Once the protection program has been designed, it must now be im- plemented. The task of beginning a corporatewide loss control program can be very complex. The security specialist must understand the objectives and methods, and gain the support of senior executives and peers if the control effort is to be a success. Everything possible should be done to ensure a near, problem-free implementation of the total loss control program.
JUSTIFICATION OF THE CONTROL PROGRAM
Once a total asset protection program has been developed, it must be justified to those individuals who pay for it. Retailers must justify the program in terms of the need for protection of assets to control costs and, therefore, ultimately to increase gross profit margins. The tendency, for most retailers, is to consider the security function to be, at best, a "necessary evil" that displays little tangible benefit. Therefore, the loss control specialist should strive to demonstrate that shortage control programs can play a positive role in the business and need not always be viewed as a negative activity.
While the programs are being designed, the loss prevention specialist should ask and answer the questions that will, or should, be asked by senior management regarding the plan. Do the expected results of countermeasures justify the expense? Is this countermeasure the most cost-effective technique available? Is this countermeasure absolutely necessary? Can the company af- ford to capitalize requested security equipment purchases? Can a positive return on investment be shown for each countermeasure?
All countermeasures do not need to be cost justified. Few corporations would require a security director to justify the need for fire or safety protec- tion, but they may question the methods and equipment used.
Cost Justification
When funds are spent on security efforts, those funds are not earning income by investment. The security specialist can use three methods to demonstrate to top decision-makers, in economic terms, the need to protect assets.
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Cost avoidance—Cost avoidance shows the losses that will most likely occur if the security program is not implemented or is only partially implemented. If the amount of the loss exceeds the cost of the program (and the capital cost of the money spent on the program), then the pro- gram can be justified. For example, if the cost of locking 100 leather jack- ets, which cost $250 each, with cables is $1200 and the estimated loss of these protected jacks is zero (compared to the projected loss of $10,000 if the jackets are not cabled), this indicates that the proposed cabling pro- gram should result in a savings of $8800.
Recovery of Assets—Recovery of assets includes the projected dollar amount of total merchandise and cash recovered due to security efforts in a fiscal year. Examples of recoveries include
1. an employee who is apprehended for writing a false refund for $170.
The cash taken from the register is recovered. Additionally, the cash- ier admits to taking $3500 over an 8-month period and begins paying that money back in monthly payments.
2. three shoplifters are arrested carrying $1800 worth of athletic shoes out of a store in plastic garbage bags
3. a sales clerk notices that a customer is attempting to purchase $198 worth of merchandise for only $58 because the price tickets have all been switched
Return on investment (ROIJ or Expenditure—ROI includes totalling calcu- lated avoided losses and their resulting costs, and counting the cost of merchandise and cash recovered. The retailer then subtracts the pro- jected cost of the loss control program from the above ROI figure (or the combined total of avoided loss and recoveries), which includes all losses to be avoided and the dollar amount of recoveries projected. It is not pos- sible to precisely project the ROI of any protection program, but the pro- gram should show an acceptable return over the specified time frame.
Selling the Protection Program to Senior Management
In addition to the cost justification, there are some other methods that loss control directors can use to convince top managers that their loss control pro- gram is worth the proposed costs.
Conduct (or have a consultant conduct) a thorough survey and analysis of the company.
Document the protection plan in clear, concise terms.
Open, and keep open, lines of communication with all key decision- makers and the individuals that influence those decision-makers.
Implementing the Program 161 Deal in principles, not personalities, when collecting data to support the proposed program.
Be aware of the feelings about security that many retailers have. These feelings range from support, to indifference, to outright hostility and may be due to previous exposure to obnoxious or incompetent security
"types." At all times, loss control executives or their staffs should dress and act like competent professionals.
Maintain an air of neutrality and professionalism, and avoid a narrow, self-serving view of corporate goals and objectives.
Maintain a fresh and focused view of the department's methods and objectives by reading books and journals on retail and retail loss control.
This activity on the part of the loss control executive will become appar- ent to key decision-makers.
After the security manager (and/or the security consultant) has analyzed all obtainable data and structured the protection plan, the following sequence of events is recommended:
1. Prior to scheduling a meeting with senior management, start a public relations program within the company to determine the feeling most employees have about safety and security at the work place. Personally visit stores and key corporate employees to discuss their perceptions of the current loss control effort to make your plans for better control clear and to attempt to gain their support of loss control efforts.
2. Timing is important in any situation and presenting a loss control plan and budget at the appropriate moment is beneficial. If at all possible, the loss prevention director should time the initial submittal when the execu- tive committee is most receptive. It may be very difficult to judge this, but, often times, either a very positive or very serious incident may create a favorable atmosphere for making the loss control pitch. Always be pre- pared for the presentation.
3. When presenting the proposal, keep it short and to the point. Discuss the highlights and the projected results of the plan. Make sure that issues that are based on educated guesses are described as such. Do not over or underexaggerate the capabilities of the program.
4. Keep in mind that very few programs are accepted in their initial form.
Remember that thorough research and a well-prepared plan is appre- ciated.
TEAMWORK
Any loss control program is doomed to failure if all individuals concerned are not brought into the planning and implementation "loop." A concerted
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effort must be made by loss prevention specialists to present their educated views as well as to listen to the views of others. No effort will be conflict-free;
human nature will not allow for all individuals to agree on every issue or method. However, it is possible to rise above misunderstandings and person- ality clashes to achieve shrinkage control goals.