RETEL TECHNOLOGIES

Without a doubt, cash and product theft is one of the most damaging sources of shrink faced by retailers and restaurant chains. As such, many now employ POS systems that offer robust exceptions-based reporting (XBR) to flag events that might suggest theft or shrink. And, while these systems can often capture a decent number of events that are actual theft, there are a few critical capability gaps that prevent them from truly being a comprehensive theft prevention system. These critical capability gaps are our exceptions to XBR.

XBR Exception #1: Theft that occurs outside the POS. Smarter dishonest employees have come to recognize that certain transaction keys – voids, cancellations and refunds, for instance – are now used by XBR to identify events that should be flagged and reviewed for shrink. Therefore, if they can perform transactions entirely outside of the POS, there is no opportunity for an event to be flagged in the POS. Examples of this include sweethearting (giving product away for free to friends and family), leaving the cash drawer open between transactions, and selling hard-to-inventory items (such as drinks) without using the POS.

XBR Exception #2: Too many false positives. Much like that car alarm down the block, or the boy who cried wolf, too many false positives in any XBR system renders it useless as the personnel assigned to monitor the system either lose the capability to effectively find actual events, or simply lose interest in using the system altogether. While thresholds and triggers can be adjusted to account for false positives, this often comes at the expense of reducing the system’s capability to find actual events – a classic Catch 22 situation. This problem can be exacerbated significantly if multiple locations are using XBR simultaneously, thereby flooding the loss prevention or asset protection department with volumes of events that are too numerous to review.

While these problems are serious, they aren’t impossible to solve. ReTel’s new CashAudit service is designed specifically to both discover shrink events that occur outside of the POS, and also work directly with XBR systems to act as a second filter on captured events to deliver only those that need added LP review to internal auditors. The result? XBR as it should be, and true deterrents to employee theft no matter how many locations need to be monitored. To learn more about CashAudit, please click here.

Does it seem like you’re always hiring new employees? If you manage a retail or restaurant establishment, then you’re familiar with rapid and constant employee turnover. The reasons for such rapid turnover are varied, but there are a number of common factors from business to business: general job dissatisfaction, a lack of opportunities for advancement, diminished loyalty to the employer and employees’ own recognition of poor performance and therefore a desire to “wipe the slate clean” by going somewhere new. All in all, retailers and restaurants face a workforce that typically turns over every six months – and sometimes even more often than that.

Beyond the constant challenge of hiring new employees to replace those that have left, this turnover leads to other issues that managers and owner/operators must face. In this post, we’ll focus on employees’ understanding of management expectations as they pertain to quality of customer service and loss prevention.

When a new employee is hired, one of the first things that employee does is go through training. In that training period, management sets expectations of job performance that the employee is expected to meet. Once that employee completes training, there can typically be a period of good performance, followed by a slow decline into poor service, dishonesty and overall diminished performance that does not meet management expectations. Given that, at any given time, any number of employees are moving further down the path towards their six-month anniversary/exit, it can therefore be assumed that a range of attitudes towards job performance will exist within any retail or restaurant staff. This leads to a problem: social proof takes over quickly, as new employees see the bar set by their more senior co-workers. A vicious cycle begins, and soon, the time that it takes for an employee to go from a new, higher performer to an older, lower performer contracts significantly.

At this point, many managers start to look for mechanisms by which they can reinstate a culture of higher performance. This can include positive incentives, such as bonuses, or negative incentives, such as the dreaded public execution, where a particularly low performing employee (even one whose tenure is longer than 6 months) is fired for repeat infractions or more grievous events such as cash theft. Often times, these rare and sporadic mechanisms will have a near-term effect on performance, with all employees generally increasing their level of performance to either help attain a bonus collectively, or minimize the chance of being the next “public execution” individually. Soon after this near-term performance bump, however, employee behavior starts to trend back towards the mean and the status quo is reinstated.

What, then, can the smart manager do to maintain consistently high performance without resorting to erratic tactics that only lead to short-term gains? As the axiom goes, you can’t manage what you can’t measure. Therefore, the answer is providing employees with constant awareness that they are under constant measurement – and that they will be treated appropriately for their performance (and that includes beneficial treatment for better performance).

In the past, constant measurement like this was tedious, costly, impossible, or all of these. With the advent of tools like ReTel’s ConstantAudit, however, ongoing measurement can be performed easily and at a low cost to help management keep track of critical information such as employee theft events, speed of service and consumer experience. These tools can also be used by management to provide ongoing feedback to employees to both provide awareness that measurement exists, as well as share best practices and provide benchmarks that employees can strive to meet or exceed to earn bonuses and accolades.

And, most importantly, by setting an ongoing culture of accountability in every store, the old culture of getting away with “just good enough” work rapidly disappears. New employees will be entering an environment where their peers perform at a higher level for longer periods of time, reversing the vicious cycle of diminishing performance and consistently allowing for further optimization. It takes time to achieve, but once the tipping point is reached, the results are well worth the effort.

Recently, I read an inspiring interview with Dave Melton, one of Domino’s Pizza’s most successful franchisees. Dave owns and operates a number of Domino’s in the New York City market. And, while it might be easy to assume that his success stems from owning stores in the most densely populated metro in the USA, that is not the reason. In actuality, his success stems from having developed a very powerful and unique culture of rewards and recognition in his stores that make his staff feel and act like owners instead of employees.

When Dave started his first New York stores, he faced the typical set of challenges that retail and restaurant franchisees often struggle with. In particular, he inherited a set of hourly employees whose aim was to get as much out of the business as they could, do the least amount of work possible, and leave shortly thereafter to find a new job. In short, none of these employees approached the business from the perspective of the owner. Customer service was not important. Food quality was not important. And, most importantly, the long term financial health of the business was not important. And why was that? There was no reason for these employees to think otherwise, as their incentives – an hourly wage – were not aligned with the performance of the business.

Dave changed all of this. He created a culture of motivation and reward, with the express purpose of taking the best and brightest workers at the minimum wage level, and grooming them to be actual owners themselves. His employees have the authority to ensure customer satisfaction as they see fit (even if it means giving an order to a customer for free); they share in the successes of their store; they understand the long term impact of their performance on the business (Dave’s stores enjoy an incredible 0% attrition rate for frontline employees. Yes, 0%); and, most importantly, every employee from worst to best is aware of their performance and how they can improve it. As a result, Dave does not employee staff, but rather…owners.

Now, Dave’s situation may not be easily replicated in every franchise chain. But the model he has created has been proven in over 20 years of exceptional performance, and can be implemented in gradual stages by any owner/operator. What can you do to start following Dave’s lead? For one, you can begin by understanding how your employees perform in key areas that impact your stores’ customer satisfaction and financial health: customer service, cash and product theft, speed of service, and efficiency. Share this information with your staff, and let them know how they benefit from improved performance. And, most importantly, help them to succeed and see that their current position can be a stepping stone to future success.

To learn more about how ReTel can help you achieve this first step, take a look at our ConstantAudit service today.

To learn more about Dave Melton and his management philosophy, visit his website here.