is someone who probably doesn’t even know how much influence he has had on my career. When I was a district manager at Kmart, the company launched the Super Kmart division. I made a choice to take a step back from core Kmart to get into the Super Kmart division as a store-level manager in Baton Rouge, Louisiana. That’s when I had the opportunity to work with Dan Faketty, who is now vice president of LP at Winn-Dixie. I saw the way he carried himself, the way he handled the people who worked for him, and even the people like myself who didn’t report to him. He

The Strip Center Loss Prevention Information Exchange This organization was originally conceived at an informal gathering at the 2002 National Retail Federation loss prevention conference of LP executives with common store demographics. Endorsed by the corporate leadership of each member company, the LP executives hold regular conference calls and annual meetings to exchange information pertinent to issues of property protection and employee safety in a strip-center retail environment. An early by-product of the original group of ten companies representing 25,000 stores was a program and policy paper entitled “The Strip Center Benchmark Survey” that is the centerpiece of each member’s commitment to progress and professionalism within the group. Prospective members must meet the following criteria: - Their company must be a multiunit specialty retailer with locations in national strip centers. - They are the head of the loss prevention or asset protection department in their company. - They must have permission from their company to participate in miscellaneous surveys from time to time, including the Strip Center Benchmarking Survey. Current members representing over 26,500 stores include Ashley Stewart, Cato, Citi Trends, Dollar Tree, dressbarn, DTLR, GameStop, Payless Shoesource, Rainbow Shops, Rent-ACenter, Sally Beauty Holding, Stage Stores, Variety Wholesalers, and the associated brands for these companies. For information about membership, contact the organization’s chairperson, John Feretich of Rainbow, at jferetich@rainbox-mail.com.

November - December 2011

LPportal.com

Interview

Everyone in the business world has heard about the different challenges associated with doing business in Mexico. To address those challenges we have had to evaluate every aspect of our business to ensure we meet the needs of our customers. As you might imagine, it has kept us on our toes. was really interested in our development and what we needed to do to be successful. Even though we went different ways, I’ve always followed his career and never miss his presentations at conferences. Over the years I’ve sent him questions, and he’s always provided me with feedback. Another thing. He wrote a series of articles for LP Magazine a number of years back on the six steps to creating a loss prevention program. I still have those articles and referred to them as I was developing the LP department at my previous company and here. The things he talked about in those articles were thought-provoking and helped me consider

what I needed to do and how I could apply different strategies in my situation. [The articles “Six Steps to a Successful Loss Prevention Program” are available in the magazine archives at LPportal.com.] EDITOR: Who was the second person? TEMPLET: Right after I started with

Rent-A-Center, I attended my first annual leadership meeting where all of our district managers, regional directors, and divisional vice presidents were brought together. At that meeting, I remember listening to our CEO, Mark Speese, use an analogy that I’ve adopted and have used over and over again. Even though he wasn’t

talking about loss prevention at the time, I think it’s a perfect analogy for us. Here’s how I adapted it. “Loss prevention is like medicine. If you use the right amount, it can help you. If you use too much, it can kill you.” Our best intentions are to protect the business and do all the right things. But if we go overboard with it, specifically in our business model, we can strangle our business and really negatively impact our ability to drive the top line and the bottom line of the company. EDITOR: That’s a great analogy, Bobby. Thank you for sharing that and sharing your story with our readers.

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“I’m certified. Here’s why.” Sandy Chandler, LPC, CPP Regional Director, Loss Prevention Rite Aid Corporation

With the evolution of our profession, it is imperative that retail LP professionals become true business partners. Whether you are a seasoned LP professional or just starting out, the Foundation certification courses have valuable content to meet that goal.

These courses contain a wide range of subject matter that validates our ever-changing roles, showing how valuable our position is to our retail organizations. The LPC allowed me to become more proficient on some subjects not previously utilized. For example,

“I have a job. Why do I need certification?”

Certification not only prepares you for the future, it helps you when you need it most—in your current job. Certification refreshes and validates your knowledge base while teaching you critical business expertise to round-out your skill set. It not only covers key components of loss prevention, it teaches you solid business skills to prepare you for your next promotion. “Yeah, but…” “It costs a lot.” Certification is very affordable and can even be paid for in installments. It is one of the best investments you can make for yourself and will pay for itself over again as you advance in your career. “I don’t have the time.” Certification was designed by seasoned professionals who understand the demands on your time. The coursework allows you to work at your own pace and at your convenience. Everyone is busy, but those who are committed to advancement will find the time to invest in learning. “I’ve never taken an online course.” The certification coursework is designed with the adult learner in mind. The online courses are built in easy-to-use presentation style enhanced with video illustrations to elevate comprehension and heighten retention. “What if I fail?” Both the LPQ and LPC certifications have been accepted for college credit at highly respected universities, and as such, passing the exam demands commitment and study. However, the coursework includes highly effective study and review tools to fully prepare you for the exam. In the event you fail the exam, you can review the coursework and retest after 30 days. “Okay, how do I get started?” It’s easy to get started. Go online to sign up at www.LossPreventionFoundation.org. If you need help or want more information, contact Gene Smith at Gene.Smith@LossPreventionFoundation.org or call 866-433-5545.

the compliance module enhanced my expertise, giving me an edge in our highly regulated retail environment. In order to promote career knowledge and advancement, the Rite Aid LP department endorses both the LPC and LPQ courses, and selects key personnel every year to receive scholarships. Why?

Because these certifications provide the business skills necessary to maximize our contributions, not only within our department, but to impact the company on multiple levels, substantiating a higher return on investment and further advancing our industry through continued professional development. www.losspreventionfoundation.org

ASSOCIATIONS IN ACTION

Protecting People, Property, and Brand Reputation A fter more than a year in my current role at the Food Marketing Institute (FMI), I’m reminded every day how there is no longer a clear divide between food and non-food when it comes to issues within asset protection, technology, or even the supply chain. The business needs of our retailing industry go well beyond the confines of definitions, and I’m motivated by our food retail members to construct and offer engagement opportunities across the aforementioned roles, including safety, risk management, crisis management, loss prevention, and food defense. In light of the challenges among these issues, one of my immediate goals is to reignite programs and build participation at FMI. FMI represents more than 1,500 retailer and wholesaler members, or about 75 percent of the supermarkets in the U.S. For these food retailers, the protection of people, property, and brand reputation is about focusing on operational efficiencies, internal processes, partnerships, and the mitigation of overall risk to an organization. Connections are crucial, and since food retailers play a critical role in our nation’s crisis management plan, we need to bridge the gaps between retailers and their local, state, and federal agencies and bring awareness to the role of these retail professionals.

For food retailers, asset protection has moved beyond the common shoplifter to defense against intentional tampering across a wide range of critical control points. New Leadership Councils. In recent meetings of several new leadership councils, our members discussed how to reengage our membership and trading partners across the areas of asset protection, risk management, safety, supply chain, and technology. Action items revolved around providing subject-matter expertise, advice, leadership, and support to advance the retail food industry. As a priority, these groups are currently working with FMI to provide frameworks for best practices regarding the identification, prevention, management, and mitigation of risk, in addition to developing strong business strategies though communication and education. Secondarily, the councils are advising FMI on regulatory

by Rhett Asher Rhett Asher is vice president of industry relations for the Food Marketing Institute, where he is responsible for the association’s asset protection, risk, and safety initiatives, including the annual Asset Protection Conference, Supply Chain Council, and Technology Leadership Board. Asher has over twenty years of retail store operations and trade association experience, including management roles with the National Retail Federation, Loss Prevention Foundation, National Food Service Security Council, and the Retail Industry Leaders Association. He can be reached at 202-220-0774 or rasher@fmi.org.

and legal issues and lobbying efforts, advising FMI on issues that are of importance to the well-being of the retail industry and guiding their participation in industry work groups. For food retailers, asset protection has moved beyond the common shoplifter to defense against intentional tampering across a wide range of critical control points: ■ Cargo to cyber to mobile-point-of-sale security, ■ Data analytics to effective C-level communications, ■ OSHA to workplace violence, and ■ Pharmacy to fuel fraud. Asset Protection Conference. At future FMI events, such as the Asset Protection Conference in New Orleans March 11 – 14, 2012, our committees are working to ensure that the educational value exceeds that of other industry shows. Next year’s conference will feature a series of professional development workshops led by collaborating partner organizations in order to drill down on these business system issues. Technology Summit. On the heels of the 2011 FMI Technology Summit, I’m able to reflect on how the newly reestablished Technology Leadership Council identified disaster recovery, food safety, data security, privacy, and mobility as relevant topics for its foundation. These ideas are helping to inform the council’s ultimate business plan, and over time, our common goals for the council will include advising and guiding FMI on the changing technology landscape. In essence, emerging technology will help food retailer professionals in all departments remain informed and equipped to protect their companies. Supply-Chain Conference. I recognize that industry partners are often the keys to the success of any program and enable strong communications across the entire supply chain. Therefore, I look forward to FMI’s upcoming work with the Grocery Manufacturers Association (GMA) on our 2012 Supply-Chain Conference. FMI and GMA will bring to life ProductivityPlus, a tactically focused add-on day aimed at distribution and transportation professionals in an effort to foster supply-chain efficiency, reduce costs, and drive value. We recognize that it’s through our trading-partner alliances that we’ll be able to truly measure our supply-chain successes. We are a competitive industry, but we leverage this energy to ensure the food supply is safe, efficient, and delivers on customer satisfaction. Our businesses and our supply chain is a fluid and value-driven process that is not bound by a strict methodology, and retailers remain nimble…no matter the SKU.

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PARTNERING WITH RETAILERS

NOTE FROM PAUL JONES, LPC: This month I asked our partner from CVS/pharmacy, Tony Sheppard, who manages their ORC team, to share some of his thoughts on this issue.

I still remember my first job as an LP specialist for Montgomery Ward in Dearborn, Michigan. My job was to catch shoplifters and turn them over to police. In those days the police would respond to the store, arrest the shoplifter, and take them to jail—case closed. Back then I had never heard the terms “booster” or “organized retail crime.” Things have certainly changed in loss prevention in recent years. Fortunately for all of us, these changes have generally been positive. In most retail companies now, loss prevention is considered a critical function. LP professionals have input into many other facets in the operation of their companies. Still, after all these changes, we are and always will be the investigators for our respective companies. This is especially true in regards to organized retail crime (ORC). City, state, and federal law enforcement agencies are stretched thin and will justifiably continue to focus on terrorism, public corruption, and violent crime. That leaves the job of investigating these crimes to retailers. Fortunately, one of the positive changes in loss prevention has been a new culture of openly sharing information on investigations, suspects, and law enforcement contacts. Although we may all be competitors for sales in the retail world, when it comes to ORC, we are all on the same team. The old school of thought was to drive shoplifters to your competitor by protecting this intelligence as proprietary information. But recent successes by ORC teams that work collectively has disproven this strategy. ORC cases are being closed faster and more efficiently than ever, and retailers are benefiting from the disruption of these organizations through increased sales due to improved product availability. There are many avenues available to share this information on a market-specific level, such as LAAORCA and AARAPA, or on a national level by utilizing LERPnet2.0. CVS/pharmacy, like many other national retail chains, has a specialized ORC unit. The unit is comprised of investigators with different backgrounds, who all bring something different to the table. If you are not fortunate enough to have an ORC team, that does not mean you cannot contribute to the fight against ORC. Your company may have great video of incidents inside and outside your stores that can be shared with other retailers. You may have store detectives who apprehend and interview boosters at store level and can share key intelligence. 38

By Tony Sheppard

In order to have success, it is critical to build an actionable case before presenting the case to law enforcement. If you go to law enforcement with the boosters or fence already tied to multiple instances of theft, including thefts from other companies, you will be well on your way to getting their full support in opening a case. This is also true at the federal level, where we have had great success. Once you bring a case to law enforcement, your job is not over. To ensure a successful ORC case, you need to remain involved throughout the entire case, including presenting the case with law enforcement to the local prosecutor or U.S. attorney. Law enforcement and prosecutors know the law, but you are the retail expert and will be called upon throughout the case for your expertise.

Tony Sheppard is Nationwide Manager, Organized Retail Crime, CVS Caremark.

Retailers must continue to educate our associates and senior leaders about the problem of ORC, deploy product-protection strategies to deter and slow down these groups while not impeding sales, and continue to build partnerships to combat this crime.

In addition to retailers, manufacturers can help control the supply chain and provide product for reverses on large-scale cases. Many times the same fences dealing in stolen goods are also dealing in counterfeit goods. Online retailers also have a role to play. eBay has provided valuable support to us over the last few years with actionable intelligence on several ORC cases. It is imperative that the industry continues to build on partnerships between retailers, manufacturers, and online retailers in this ongoing fight against ORC. By all working together, we can make a major impact on ORC by making it a less rewarding, higher risk crime. By going after the supply and demand concurrently, we stand a greater chance of success. Retailers must continue to educate our associates and senior leaders about the problem of ORC, deploy product-protection strategies to deter and slow down these groups while not impeding sales, and continue to build partnerships to combat this crime. If a booster crew or fence is arrested and prosecuted fully, that is one less crew stealing from all of us and one less fence buying our stolen product. Thus, we all benefit where it matters most—our company’s bottom line.

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FeatUre

WHY SMART LEADERS DO SUCH

Dumb Things

n our personal and professional worlds, we are constantly surrounded by smart and successful individuals and some not so much. But have you ever wondered why so many of these people can do such dumb things? How in the world did Tom Coughlin, Kenneth Lay, and Bernie Madoff, to name but a few, all at the top of their games, do what they did? Well, I happen to have the answer. My story isn’t much different from theirs, as I managed to turn a very successful career as a financial planner, stockbroker, and entrepreneur into something far different. In fact, through a series of poor decisions, I ended up becoming an international fugitive, was incarcerated in a Central American country, and served several years in U.S. prisons. As you can imagine, I paid a very dear price to get that answer, including losing my family, freedom, country, and assets. But now I’m going to share it with you for free. This research helped me tremendously in my own life to recognize the thinking patterns myself and so many others have been guilty of indulging.

Why Am I Sharing This Experience With You?

Upon release from prison, in addition to my obligation of serving three-and-a-half years on probation, I had 208 hours of community service to fulfill. To satisfy that obligation, my choices were working out on the highway picking up garbage (and trying not to get run over) or giving talks. The obvious pick was giving talks. Why should the reader be interested in this? Because in our busy lives, we are all subjected to thousands of decisions each and every day, and it’s next to impossible to devote the necessary brainpower to evaluating and processing each of those decisions. When I went to prison I was scared...by the way, not an uncommon feeling there. I knew exactly what I did that landed me in there—32

federal felony counts of bribery, conspiracy, and money laundering—but I didn’t know why I did what I did. I didn’t need the money or the perceived power or prestige, so what on earth was I thinking? With three out of four men released from prison today going back within three years, I knew I’d better figure out why it happened because I definitely did not want to be one of those returnees nor did I really want to be there in the first place. Well, what better place to do research on the subject of poor decision-making than prison? Everybody in there had at least one thing in common—we broke the law. It became my mission to talk with as many fellow inmates as I could over the next several years, trying to discover

As I unfold these eight errors, don’t be afraid if your face flashes in your mind. We all stick our toes in these waters. I just happened to hit all eight at once. In fact, many times these thinking errors are “disguised” as something else and hard to detect. Or they try to seduce us by the promises of riches or easy money. Let’s start with the queen mother of all critical thinking errors.

Critical Thinking Error Entitlement

What is entitlement? That sense that we are better than everybody else, or we’ve earned the right to [fill in the blank]. Why? Because we are all that and more; the world owes it to us. We calibrate at a higher level than everyone else. Anyone with teenagers at home can appreciate the identification of this error. “Hey Dad, give me some money, my friends are waiting and I have to go.” Or, relating to downloading

The slide down the slippery slope of unethical behavior most times does not start with a giant leap over the edge. It almost always starts with a seemingly inconsequential decision that we don’t think much about. if there were common thinking errors that we were all guilty of violating. Over the course of thousands of these conversations, the same glaring thinking errors became apparent time and again. From all walks of life, all types of crime…everything from wire fraud to murder…different socioeconomic backgrounds and education levels, it didn’t seem to matter; it was always the same erroneous mind sets and decision-making errors. I have separated these thinking errors into what I now maintain are the eight critical thinking errors that underpin all unethical behavior. noveMber - DeceMber 2011

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music and not paying for it, “If it’s on the Internet and accessible, than I can do whatever I want with it.” My sense of entitlement really started in college when I discovered that my fraternity brothers seemed to have more “things” than I did, plus they had it easier and didn’t have to work for tuition and book money. Don’t we all consciously or subconsciously compare how we’re doing in life to our peer group? If they have more things than we do, it makes us feel uncomfortable. But if we lead the pack in material accumulations, our self-perception can be very strong.

Dumb Things

Critical Thinking Error Super Optimism

What is super optimism? It’s ego. A sense that we are invulnerable, incapable of failure, faster, stronger, smarter than others. There is no downside to what we do. If we get ourselves in trouble, we can always get ourselves back out of trouble. Always have, always will. Super optimism carried me into the financial services profession, a career I truly loved. You can help people achieve their goals and aspirations and be compensated for it. Perfect. I love helping people. It was super optimism that got me over the hurdle of not having a college degree, yet managing to get hired into a firm that required that degree. You can combine the first two thinking errors, entitlement and super optimism, into one snappy word called “arrogance.” I was arrogant. I enjoyed success at an early age, made great money,

built a financial-planning practice, and seemed to be pulling ahead (monetarily) of my peer group…heady stuff. There’s an additional acronym that we can plug in here called PIG, which stands for personal instant gratification. Do we live in an instant gratification society? It seems like we all want it and we want it now, yesterday would be even better. When we are programed for instant gratification, we are moving at such a rapid rate that it’s very difficult to take pause and actually ponder something. No way, it’s full-speed ahead, let’s go get it. Besides, I’m entitled to it. The slide down the slippery slope of unethical behavior most times does not start with a giant leap over the edge. It almost always starts with a seemingly inconsequential decision that we don’t think much about. Maybe we’re rushed with kids, school, work, relationships demanding our attention and pulling us in many directions at once. Or, it can be a seemingly urgent decision where we’re

in a hurry, short on time, pressured by colleagues and friends to do it now! In those snap decisions, sometimes our emotions highjack our logic, then it’s all hands on deck for the cleanup afterward.

Critical Thinking Error Seemingly Unimportant, Urgent Decisions

So many fellow inmates told me they started looking back and going, “Wow, how in the world did I get here?” Well, we got there one decision at a time, often so subtle it didn’t register at first, then we slowly started to shape or reshape our character and the poor decision making became an every day event. Have you ever made a decision you wish you could take back? You wanted to hit the “reset” button, but it just wasn’t there? We all have, and no doubt it stemmed from a seemingly unimportant decision.

Dumb Things

The queen mother of all critical thinking errors— entitlement. That sense that we are better than everybody else, or we’ve earned the right to [fill in the blank]. Why? Because we are all that and more; the world owes it to us. How do you prevent yourself from falling into this thinking trap? Mentors. When we stop listening to mentors, that’s usually when we’re heading for disaster. Have you ever mentored someone who was just heading for a major train wreck in life and quit listening to you? It’s frustrating. Do you have people in your life who love you, know you, and can assist in guiding you in the proper direction? Share your thoughts and ideas with these mentors and listen carefully to the feedback. It’s tough to do it alone, so create your own winning team.

How do we justify a seemingly unimportant decision when we know in our heart of hearts it’s wrong?

Critical Thinking Error Rationalization

We are a nation of rationalizers, aren’t we? Think about it, how many of us drive

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the speed limit on the freeway? It is the state and federal law, but do we comply? Only when law enforcement is in the area. Can that same parallel be drawn in the business world? We sign the company code of conduct in orientation, then get pulled aside when we start our company position by the veterans who want us to know “how it really works around here” and “don’t try to rock the boat” by doing it by the rules. What rationalizations do we use most frequently? The most dangerous phrase in the American vocabulary today is, “Everybody is doing it so that makes it okay.” How many times have we used that in our life? When do we start? Usually very young. The classic example in business is anyone who is responsible for filing an expense report. “I’ve been on the road for three weeks, missed my child’s birthday, picked up the two biggest accounts in company history, and I’m not even eligible for a wage review for six more months.” Enter the temptation to alter your expense report to boost your income

Dumb Things to where you think it should be. There are several variations on this theme, and we’ve probably seen and heard them all at one point or another. I asked every white-collar criminal I could find in prison the same question, “What was the tipping point in your mind; the point where it all began?” Every one of them answered the same way. Their common rationalization was, “Just this one time...just once. I’ll never do it again. I’m in control here. I can stop anytime.” I didn’t meet any inmates who figured they were going to get caught, but did it anyway. Every slide down the slippery slope is greased with rationalization. Some of the most common rationalizations we hear: ■ “It’s a one-time thing.” ■ “I’ll never get caught.” ■ “I’m entitled to it.” ■ “It’s only zeroes, no one will really get hurt.” ■ “I can borrow from next quarter to cover this one and then pay it back.” ■ And on and on.

I’ve worked with over 200 business schools and occasionally sit in with the provost offices to hear students answer to a professor’s suspicion of plagiarism. The students’ most common defense, “That’s what I meant to say anyway, what’s the big deal?” Next thing you know, by rationalizing or mollifying our behavior, we compound a small situation into something larger, requiring us to take more drastic steps.

Critical Thinking Error Affection Disconnection

Here’s where we are in our own little universe with an attitude that it’s my world and you all are just passing through. Kind of like that popular radio station, you know the one—WII-FM, translated into “What’s in it for me?” Perhaps you no longer consider the consequences of your decisions against the best interest of your

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loved ones. You’ve disconnected and are not emotionally available. In my case, a long-time friend approached me about the possibility of working as a broker for an entire state. She had just been appointed as the person who would decide what investments and who would be investing the funds for the state. A powerful position she was not qualified for. I thought, “What a great opportunity.” All my hard work had finally moved me up the corporate ladder of success to this role. But as you climb your corporate ladder of success, make sure your ladder leans against the right building. Mine leaned against a dollar bill with no solid foundation. One thing led to another, I started making huge money, and she wanted some of it. My rationalizations intact, I began giving her money to keep her happy and sending me business. After all, I earned it and was entitled

Dumb Things to share it with whomever I saw fit, right?

Critical Thinking Error Laziness

Eighty percent of fraud is caught by something the perpetrator did not anticipate. Why? You get lazy, overconfident, want to spend money, have fun, and don’t want the tedious day-to-day job of watching your back. In my case, eventually suspicions began on how a government employee (my friend) could lead such an opulent lifestyle on a modest income. Investigations began, accusations made, I could see the writing on the wall.

Critical Thinking Error Situational Ethics

Instead of looking through the same ethical goggles at every dilemma, maybe we pick and choose our spots, evaluating the dilemma first and then deciding which set of ethics we are going to apply. It’s easiest to pick the set of ethics that cost us the least amount of time and money leading to the old adage—Ethics is easy until it costs you something. Most of us speed on the freeway, yet I doubt if any of us speed through a school zone with children present. Both are state and federal l aws, yet we will comply whole-heartedly with one and not the other. That’s situational thinking. I considered myself an ethical guy and had this huge disconnect that this chain of events was happening to me, of all people. Situationally, I just wasn’t seeing the ethical failure in all this and wanted to separate myself from the confusion. What was driving this disconnect?

Critical Thinking Error Victimitis

What is victimitis? It’s playing the blame game. Have you ever known anyone who had a long list of people or things they blamed every malady in their life on? It’s never their fault, so they don’t take personal accountability. It’s so much easier to blame someone else instead. Yet, people playing the blame game seem to continue to wallow in self-pity and misfortune because,

until you take accountability for your own actions, it’s the easy way out. By the way, you’ll never find more victims than you will in prison. What are they victims of? Someone told on them. That’s why they are incarcerated. It has nothing to do with their crime; it’s all about someone else being responsible for their containment. Instead of facing potential federal felony charges, I moved my family out of the country to Costa Rica. From there, I knew I could figure out how to get out of this mess (super optimism). Charges were eventually filed and warrants issued. Law enforcement began chasing me across Central America. After a couple years of insanity, my family moved back to the States. After four years of running, I surrendered in Costa Rica and was thrown in prison there. I was returned to the United States, pled guilty, and sentenced to 71 months, $3.89 million in restitution, banned from securities, given three-and-a-half years of probation after eventual release, and 208 hours of community service.

My Climb Back Out

Prison is many things, but it all boils down to one concept—missed opportunities. As an inmate, you are removed from society socially,

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professionally, and personally. Life marches on outside, but inside it’s a terrible lack of participation. Prison visitation is probably the most depressing place in America. All these kids want their daddies to go home with them. When they return home from a visit, they face the harshest peer group in America—their friends. God forbid if their friends find out their daddy’s in prison. It’s never the inmates who do the time; it’s all their loved ones. I served my time as best I could, actually finishing my college degree through the mail. I got my college degree and divorced within a week in 2000. On March 21, 2001, I was released from prison and sent to a halfway house in Arizona to begin my supervised release period of three-and-a-half years. I was allowed to move in with my parents in the Phoenix area under home confinement shortly after arriving in Arizona. Thankfully my parents were very supportive, which went a long way in my reorientation to society. I got a job driving a delivery truck for a firm based at the Phoenix Airport. My pay was $8.50 an hour. I loved that job. It was hard, but satisfying work, and it gave me a chance to readjust to the world after being “elsewhere” for eight years. To satisfy my community service, I started giving talks. This led me to realize my true passion in life, sharing what I had learned in my life with others. I gave hundreds of talks to any group that would listen, honing my skills, and building a reputation as a speaker. As my audiences continued to expand into different areas of life and professions, it once again became

Dumb Things clear that even though so many of us are in diverse fields, the same common thinking errors continue to appear. In fact, I had the opportunity in 2010 to speak in both Europe and South America. What I found most interesting in both locations was what was on the peoples’ minds—concern for their kids and how to address entitlement issues with them. Sound familiar? There’s a universal theme today to the thinking errors I’ve shared in this article. Because I have experienced poor ethical decision making on so many levels in my own life, it’s important to me to give my audiences a heads-up on not only the detection, but also the prevention of these dilemmas.

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Avoiding Poor Decision Making

Now that I’ve identified these thinking errors, let’s talk about thinking skills that can help assure us of making the right call when faced with an ethical quagmire. There are any number of systems for decision processing, but the most effective and easiest one for me to remember and utilize was developed by my favorite author, Dr. Norman Vincent Peale. Dr. Peale outlined these three basic decision-making steps: 1. Is this decision I’m considering legal? Obviously for me, if I’d implemented this system in the first place, I would not have gone on to do the things I did. 2. Is the decision I’m considering going to be a win-win for all parties concerned? There should not be “winners and losers.” Everyone is treated evenly and fairly. 3. How will I feel about myself in making this decision? In my own life, I equate it to asking myself how my two sons would perceive me after this decision. Will they be proud or ashamed? Basically this is thinking outside our own universe and taking into consideration the impact on our loved ones. Hopefully these ideas will resonate with you, your loved ones, your friends, and your coworkers and give you a common ground to discuss your own individual challenges with each other and how to avoid falling into these traps. Remember, we are exactly where we are in life today due to every decision we’ve ever made. Hone your personal decision-making skills and, just as important, teach these skills to your children.

aCCePt BILLS and dISPenSe CoIn wIth ConFIdenCe and vISIBILItY • Increase visibility and “anytime reporting”– remote access management and immediate view of cash flow, with detail reports for accountability audits • Employee self-service – increase cash management productivity with direct, authenticated and traceable employee deposits • Remote management – remote access management and support for software rollouts, updates, setup control and data retrieval or upload • P.O.S. and back office integration – track the flow of cash to the transaction level

to Move ahead PATRICK KUHSE is an internationally recognized authority on business ethics and critical decision-making skills. He has given over 1,500 presentations to such diverse groups as businesses, major universities, international business associations, law enforcement agencies, government forums, and civic groups. Kuhse serves as an appointed Ethics Fellow for the Poe Center for Business Ethics at the Warrington College of Business Administration, University of Florida, and the Institute for Executive Education at Suffolk University in Boston. His website is www.speakingofethics. com. Kuhse can be reached at 619-981-1911 or via email at patrick@speakingofethics.com.

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LP Magazine | noveMber - DeceMber 2011

EVIDENCE-BASED LP by Read Hayes, Ph.D., CPP

Options Are Good A

s a general rule, the more positive options we have, the more readily we can prevent or solve problems. Our current crime and loss prevention development and evaluation efforts are focused on providing retail decision makers with multiple options. To do this, some of our work on infant formula and vodka theft, for instance, involve working on multiple procedural and technological protective measures to see how they work and compare. By placing proposed solutions into StoreLab innovation sites and working to iron out problems and make adjustments, we learn some best practices. And by separately testing the solutions in randomized controlled trials (RCTs), we provide real-world performance comparisons.

As a general rule, the more positive options we have, the more readily we can prevent or solve problems. Future columns will provide readers the results of some of this testing. In the meantime, here are the results of two recent innovation/adjustment and field test projects. The first involves testing hard EAS tags on high-loss apparel in a major department store chain. In the test we looked at new hard tags designed to be more difficult to remove or shield than existing hard tags.

Hard Tag Test

The new tags were provided by Canada’s Retailers Advantage in two forms. Our team recommended making the new tags a different color in order to immediately let would-be offenders…the target audience…know this tag was different. Our offender interview research clearly indicates theft deterrence is much more likely when offenders are alerted to the protective countermeasure’s presence and function. They need to see it or know it’s there, and they need to understand how it will make their theft attempt harder, riskier, and/or less rewarding. It should not be a secret, or too tough for them to figure out. Shopper interviews in a StoreLab location further support the need to make solutions more obvious and

Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2011 Loss Prevention Research Council

understandable. So in this test the tags came in the standard gray as well as red. The existing tags were of course gray. Test stores were randomly assigned to get one of the two tag versions, with control stores maintaining the status quo of existing hard tags. Test results indicated tested apparel item losses were increasing during the test, but the new gray-tagged test stores loss levels went up only slightly more compared to control, while the red-tagged test stores experienced almost no loss increase. This test not only provided evidence of the improved impact and cost-benefit of the new tags to retailers, but good evidence that making new solutions presence more obvious to the target audience might be a sound strategy.

Peg Solution Test

High-loss products like printer ink create constant problems for retailers trying to keep busy customers happy with open item access, while trying to also remain profitable and violence-free from chronic theft. The second test involved working with a peg solution from InVue designed to make theft of ink much more difficult and risky. In this product-protection solution, customers must slowly turn a lever to access the ink, which proved to be acceptable with customers just needing one or two units. For interviewed offenders wanting multiple units to make needed cash, the slow turning action was very frustrating and took so long they felt more at risk. The initial StoreLab phase also found some needed durability and additional fixture usage notification was indicated. Test results indicated the refined peg solution reduced losses compared to control stores levels, and at a cost-effective rate. Our research team is using brain-mind-behavior concepts to work with over thirty retail chains and the same number of solution providers on developing and evaluating more options for everyone. As always, we look forward to your insight, comments, and questions. We would also love to someday work with your team on the issues that are facing your company. Please contact me at rhayes@lpresearch.org with your comments or questions.

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TEN STEPS TO TRAINING EMPLOYEES TO WRITE GOOD REPORTS by Liz Martínez

Report Writing

riting reports ranks low on the scale of fun aspects of loss prevention. Most employees would rather submit to dental surgery without Novocain than sit down and craft a good report. Yet report writing is a critical part of any loss prevention professional’s job. Supervisors have an even tougher task than associates do because it’s the bosses who have to review…and correct…their subordinates’ reports. Supervisors are also the ones held responsible for inadequate or potentially damaging reports. So, how can supervisors avoid developing a close personal relationship with a red pen while other pressing matters threaten to create an avalanche on their desks? Here is a quick-and-dirty guide to instructing employees on the proper techniques of report writing.

1. Explain the Purpose of a Report. Loss prevention associates without security or criminal justice education or training may resent having to write reports because they don’t understand their importance. Their attitude may be “I caught the guy. Why are you bothering me with this paperwork?” Take a few minutes to explain that a report creates a legal record of an incident. Fern Abbott, a career investigator and LP professional, currently serves as the director of AFI Security Training Institute in Metuchen, New Jersey. She communicates to trainees that the purpose of a report is threefold—“To permanently record information, to communicate information to others about what occurred, and to refresh your recollection if you’re required to testify in court.”

2. Consider the Audience. Make sure associates understand that their reports may be reviewed by many people, from corporate management to law enforcement to attorneys, judges, and juries, each with their own agenda.

Adam Parker, director of loss prevention at Lamps Plus in Chatsworth, California, stresses this point. “The writer needs to understand how many different audiences will view the report. It may not be just an internal audience,” he cautions, “so don’t think it’s just for your supervisor.” He adds that report writers must always keep in mind the possibility of potential litigation when writing their reports.

3. Paint a Picture. The basics of a good report include the answers to the who, what, when, where, why, and how of an incident. But associates also need to know how to strike a balance between incorporating too few details (“Saw suspect, arrested same”) and expounding on an event with a Norman Mailer-like treatise. Employees can be taught to make the reader “see” an incident as though

LP professionals must learn that a good report has these four attributes—it is clear, concise, complete, and accurate. A report should be easy to follow, free of jargon, and follow the rules of spelling and grammar. As the only New Jersey Security Officer Registration Act (SORA) instructor to be an invited guest lecturer on “How to Be an Effective SORA Instructor” for the New Jersey State Police Private Detective Unit, Fern Abbott agrees. She suggests having associates think about not only who will read the report, but also the kinds of questions those parties may have. Following are some on those potential questions: ■ Supervisors and management—What happened? Did we do something we shouldn’t have, or not do something we should have? Was this preventable? How do we make sure it doesn’t happen again? ■ Corporate attorney—Are we civilly liable? ■ Police and prosecutors—Has a crime been committed? If so, who can be charged? ■ Defense attorneys—How do I defend this? ■ Insurance company—Do we have to pay out?

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it were unfolding on a movie screen (or for the younger generation, in a video game). Encourage them to incorporate the five senses—hearing, sight, touch, smell, and taste—wherever possible and appropriate in order to have the reader vividly experience what occurred.

4. Keep It Objective. Associates also need to realize that reports should be objective (free of opinion), rather than subjective (inserting their own opinions into the narrative). A reference to “a homeless guy,” for example, may mean different things to different people. Some may picture a filthy man pushing a shopping cart full of his worldly belongings, while others may imagine a disabled veteran begging for change. Specifically describing the things that led the writer to believe the man was homeless, such as “wearing several layers of dirty clothing, with a foul odor about his person,” will paint an accurate and objective portrait of an individual,

Report Writing without leaving readers to fill in blanks with their imaginations. Parker points out that new associates can overlook such details. “As an example, writers should include comments someone makes at the scene and the way they came across, verbally or non-verbally,” he says. “They should present a descriptive presentation of what happened.” Being too dry or clinical or trying to “clean up” a report sacrifices accuracy. When a suspect says, “F--- you,” to an associate, cleaning up the language so that the report reflects the suspect saying “You rascal” instead, makes the report a work of fiction. Associates who are so offended by four-letter words or obscene gestures that they can’t bear to include them in their reports should perhaps rethink their career choice.

5. Include Feeling. The best report writers understand the differences between the denotation of a word or

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phrase (the dictionary definition) and the connotation (the emotional meaning attached to a word or phrase) and choose the phrasing that best represents the feeling they want the reader to have. Certain words can have the same denotation: “childlike” and “childish” both mean “like a child,” for example, but the connotation is different. “Childlike” summons an image of a playful, open person, whereas someone described as “childish” brings to mind a resentful, selfish individual. Likewise, referring to an individual as a “bum” leaves the reader with a negative impression, whereas calling the same person “a constant outdoorsman” is neutral and does not prejudice the reader. If a homeless man rushed over to a falling ladder and broke the fall of one of your employees, which description would be preferable? “The heroic actions of a constant outdoorsman residing in the parking lot prevented employee injury” (yay!), or “The

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employee landed on the bum who just crawled out of the dumpster” (yuck!). Paying attention to the connotation of words and phrases and selecting the appropriate ones can mitigate a potentially negative situation or enhance an already positive one.

6. The Angel and the Devil. The tug-of-war between desire and conscience is often represented by the image of an angel on one shoulder and a devil on the other. Report writers need to realize that they also have two beings looking over their shoulders…and neither one is an angel. Picture a prosecutor hovering on one side and a defense attorney on the other, and it’s clear that reports must be airtight because one of the two is going to try to pick them apart. One of the keys to crafting a “pick-proof” report is to close any holes that a prosecutor or defense counsel can try to widen in order to discredit the writer. The use of words such as

2/24/11 11:26 AM

Report Writing “observed,” “noticed,” “saw,” and “heard” within a report will generate unwanted scrutiny. An associate who reports, “I noticed the suspect pick up the item and place it in his pocket” is inviting a defense attorney to ask, “You noticed that, but what else did you fail to notice?” By simply stating what the suspect did, rather than including the writer in the action (“The suspect picked up the item and placed it in his pocket”), it becomes

harder for a lawyer to wedge open a crack allowing a client to weasel out of responsibility and easier for a prosecutor to win a case.

7. Elementary, My Dear Watson. It doesn’t matter how well an incident is described, if the necessary elements of a crime are not included, no one is going to be prosecuted.

The basics of a good report include the answers to the who, what, when, where, why, and how of an incident. But associates also need to know how to strike a balance between incorporating too few details (“Saw suspect, arrested same”) and expounding on an event with a Norman Mailer-like treatise. VIDE O SURVE I LLANCE

Walt Kodba, a thirty-year veteran of law enforcement and loss prevention who is the Las Vegas, Nevada, branch manager in the West Coast business unit for U.S. Security Associates, oversees retail loss prevention business. He emphasizes the need to include “The five magic elements needed in order to make an apprehension—you must see the person enter the store, make a selection, conceal the item, walk past the point of sale, and have 100-percent observation.” Associates must be drilled that if they lose visual contact for even a second, they cannot make an apprehension, and they certainly cannot write a false report claiming 100-percent observation if that’s not what took place. Allowing a thief to take off with merchandise is much less expensive than defending a lawsuit for false arrest when it turns out that the bad guy had ditched the item when the associate wasn’t looking. “The job is always different,” Kodba points out, “but what doesn’t change is the elements. The aisle and where they concealed an item will change, but they

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November - December 2011

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Report Writing still have to pass all points of sale before they can be apprehended.”

8. Cut and Paste. Because loss prevention handles the same kinds of incidents over and over, having a good report that serves as a model for subsequent incidents of the same type can be a time-saver. Troy Willmon, a former law enforcement officer for the Ellis County (Texas) Constable Office and investigator for Ellis County Office of Emergency Management, says that in his experience, the finest report would “serve as a piece of history. And next time we had a similar incident, we would use that report as a template.” As Willmon points out, “Certain information stays the same, but names and descriptors are different. The best written reports are when five years later, someone else can pick up the report and picture in their head what happened. That’s a good report,” he emphasizes.

The best report writers understand the differences between the denotation of a word or phrase (the dictionary definition) and the connotation (the emotional meaning attached to a word or phrase) and choose the phrasing that best represents the feeling they want the reader to have.

Kodba agrees. “Associates should be able to read one report and model the basics.” Kodba also advocates constant correction. “Associates will train with a training officer, which includes reading reports,” he explains. “Associates should follow the guide of previous reports, then complete their own reports and submit them for correction. The narrative will change in each report,” he points out, “but the descriptive elements, such as time and place of occurrence, are pretty standard.” He advises that while cutting and pasting the details is quick and useful, “Associates should be sure to change the necessary information if they change stores.”

9. Correct, Correct, Correct. Supervisors are always happy to be able to ditch the red pen, but showing employees where the errors are in a report is a necessary part of training them to write good reports.

THERE’S NO ONE ELSE LIKE YOU. s we enter the holiday season, we are reminded of the great privilege it is to serve you. Were it not for your ongoing pursuit of excellence within the loss prevention community, such outstanding relationships could not be forged. Just as no two snowflakes are alike, no two clients’ needs are alike. And it is an honor to know each and every one of you individually — not only as clients, but as friends. We thank you for your loyalty and wish you the very best of the holidays.

Toll-Free in the U.S.: 866.875.6565

LP maGaZINe | November - December 2011

M 53

Report Writing

For the Supervisor

Fern abbott, director of aFI Security training Institute in metuchen, New Jersey, is offering her training PowerPoint, “the Importance of Good report Writing, or How to Get Good reports from Your Subordinates,” free to LP Magazine readers. contact her through aFI’s website at www.afitraining.com, or send an email request to fabbott@afitraining.com.

For the Associate

the only remedy for poor spelling, punctuation, and grammar is for each individual to learn the basic rules. two excellent interactive websites that can be very helpful in getting associates up to speed on the basics include Grammar bytes! and the Guide to Grammar and Writing. Grammar bytes!, which bills itself as “grammar instruction with attitude,” offers handouts, videos, and interactive exercises at www.chompchomp.com. the Guide to Grammar and Writing, sponsored by the Hartford, connecticutbased capital community college Foundation, contains instructional PowerPoints, digital handouts, interactive quizzes, and a comprehensive topic index for easy reference at http://grammar.ccc. commnet.edu/grammar.

“Learning to write a report is really a form of on-the-job training,” Kodba explains. “It’s a hands-on type of task. Classroom training is not the whole picture.” Lamps Plus’s LP director Parker points out that everyone needs to begin somewhere. “They need to start with basics, and they’ll get better with practice,” he says. “With experience, associates can see what information is important.” Willmon agrees that learning what to include and what to leave out of a report

takes time. “Pertinent information is not always obvious to the new report writer. Knowing what’s important comes with experience and common sense,” he says. He recalls that his toughest supervisor was his best teacher. “My sergeant would red-mark my reports and call me in on my day off to fix them,” Willmon laments. “It didn’t take me long to look at my sergeant’s old reports and use them as a template. He made me a better report writer by riding me hard,” he admits now.

10. Pay Attention to the Basics. LP professionals must learn that a good report has these four attributes—it is clear, concise, complete, and accurate. A report should be easy to follow, free of jargon, and follow the rules of spelling and grammar. Kodba warns, “A district attorney must be able to read the report. It must make sense and flow. It shouldn’t be jumping around all over the place,” he says. “And it should follow the rules of proper grammar.” One of the biggest mistakes beginning report writers make is to discuss one topic, move on to another, then go back to the previous topic. Have associates indicate in the margins of a rough draft where each topic is being discussed. If they write “suspect appearance” in two different places, for example, instruct them to say everything there is to say about the suspect’s appearance in only one place, before moving on to the next subject. Making notes about each element will help them focus on keeping each topic together and maintain a flowing narrative. As Willmon says, “Say something and only say it once. Don’t repeat the same thing in different words.” Abbot instructs trainees to “write clearly, so that there’s no room for

misinterpretation.” For example, “If a report says, ‘While on patrol, we found a black woman’s purse outside the restroom,’ that calls into question whether the woman was African-American or the purse was black in color,” she points out. “Write in plain English,” Abbott adds. “Don’t use a four-dollar word when a 25-cent word will do. I’m not impressed that you know big words, and if I don’t know what that big word means, you’ve just alienated me…which is a big word for ‘ticked me off,’” she says. Abbott cautions against using “industry-specific jargon or code words. And don’t use legal words or phrases, for example, saying ‘assaulted’ instead of ‘hit,’ ‘punched,’ or ‘kicked,’” she advises. Willmon also warns against using jargon. “The abbreviation ‘RP’ means ‘reporting person,’ but not everyone knows what that means,” he offers as an example. “Don’t acronym the crap out of a report.” Getting associates to conform to the rules of proper spelling, punctuation and grammar can be quite challenging, especially with younger employees, who often have not received this instruction in school. Unfortunately, computer spell-check and grammar-check programs will not catch every error. Plus, sometimes the programs make incorrect suggestions. The user has to be smarter than the machine, but getting employees up to speed is something only they can do for themselves. Encourage associates who are lacking in these areas to take an English course or engage in self-study on the Internet. Point out to carry the entire financial burden. Or if you can arrange for them to be given paid training hours for the time they spend improving their skills on an interactive website, both you and the associate will reap the rewards.

LIZ MARTINEZ is a retail security analyst and a former New York State investigator. She teaches criminal justice and security management college courses, including report writing, at ITT Technical Institute and Kaplan College in Las Vegas. She is the author of the book The Retail Manager’s Guide to Crime and Loss Prevention: Protecting Your Business from Theft, Fraud and Violence (Looseleaf Law, 2004), as well as of the amateur-sleuth, adult-themed mystery e-book Sticks and Stones (Oak Tree Press, 2011). For more information about Martínez and her publications, visit her website at www.LizMartinez.com. November - December 2011

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FUNDAMENTALS

Corporate Greed Versus Giving Back Y

ou know (actually you don’t; that’s why I’m writing this), sometimes I get unexpected responses to things I mention. A little tradition I have with you (you didn’t know we had traditions?) is, I conclude each holiday season column with “Be nice to the bell ringers.” Last year I got an email from someone who thought that was a pretty funny line. Unfortunately (on many levels), I was being sincere. I know, it’s a rare thing, and where was he anyways when I was trying to be funny? My now 15-year-old daughter and I have rung those bells for the last seven or eight years together. It’s a tradition (not between you and me, but her and me) that I think she looks forward to more than I do. Her 11-year-old brother sometimes gets into it, but not so much. We’ve been out there in 60-degree weather as well as in snow and single digits. I share this with you because, first you should be nice to the bell ringers (they could be me!), and, second, it’s nice to start off a column about how much retail and LP folks give back. Working in LP, you should know and, hopefully, participate in the difference we make in people’s lives on a daily basis. For example, Walmart, the world’s largest retailer, has made a $2-billion-dollar commitment to hunger relief efforts in the United States. That’s over and above the almost fifty non-profits that have been recipients of $1-million-dollar contributions, and scores more who’ve received at least $250,000 from them. Elsewhere in the retail world, the Macy’s Foundation granted over $27 million dollars to non-profit organizations across the U.S. in 2010. Macy’s focuses their contributions on education, the environment, HIV/AIDS research, and women’s issues. Gap, Inc. can boast their foundation head serves on the White House Council for Community Solutions. Their employee-driven community investments topped $16.5 million dollars last year. My former employer, Limited Brands, donated $9 million dollars to non-profits along with over $3 million in product donations. Their international efforts include rebuilding orphanages in Sri Lanka, supporting the blind in Vietnam, summer camps in Israel, and donating boats to fishermen in Indonesia.

by Mike Marquis, CFI Marquis is currently an assistant vice president of loss prevention with the TJX Companies. His more than twenty-four years of LP experience includes senior leadership positions with Limited Brands and Urban Outfitters. Marquis invites your comments at mike_marquis@tjx.com. The opinions and commentary expressed by Marquis do not necessarily represent the TJX Companies or any of its divisions.

My current employer’s TJX Foundation supports over 1,300 local non-profits in the U.S. alone. Last year, TJX committed to a multiyear partnership with the Alzheimer’s Association, a world leader in searching for answers in research and advancing care.

On a smaller scale, our LP team took a leadership role in the Making Strides Against Breast Cancer walks across the country in supporting or leading twenty-seven walks. A few of us even took pies to the face in a 45-minute, $2,000 fundraiser for the walks. (Don’t pretend you didn’t notice the picture of yours truly. The collective sighs of missing your chance were unnecessary.) What’s your team or company involved in? You know, the next time you hear a comment about corporate greed, why not take a minute to educate the uninformed. Retail is about making money for our shareholders, but we as an industry do an awful lot to give back. This year’s just about over, so from me to you, if you have a favorite charity you support, thank you. If you don’t, please think about finding one for next year. You might find out you get just as much out of it as those you help. I know I do. Once again—Be nice to the bell ringers!

November - December 2011

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SOLUTIONS SHOWCASE i3 INTERNATIONAL

Beyond Shrink—From LP Practitioner to Integrated Business Professional By Kev Auty

o be successful, today’s loss prevention professionals need to equip themselves with skills beyond their craft, including politics, diplomacy, operations, finance, general business knowledge…and one additional skill—how to sell. After all, businesses are in business to make money—no margin, no mission. Today’s economic reality suggests that if we don’t talk bottom-line language, we will be left in the broom closet of idealists, hoping to be recognized for wanting to do the right thing and not as a cost center. Experience tells me that we need to explore this reality and take the opportunity to add some additional tools and a different perspective to the portfolio of today’s beleaguered LP professional. How many times have you asked your boss for money to buy equipment, software, or other technology that you know will improve your process, only to be told that you are a cost center? Are you denied the funds in the name of recessionary measures, cost cutting, competitive advantage, or another equally important business reason? “But it will help us catch the bad guys and reduce shrink,” we say as passionately as we can. The top challenge facing LP professionals today is convincing their employers to invest in innovation. The only way is to show the link between loss prevention, intra-departmental performance improvement, and the overall impact to the bottom line. We have all been told that loss prevention is a “necessary evil.” It’s time to show our organizations that we add value and positively impact the bottom line in economic terms beyond theft and fraud. By learning to sell the benefits of our tools and skillset to operations, finance, marketing, merchandising, and other departments, we will be successful in securing funding for projects that will impact general business performance and ultimately the bottom line. Jen Drake, Director, Resource Protection, West49 Inc., a division of Billabong International Ltd. “i³ International was my partner in introducing the Dvr analytics to our store operations, merchandising, planning, marketing, and advertising folks. right out of the gate, we focused on a KPI that could help drive sales performance to a new level. traffic conversion data tells store operations the total number of customers who visit the store and don’t buy. this business intelligence gives us a chance to experiment and build strategies to increase the number of visitors we convert into buying customers.”

To pique the interest of the purse-string holders, it is necessary to present costs and a good return-on-investment plan. Be sure to provide information your boss doesn’t currently have. For example, “Do you know we can track and manage inventory in real time from the back door to the sales floor to the basket and out the front door?” Or, “Do you know we can provide reporting on conversion rate, customer service, customer habits, shopping patterns, dwell time…?” The key is to align your position with your corporate position. ■ State their problem (inventory management, conversion rates, etc.). ■ State the solution (your brilliant idea for retail reporting). ■ Tell them how you will achieve performance improvement, cost avoidance, expense reduction, and revenue enhancement. ■ Deliver pay back and ROI assumption. LP professionals are in this business to make a difference. We all possess a great deal of value that we want to transfer to our workplaces. I believe we have the responsibility to take our “show” to our business leaders and demonstrate that we are not a cost center. Our business is changing rapidly. Let’s show that we add to the bottom line…beyond shrink. Visit i3 International at the NRF Big Show January 16 – 17, booth 2852, at Jacob K. Javits Convention Center, New York, and learn how we turn cutting-edge technology and special partnerships with you into a winning combination. KEV AUTY, CRSP, CHSC, CHRP, is President of KEA Associates (www.keaassociates.com) and former Director of Asset Protection for the Home Depot Canada and Asia.

Rui Rodrigues, National Director, Loss Prevention, Staples Canada “LP executives are challenged more than ever to present convincing arguments to their organizations to spend capital on loss prevention tools. after all, a camera system, for example, is a cost that just depreciates over time and has no true roI. Well, it doesn’t have to be that way. i³ International understands the challenges LP leaders face and offers a great product for our needs, with the flexibility to deliver other business intelligence metrics, such as traffic counts and conversion rates, which is added value to sales and operations executives. the team at i³ LP maGaZINe | November - December 2011

listens to their customers, takes the time to understand overall business goals, and connects the business need to what they offer, so they can deliver a solution that an LP leader can present to their organization, which speaks to roI for the entire business.” Paul Paglia, Senior Director, Loss Prevention and Retail Operations, Donna Karan “We are methodically looking to layer video analytics into many aspects of our business. I believe this technology will allow us to run a more efficient operation and ultimately a more profitable company.”

SOLUTIONS SHOWCASE ALPHA

Overnight…Thieves Stopped Visiting the Store No More Theft with Intelligent Loss Prevention “

e are very pleased with our new system. Since it was installed, we have not seen any theft.” This is how Jette Pedersen summarizes her experiences with Nano Gate™, the new loss prevention innovation from Alpha®. Jette Pedersen is store operation manager at the ECCO Flagship Store on Strøget in Copenhagen. The store is located just opposite the department store Illum, which means there is heavy pedestrian traffic. With heavy footfall in the street and a high number of customers in store, it’s no wonder that theft is an issue. A thief can easily disappear into the crowds, which makes it difficult to identify and catch him afterwards. The attractive ECCO store on Østergade is one of the larger stores. With 246 square meters of sales space and two entrance doors, there is a lot to keep an eye on all the time. Even with up to seven or eight employees, not everything can be monitored, as the primary task is to serve the customers. “Periodic theft has not been a major problem since we opened the store in 2002, but a year ago we began to see accessories disappearing, and we suspected this was caused by gangs operating in the area. A single bag vanished and shortly after this, another. When it peaked we lost three bags in one single day and almost twenty articles in one month. We knew we had to act…and fast,” says Pedersen. “We relocated the bags and tied them up with steel wires, with no improvement to the situation. We considered having guards at the entrances, but the final decision was to install some

sort of electronic article surveillance.” Concept Manager Peter Guldbrandt from ECCO Global Retail tested different systems when he first heard about Nano Gate. “The test came out in favor of Nano Gate and obviously this was an excellent choice, since we have had no theft at all during the six months the system has been active,” says Pedersen. Nano Gate differs from the traditional systems in the way the alarm works. It is not the antennas at the doors that give out the alarm when secured articles are brought out of the store. The alarm comes from the tag itself, which is safely attached to the bag, belt, or any other article you wish to protect. When the alarm goes off creating a loud noise, it continues to alarm until deactivated by the store assistant at the counter. No matter how fast a thief runs, the sound will follow. In addition to this, the Nano Gate solution is also a very cost-effective system, with a relatively small up-front investment, easy no-wires installation, and low maintenance cost. In the ECCO Flagship Store on Strøget around a hundred high-end accessories are secured with Alpha’s 3 Alarm™ CableLok™, mostly belts and handbags. Shoes are not that exposed, as there is only one shoe on display for each model. “Our employees are very happy, as we have found an easy and effective solution to our shrinkage problem. Our customers have also welcomed our initiative. As an extra, add-on benefit, it sends a signal to our customers that we are selling high-value accessories that need to be secured. Personally, I am very happy that we now have a system that fully supports our primary goal, which is to prevent theft. I highly recommend this effective security system to all my High Theft Solutions colleagues,” says Pedersen.

About ECCO

ECCO’s roots in defying convention run deep. Forty years ago in the small southern Jutland town of Bredebro, Denmark, Karl Toosbuy pioneered a revolution in footwear, choosing comfort over conformity. Tired of having his feet mold to his shoes, he charged that the foot should lead the shoe. A new type of footwear was born. Today there are more than 800 ECCO stores around the world.

November - December 2011

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SOLUTIONS SHOWCASE ALPHA

Alpha Introduces Jewel Lok—The First Retail Security Solution That Attaches Directly to Jewelry… not Packaging…to Dramatically Reduce Shrink Stud, Hoop and Loose Jewelry Solutions Ideal for apparel and accessory retailers

lpha® has done it again. Introducing an effective solution to one of the highest shrink categories in our industry—jewelry. Alpha’s Jewel Lok™ is the first effective retail security solution to dramatically reduce jewelry shrink by attaching directly to the merchandise, not the packaging. According to several industry researchers, moderately priced jewelry in the $20 to $200 range is consistently in the top five shrink categories for retailers, with losses between 15 and 50 percent not uncommon. However, jewelry is a critical component of many retailers’ merchandising strategy, where aesthetic display of their center core is paramount, even more than theft prevention. Until now, retailers could combat jewelry shrink only with EAS labels applied to the back of jewelry cards, but thieves often find ways to separate desired jewelry from these labeled cards.

About Alpha

Locally, nationally, and globally, Alpha (a division of Checkpoint Systems) leads the way to the most innovative and technically advanced solutions engineered to protect retailers’ high-theft merchandise. For three decades and counting, every Alpha product is designed with uncompromising security, ease-of-use, and the ability to deliver outstanding merchandising capabilities to help retailers reduce theft and increase sales. For more information on Alpha Jewel Lok or other solutions to high-theft challenges, call Carlos Perez directly at 704-206-7849 extension 332.

High Theft Solutions

Alpha’s Jewel Lok introduces an innovative way to protect the merchandise, not the packaging. It includes stud, hoop, and loose jewelry solutions that can be applied in-store or recycled at point of manufacture through Checkpoint’s Hard Tag @ Source program. Jewel Lok is virtually invisible to the shopper, so the solution will not affect the aesthetic display. It also provides benefit denial, where the shoplifter would have to damage the merchandise to remove Jewel Lok, rendering it useless to wear or for resell. Jewel Lok can be easily removed at point-of-sale with Alpha S3™ HandKey or XT Detacher products. “Based on customer feedback, we’ve created what retailers tell us is a highly desirable jewelry-protection solution,” said Larry Yeager, Alpha’s vice president and general manager. “Because of this, we will expand on the family of Jewel Lok solutions for other types of merchandise, like rings and watches, in the near future. If Jewel Lok can deliver back even a portion of the retailer’s current jewelry shrink numbers, imagine the impact it will have on their bottom line.” During the last year, Jewel Lok has been tested at different department stores and is now available for launch. LP maGaZINe | November - December 2011

INDUSTRY NEWS by Robert L. DiLonardo DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

Phones in DIY Chains B

y now everyone has seen the Konica Minolta commercial in which the young workers standing around the Bizhub are complaining about how difficult copying and faxing was in the “old days.” The clip ends when one of the people spots “the elder…he who speaks of floppy disks” who, in turn, tells the workers that they’re “soft.” Soon, retailers are going to be able to tell a similar story about high-tech telephones, such as Apple’s iPhone and Motorola’s digital assistants, in the soon-to-be “mobile” POS transaction process. Elders, like me, will point back in time to old-school methods, such as computer terminals, credit card authorization readers, and cash registers. Recently, Home Depot and Lowe’s, the two largest do-it-yourself (DIY) chains, have decided to deploy hand-held units to store associates that will assist with transactions, inventory control, and other customer-centric issues. Home Depot was first out of the gate with a late-2010 decision to deploy over 30,000 customized Motorola MC75 Enterprise Digital Assistants, called the First Phone. The unit is a combination walkie-talkie and VoIP telephone with intelligence capabilities that include inventory management and analytics functions, POS, and label-printing functions. Several million phone-assisted POS transactions later, the company credits it with helping to increase “customer facing” hours. Home Depot’s asset protection organization was instrumental in minimizing any theft, fraud, or risk vulnerabilities in the new system. Mike Lamb, Home Depot’s vice president of asset protection, calls the First Phone a “significantly effective tool with regard to shrink mitigation.” Though the project was designed to improve the customer experience and streamline store operations, Lamb observed that “as we have gained efficiencies in inventory management with the First Phone, we inherently have a better ‘line of sight’ on methods to improve shrink performance across the enterprise.” With its recent decision to purchase and deploy 42,000 iPhone 4s, Lowe’s experiment is part of a larger mission to upgrade its POS system by replacing 72,000 POS computer screens with flat panels, and retire thousands of scanners circa the early ‘90s. Each store will receive about twenty-five iPhones for use at the POS, and for calling, texting, emailing, and helping to answer customers’ questions. The company is also increasing bandwidth for transmitting data, adding in-store WiFi for shoppers, and offering a MyLowes phone application that was made available in October.

3Biometrics Eliminates PINs, Thwarts Internal Theft at KFC Biometrics has been slowly, but steadily gaining traction within the retail industry because it is a near-perfect way to make certain that someone is authentic, that is, who he or she claims to be. Its major uses are for access control or identity verification in credit and debit card transactions. The fast-food industry is quickly becoming a major believer in biometrics because it has proven to be a strong deterrent to payroll fraud known as “buddy punching” and unauthorized sales transactions. Restaurant News recently reported that two large KFC franchisees, West Quality Food Service and KBP Foods, have recently announced deployments of equipment supplied by DigitalPersona, Inc. Both franchisees have seen improved operating profitability. Biometrics has been employed in order to eliminate the need for personal identification numbers (PINs) at the point of sale and the time-and-attendance system. Under the old system, employees were able to share PINs to inappropriately clock-in one another, or use managers’ PINs to authorize fraudulent transactions. KBP Foods requires everyone to use the biometric reader to access any store systems. They have taken the additional step of requiring a manager’s fingerprint to approve any early clock-ins or overtime. West Quality Food Service has seen a near-immediate reduction in food costs that they attribute directly to the elimination of false voids and overrides.

November - December 2011

Join Us Online LP central

our LinkedIn group is called LP central because it is the central meeting place for LP professionals who want to connect with their peers to discuss important issues in the industry.

LP voices

our Facebook page, LP voices, allows LP professionals to share not only the activities they are involved with in the industry, but also their personal lives with their friends, family, and community.

LP mag

the magazine’s twitter page is @LPmag, where you can get frequent updates on what’s happening in the world of loss prevention.

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PEOPLE ON THE MOVE

Advance Auto Parts has announced the following changes: Brian Bazer to Director of AP, Mike Cox to VP of AP, and Kevin Gollner, CFI to AP Director Southeast and Puerto Rico. Mark Miller, CFI was appointed Fraud Prevention Supervisor at Apple. Jamal Evans was appointed Regional LP Director at Ashley Stewart. Bebe Stores has announced the following changes: Brent Hamlin has been promoted to Senior Director of LP, Mark Kloiber to Senior Regional LP Manager NE/SE/MW, and Zachary Smith was named Regional LP Manager, Northwest. Kevin Ling was appointed Director of LP for Big Lots Canada. Tammy Smith, CFI was promoted to Senior Manager of LP at Blockbuster. Chris Verdi was appointed LP Manager at Bloomingdale’s. Adam Gilvin was named Proﬁt Protection Manager at The Body Shop. Brad Dykes was appointed Director of AP for Cabela’s. Eric Chase was appointed Regional LP Director at CarMax Inc. The Children’s Place has announced the following changes: Michael Van Hanja and Fawad Khan to DC Security Coordinators and Andy Palomino to Regional LP Manager. Gerard Fredo and Frank Moreno, LPQ were named Regional LP Managers at CVS Caremark Corporation. Randall Trogdon, CFE was named Manager of LP Analytics for Delhaize America. Michael Skeen was appointed Senior LP Manager, Western Region at Disney Consumer Products. Doug McKendry was appointed Senior Manager of LP at The Disney Store. Eric Granger was promoted to Director of LP for Family Dollar. Deb Mayhew was appointed Director of Workplace Safety for Five Star Quality Care. Bryan Obrien was promoted to Senior Director of LP for the Banana Republic and Outlet Division of Gap Inc. Sheila Hunt was appointed Regional LP Manager at Golf Galaxy. Timothy Schaben has been named LP Manager at Goodwill Industries of Central Florida. Larry Cruse was appointed Regional LP Manager at Goodwill Industries of Central Indiana. Tom Anderson was appointed Organizational LP Manager at Goodwill Industries of Denver. Lee Tessnear has been named Regional LP Supervisor at Goodwill Industries of Upstate/Midlands, South Carolina. Brad Reeves was appointed Regional AP Manager at The Great Atlantic & Paciﬁc Tea Company.

Gary N. West, Jr. has been appointed Divisional LP Manager at Heartland Automotive Services. John Lamont was appointed Director of LP for Jewellers Vigilance Canada. Kevin Larson was named Manager, LP Training and Investigations at Kroger. Shawn Smith was appointed Corporate LP Manager for Lamps Plus. Joshua Phillips was promoted to Area LP Manager at Limited Brands. Robert Ruiz has been appointed Regional LP Manager at Louis Vutton North America. Josh Francis was appointed National Task Force Investigator, ORC for the Chicago market at Marmaxx. Octavio Jara was promoted to West Division Director of LP and Security at McDonalds Corporation. Johnny Custer was promoted to Director of Field Operations and Data Analysis for Merchant Analytic Solutions. William Gates was appointed Director of LP for Natural Grocers by Vitamin Cottage. Vince Williams was appointed Regional Investigations Manager at Newgistics. Tory Schmechel has been named Commercial Sales Executive at Protection One in Wisconsin. Jim Carr was promoted to Director of International LP and Mark Reaves to Director of LP for Rent-A-Center. Jeannie Tatis was appointed Director of Security for The Richline Group. Neil Browne, CFE was promoted to Senior Director of Global LP for Sherwin-Williams Paint Co. Ed Turner was promoted to Area LP Manager at Staples. Shawn Abbott was appointed LP Exception Reporting Manager and Julie Zhu was named Senior Corporate Auditor at Stein Mart. Lindsay Slavetskas was appointed District LP Manager at TJX Companies. Robert LaCommare was promoted to Associate VP of LP at Tween Brands for Justice and Brothers. Greg Saputo was appointed Senior Southeast Regional Sales Director at Universal Surveillance Systems. Art Miller has been named VP of Marketing and Teresa Godwin was appointed National Account Manager for the South for Vector Security. Chris Durgan, LPQ, CIPM was promoted to AP Coordinator at Walmart. Mike Skrypek has been promoted to Director of LP at Zale Corporation.

Information for the People on the Move section is provided in part by the Loss Prevention Foundation, Loss Prevention Recruiters, and Jennings Executive Recruiting. Send information on promotions and new hires for this listing to peopleonthemove@LPportal.com.

LP maGaZINe | November - December 2011

CALENDAR

November 2 – 3, 2011 ISC East Jacob Javits Convention Center New York, NY www.iscsolutions.com January 15 – 18, 2012 National Retail Federation 101st Annual Convention & Expo Jacob Javits Convention Center New York, NY www.nrf.com February 8 – 10, 2012 HospitalityLawyer.com Hospitality Law Conference Omni Houston (TX) Hotel www.hospitalitylawyer.com March 11 – 14, 2012 Food Marketing Institute Asset Protection Conference Hyatt Regency, New Orleans, LA www.fmi.org March 27 – 29, 2012 Merchant Risk Council e-Commerce Payments & Risk Conference Wynn Resort Las Vegas, NV www.merchantriskcouncil.org April 22 – 25, 2012 Retail Industry Leaders Association LP, Auditing, and Safety Conference Gaylord Texan Resort Dallas, TX www.rila.org June 19 – 22, 2012 National Retail Federation Loss Prevention Conference & EXPO Ernest N. Morial Convention Center New Orleans, LA www.nrf.com August 5 – 8, 2012 National Food Service Security Council Annual Conference and Exposition Hyatt Regency Inner Harbor Baltimore, MD www.nfssc.com September 10 – 13, 2012 ASIS International 58th Annual Seminar and Exhibits Philadelphia (PA) Convention Center www.asisonline.org October 15 – 17, 2012 Loss Prevention Research Council 8th Annual Impact Workshop University of Florida campus Gainesville, FL www.lpresearch.org

CERTIFICATION

Weis Markets Awards LPQ and LPC Scholarships A

s Weis Markets approaches its 100-year anniversary, their loss prevention team continues to grow and evolve to meet the changing needs of the business. The professionals at Weis Markets believe that world-class LP programs are made up of world-class people. Their first priority is having the most qualified professionals in the industry. Weis believes investing in their associates is critical to their program’s continued success. In November Weis Markets awarded LPCertified (LPC) and LPQualified (LPQ) scholarships to their team in partnership with the Loss Prevention Foundation and InstaKey Security Systems. These scholarships play an integral role in setting the standard for their team and emphasize the advancement of loss prevention as a career.

mark Ulrich, District LP manager for Weiss markets, is shown above receiving an InstaKey scholarship for LPc certification. From left to right are Scott Frost, cFo; Dave Hepfinger, ceo; Ulrich; mike Limauro, vP LP; rob Wynn, regional Director of LP; and Karl beagle, Director of LP.

By seeking new ideas from progressive industry partners, such as InstaKey, and combining them with great people, Weis is rapidly moving their program forward. The Weis program will undoubtedly become a best-in-class program with their philosophy of building partnerships within the organization as well as encouragement and support from the Weis senior leadership team. “Weis Markets is a remarkable place to work,” said Mike Limauro, vice president of loss prevention. “Every day presents an opportunity for us to be passionate and creative about what we do. In addition, the support from our senior leadership team and partnerships from all areas of the business enable us to be extremely productive in an environment that is truly enjoyable. “I believe that in order to have a world-class company, you need to have world-class people,” continued Limauro. “With that said, we

by Gene Smith Smith is president of The Loss Prevention Foundation, the not-for-profit organization charged with the responsibility of managing certification. He was formerly president of the industry’s largest executive search and consulting firm. During the past fifteen-plus years, Smith has provided career counseling for thousands of industry professionals nationwide. He can be reached at 704-837-2521 or via email at gene.smith@losspreventionfoundation.org.

are fortunate to have some of the industry’s best. We also feel strongly about giving our team the tools they need to succeed. The LPC and LPQ certifications are another avenue to reward our associates and help them advance as business professionals at the same time.” “We are excited to share LPQ and LPC scholarships with the Weis Markets team,” said Cita Doyle, director of sales and marketing for InstaKey. “As one of the initial LPF vendor sponsors, we have always supported its quest to develop and standardize industry-specific education. In addition to providing clientele scholarships, InstaKey has also distributed scholarships internally to its personnel. We feel that learning and understanding today’s loss prevention can only assist the vendor-client partnerships.” One of the many benefits of professionally developed and academically accepted certification programs is that they assist senior leadership in ensuring their new hires and existing team members all have the same core base knowledge. That is one reason many loss prevention departments that initiate knowledge and skill assessments utilize the LPQ, LPC, as well as the CFI certification as a means of benchmarking core competencies. Weis Markets is practicing what they preach by investing in their staff, as are many other retailers, including Rite Aid. “In order to promote career knowledge and advancement, our department endorses both the LPC and LPQ certification courses, and selects key personnel every year to receive scholarships,” said Sandy Chandler, LPC, CPP, regional director, loss prevention, Rite Aid Corporation. “When seeking potential LP candidates for Rite Aid, I know that those with the LPC certification have made a personal investment in their self-development in an effort to expand their knowledge.”

What Others Are Saying about the LPC

“The LPC course studies were extremely well done and comprehensive in their scope. I am a very strong advocate of ongoing education and industry benchmarking. The LPC accomplishes both of these. In my over ten years in the LP field and nearly twenty-five years in the retail industry, I have not utilized or experienced a product of this caliber. If you are thinking about pursuing LPC for yourself and your career, you should.” – Chris McCray, CFI, LPC, LPQ, Director Field Asset Protection, Best Buy Stores North America, Multibrand AP Support/Central U.S. “I learned a great deal in the LPC certification. The course content provided me crucial training that would have taken me many more years to obtain on my own. Thank you to the Loss Prevention Foundation for providing such a focused level of training for the loss prevention professional.” – Ken Parsons, LPC, District Loss Prevention Manager, Dick’s Sporting Goods

November - December 2011

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ANNUAL INDEX January/February 2011 Security 2020—Identifying the Store of the Future by Francis D’Addario, CPP, CFE, Security Executive Council (p. 17) Law Enforcement and Retail Partnerships by Millie Kresevich, Luxottica (p. 41) 2011 Loss Prevention Resource Guide (p. 51) March/April 2011 The Challenges of Loss Prevention in Mexico by William A. Alford, International Lighthouse Group (p. 17) Top Three Pitfalls of Vendor-Retailer Relationships by Amber Virgillo, Contributing Editor (p. 45) Overhauling Your Online Fraud Prevention Strategy by Phil Mead, Carphone Warehouse (p. 57) May/June 2011 The Evolution of Data Sharing in Retail’s Battle with ORC by Jack Trlica, Editor and Publisher (p. 17) Leveraging Video Analytics throughout the Organization by Jen Richard, West49 (p. 41) Be a Great Workplace Citizen by Bruce Tulgan, RainmakerThinking (p. 53) July/August 2011 The Threat of Social Media by Helen Levinson, Desert Rose Design (p. 17) Flash Mobs Becoming a Threat to Retailers by Frank Muscato, The Muscato Group (p. 39) Reﬂecting on Quality Recruitment and Retention by Ryan Kelly (p. 49) September/October 2011 The Impact of 9/11 on Loss Prevention by Jack Trlica, Editor and Publisher (p. 21) Where Were You on the Morning of September 11th? by James Lee, Executive Editor (p. 29) Ten Long, Slow, Consuming Years by Bobby Senn, FDNY (retired) (p. 45) Training Mall Security to Respond to Terrorist Threats (p. 48) November/December 2011 LAAORCA—Taking a Bite out of Organized Retail Crime by Adam Paul, Contributing Writer (p. 17) Why Smart Leaders Do Such Dumb Things by Patrick Kuhse, Speaking of Ethics (p. 39) Ten Steps to Training Employees to Write Good Reports by Liz Martinez, Kaplan College (p. 49) Interviews by Jim Lee, Executive Editor Using Technology and Training to Impact Financial Success with Joe Fryar, Food City (Jan/Feb 2011, p. 29) Making LP a Talent Destination for Retail Careers with Monica Mullins, Walmart (Mar/Apr 2011 p. 31) The Winding Road from Store Detective to VP with Stan Welch, JCPenney (May/Jun 2011 p. 29) Reducing Shrink Through People, Not Technology with Gary Johnson, The Vitamin Shoppe (Jul/Aug 2011, p. 27) Managing Loss in the Rent-to-Own Industry with Bobby Templet, Rent-A-Center (Nov/Dec 2011 p. 27) Academic Viewpoint by Richard C Hollinger, Ph.D. NRSS Article: “Business Expense” (Jan/Feb 2011 p. 26)

Nature Versus Nurture (Mar/Apr 2011 p. 28) Perceived Wage Inequity Can Often Be Used to Rationalize Employee Theft (Jul/Aug 2011 p. 24) The London Riots: Could It Happen Here? (Sep/Oct 2011 p. 12) 2010 NRSS Executive Summary (Nov/Dec 2011 p.24) Associations in Action Risks from Shoplifter Apprehensions: Part 2 by Lisa LaBruno (Jan/Feb 2011 p. 72) The Need for Federal ORC Legislation by Lisa LaBruno (Mar/Apr 2011 p. 62) Protecting People, Property, and Brand Reputation by Rhett Asher (Nov/Dec 2011 p. 36) Certification Retailers Beneﬁt from Solution Providers’ Scholarships by Amber Virgillo (Jan/Feb 2011 p. 74) March Momentum by Gene Smith (Mar/Apr 2011 p. 70) Is It Your Obligation to Get Certiﬁed? by Gene Smith (May/Jun 2011 p. 50) Give Our Veterans a Fighting Chance by Gene Smith (Jul/Aug 2011 p. 46) Connecting Retailers with Informed, Motivated College Candidates by Catherine Penizotto (Sep/Oct 2011 p. 50) Weis Markets Award LPQ and LPC Scholarships by Gene Smith (Nov/Dec 2011 p. 62) Evidence-Based LP by Read Hayes, Ph.D., CPP Environmental Criminology (Mar/Apr 2011 p. 64) Research Fundamentals (May/Jun 2011 p. 66) Retailers’ Research Objectives (Jul/Aug 2011 p. 58) Decisions, Decisions (Sep/Oct 2011 p. 58) Options Are Good (Nov/Dec 2011 p.46) FUNdamentals by Mike Marquis, CFI Game Changers in LP (Jan/Feb 2011 p. 50) Game Changers in LP, Part 2 (Mar/Apr 2011 p. 54)

Feedback from the Dark Side (May/Jun 2011 p. 62) Still More Game Changers (Jul/Aug 2011 p. 48) Are You Cautious Or a Risk Taker? (Sep/Oct 2011 p. 52) Corporate Greed Versus Giving Back (Nov/Dec 2011 p.56) Interviewing by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP Power. Control. Part 2 (Jan/Feb 2011 p. 14) Looking Back Over Ten Years (Mar/Apr 2011 p. 14) History of Interrogation According to W-Z: The Past (May/Jun 2011 p. 14) History of Interrogation According to W-Z: The Present (Jul/Aug 2011 p. 14) History of Interrogation According to W-Z: The Future (Sep/Oct 2011 p. 14) Did You Do It? (Nov/Dec 2011 p. 14) Parting Words by Jim Lee, Executive Editor To Be Young Again (Jan/Feb 2011 p. 82) Spring Forward (Mar/Apr 2011 p. 74) Rambles from My Calendar (May/Jun 2011 p. 74) August—You Need an Identity (Jul/Aug 2011 p. 66) One of Those Days (Sep/Oct 2011 p. 66) What’s in Your Gift Bag? (Nov/Dec 2011 p. 66) Publisher’s Letter by Jack Trlica, Editor and Publisher 10-Year Anniversary (Jan/Feb 2011 p. 6) March Madness Takes Study (Mar/Apr 2011 p. 6) April Anniversaries (May/Jun 2011 p. 6) Finding Your Niche (Jul/Aug 2011 p. 6) Special Edition (Sep/Oct 2011 p. 6) Year in Review (Nov/Dec 2011 p. 6) Supply Chain by Kelby Woodard Taking a Bite Out of Organized Crime (Jul/Aug 2011 p. 56) Ten Years Later, Uncle Sam Wants to Be Your Security Manager (Sep/Oct 2011 p. 57)

Statement of Ownership Publication title: LossPrevention Filing date: 10/21/2011 Issue frequency: bi-monthly No. of issues annually: 6 mailing address of ofﬁce of publication: 700 matthews mint Hill rd, Ste c, matthews, Nc 28105 mailing address of headquarters: same Name and address of publisher, editor, and managing editor: Jack trlica, same address as above corporate owner: Loss Prevention magazine, Inc., 10433 Pullengreen Dr., charlotte, Nc 28277 Stockholders: Jim Lee, 10433 Pullengreen Dr., charlotte, Nc 28277; Jack trlica, 7436 Leharne Dr., charlotte, Nc 28270 Publication title: LossPrevention Issue date of circulation data below: September-october 2011 avg. No. copies No. copies of Single each Issue During Issue Published Preceding 12 months Nearest to Filing Date total no. of copies 25,333 26,200 outside county paid/requested subscriptions 17,719 19,067 In-county paid/requested subscriptions 0 0 other paid/requested distribution outside USPS 5,522 5,761 requested copies distributed by other mail classes through USPS 168 168 total paid and/or requested circulation 23,408 24,996 outside county nonrequested copies 0 0 In-county nonrequested copies 0 0 Nonrequested copies distributed by other mail classes through USPS 0 0 Nonrequested copies distributed outside the mail 1,253 650 total nonrequested distribution 1,253 650 total distribution 24,661 25,646 copies not distributed 673 554 total 25,333 26,200 Percent paid and/or requested circulation 95 97 Name and title of publisher: Jack trlica, editor and Publisher Date: 10/21/2011

LP maGaZINe | November - December 2011

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PARTING WORDS

What’s in Your Gift Bag? There are two things that are constant as we approach the holiday season. One is that all of retail is geared up to sell more merchandise. The other is that each of us will give a gift or get a gift. That’s great news for everyone. Since selling merchandise is the business loss prevention professionals have chosen, getting or giving a gift is good stuff. Sir Winston Churchill is given credit for the following quote: “We make a living by what we get; we make a life by what we give.” I can’t imagine another career, job, or profession that is as “giving” as loss prevention. We have so many opportunities to give; it’s almost part of the job to be a “giver” in our profession.

“We make a living by what we get; we make a life by what we give.” – Sir Winston Churchill Think about charities. Melissa Mitchell makes an annual presentation at the NRF conference where she speaks about the efforts of LP teams from different companies and the many good causes they support. It makes you feel pretty darn good. Rod Holm continues the support of NCMEC that was started years ago by others in the industry. Many companies and individuals support the worthy cause of missing and exploited kids. And many of you wear colored wrist bands supportive of a variety of causes that need our physical and financial support. While some have personal reasons for supporting those causes, many in loss prevention just “give” their time or financial support because they value “giving” over getting. Think about the job. Is there another position in retail where you can call someone from another company and get advice or counsel on any facet of the job? Where you can gauge yourself or your company against the best practices of others? LP practitioners care about their peers and advancing the industry. Think about mentoring. All of us have one or more mentors who have “given” of their time to help make us a better loss prevention professional. I purposely said “all of us,” because I hope that is true. Sometimes this mentoring process is not always obvious. In our interview with Bobby Templet (see page 27), he credits Dan Faketty for helping

Jim Lee Executive Editor

him, and likely Dan didn’t even know it. That speaks to how we conduct ourselves day in, day out. If you owe a debt of gratitude to a mentor, please “give” them a periodic “thank you.” That is a gift both ways. Think about conferences. The presentations are all “given” by volunteers. Everyone is a practitioner “giving” their time and knowledge to others. I am always amused by the session critique forms. Everyone deserves an outstanding rating. Public speaking expertise is not nearly as important as the “giving” by the presenter to others. Think about vendors, who are often seen as individuals who are trying to sell you something. That is their job. But, many can and do more than just sell. They often are mentors, presenters at conferences, contributors to charities or professional initiatives, and advisors on best practices to you or your company. They are some of the biggest “givers” to our industry. Think about associations. They provide a forum for us to get better as professionals. Each of the associations has individuals that go out of their way to “give” and help individuals and companies. Being a participant at conferences is a good thing, being a “giver” and getting involved in the conferences is even better. Have you thought about doing more? Think about this magazine. Most of the editorial content is contributed by working professionals who want to share their expertise and experiences with their peers. There are also many others who “give” their support to the magazine in order to advance our profession and educate our young people (see page 6). Think about your family and friends. Our jobs can often be all consuming, which makes keeping our friends and family foremost in our “giving” even more important. Tomorrow is not promised to any of us, and there are no guarantees that you will “get around to it” to show the ones closest how much you care. Family and friends always have your back. Think about your purpose. Churchill’s quote bears repeating: “We make a living by what we get; we make a life by what we give.” Happy Holidays. Every day is the season for giving.

November - December 2011

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