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ARTICLE:
Profit Protection
Sums It Up
By John Woolf
MREC of SSR Personnel |
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The security
industry has a mixed public profile - in some
quarters the disinterested individual at the store
entrance is one perception, but fortunately in
the boardroom a few retailers have security professionals
who deliver consistent measurable benefits - yesterday,
today and tomorrow.
In sectors such as retail, utilities, technical
services and the Internet, consumers ensure we
have to deliver evolving requirements, but in
each remains the consistent risk from theft and
fraud.
Until a few years ago, the retail sector was guilty
of applying resources at a problem that was unidentified
and mostly anecdotal.
In 1999 £2.3 billion was lost by retailers,
the BRC identified that £500 million was
due to staff theft. It is estimated that approximately
£12 billion of total losses are the result
of incorrect store procedures, manufacturer's
cabbage disposal and contract collusion. That
leaves approximately £600 million per annum
due to customer theft. It is further estimated
that those drug takers funding a habit will need
to steal £25,000 per annum in order to maintain
a basic level of dependency which will cost £11,000
at today's street prices.
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Lack of awareness
The answer to shoplifting by
many retailers is to spend approximately £500
million per annum in security resources, directed
at a £600 million problem. As a finance director
you might be considered to be keeping a status quo,
but specialists in loss prevention contend that
shoplifters are limited in the number of people
who undertake it, quite easy to deter with good
customer service and all you have to do is look
a harder target than the store next door. Colour,
texture and ambience all have an affect on the professional
and opportunist. Is it easier to shoplift in the
Manchester United Megastore in which 20,000 people
can visit in less than 2 hours or on a cold wet
Monday morning in your local high street store?
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Establishing
the bigger picture
The audit of process (to
re-engineering accepted practice) is a primary business
tool for those who wish to protect profits. There
is still only a limited number of worldwide data
mining software applications and because of differing
practice, every user has their own style of presentations
for results.
A DIY company may focus on bogus health and safety
claims, costing perhaps £5 million a year
to the industry. Another retailer will concentrate
on supply chain losses, perhaps as much as 50% of
losses they have incurred and another will undertake
a stock take once a year. The latter company will
in times of retreating margins be one of the next
retail casualties.
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Making it
work
The security auditor will
have a background in either security or accountancy
and the merging of the discipline occurs only in
this application. Primary questions to answer for
the security auditor.
Where has it come
from?
What is it doing here?
Where is it going?
Have validity in every
profit protection plan. Large or small companies
can recover 25% to 50% of current losses with a
basic security plan. The economics of scale will
work for the larger users' benefit, but even for
the most local independent they would recover the
costs of implementing their plan by a factor of
3:1.
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How do I implement
regular Security Audits?
The recruitment, training
and retention of security auditors may not be financially
expedient for all retailers - so this function can
be hired in through specialist consultancies.
Commitment should be from both parties. The client,
by setting minimum levels of use - the contractor
pre-setting security levels, guaranteed training
competencies and response times. The hiring party
should also enquire, can both parties share the
service risk? Can the hired put at risk part of
their service charge against performance? How will
capital costs be funded?
If your preferred route
is to employ your security auditors, personnel departments
may start recruitment campaigns or perhaps instruct
their usual agency to find someone. But the nature
of those who are undertaking security auditing is
that they will not necessarily be noticeable. What
will be a benchmark of salary? A source of reference
is www.jobsinaudit.com for those constructing job
descriptions, with live vacancies from which salary
benchmarking can be compiled.
One or two recruitment consultancies claim to specialise
in providing security personnel, but you should
enquire as to their range of experiences. If your
group trades internationally you may wish to build
a team with language capabilities. Even the sourcing
of capable people could be international. Hungary
and Poland joining the EU will enable UK companies
to employ excellent English speaking, job experienced
graduates at less than the salaries of UK first
job graduates. One of the EU thrusts for suggesting
an immigration policy for 75 million people over
the next 10 years, is to reduce wage inflation.
If your security audit structure is championed by
the operational layers in the business, it enables
investment in the business, growth of SAYE, increased
shareholder value and the buy in from our staff
who witness unnecessary waste or employee theft
and feel they can say nothing in an environment
which does not address the basics of profit protection. |
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John Woolf MREC is a
Team Leader with SSR Personnel, the largest specialist
recruitment consultancy in Europe for retail and
audit positions, and has worked for the company
since 1996. With a background in retail management
he has a unique perception on service delivery
and the culture of those who can deliver it. John
Woolf can be contacted at:
jwoolf@ssr-personnel.com.
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