Calculating Your Staff Dishonesty Detection Gap: New Excel Tool for Retailers

In her new report for ECR Retail Loss, click here, Professor Emmeline Taylor introduces the internal theft ‘detection gap’ which she refers to as the difference between the estimated amount of theft committed by employees and the known amount that is detected or recorded by the retailer.

It is widely acknowledged that most internal theft goes undetected or is only discovered – and actioned - after significant losses have occurred.

We provide here a simple excel tool that we hope can help loss prevention leaders explore their own detection gap that can help shape, inform and articulate the choices and measures the business might want to adopt to influence and prevent staff dishonesty.

The excel form, downloadable below, is a simple formula. It asks you the following questions:

• How many stores do you operate? (example, 100)
• What is the value of your total sales per year from these stores? (example, €100 million)
• What is your unexplained / loss rate (typically valued at cost over retail sales? (example: 1.5%)
• What is your best estimate on the percentage attributable to staff dishonesty (example, 33%)
• How many staff dishonesty cases do you close per year? (example, 200)
• What is the average value of a staff dishonesty case? (example $200)

From these questions, the excel tool will then calculate your detection gap, which in this example, using the above data points, would be 92%.

CLICK HERE FOR THE EXCEL MODEL

The research paper makes the case that communications strategies can be an effective way to close the gap and help retail businesses' prevent and reduces losses associated with staff dishonesty.

Sharing with your business leaders the difference between what the loss prevention team are currently able to detect and close, with the possible larger universe, could be one way to promote the case for change and for more efforts to prevent staff dishonesty, especially communications.