Lifting the lid on light-fingered employees in SA’s retail sector

Retailers around the world lose billions of dollars in goods every year, and the situation in South Africa is among the worst in the world, especially as tough economic circumstances in the country hit home.

“In a stagnating economy, South African retailers that are already struggling are facing the added pressure of shrinkage due to employee theft,” says Vickey de Villiers, a researcher at Henley Business School Africa and one of four co-authors of a new research paper published by Henley Africa in association with the University of Johannesburg and the Wholesale & Retail Sector Education and Training Authority (W&R Seta). “Although data is scare and typically outdated, some estimates put annual losses to shrinkage at around 2% of sales, a large portion of which can be attributed to employee theft. The Fast-Moving Consumer Goods (FMCG) industry – typically selling the goods and foods we buy at grocery stores – makes for a particularly common target,” she adds.

Exposing the limitations to traditional approaches to curb the problem

Studies have shown that seeking to combat theft, most businesses tend to fall back on more traditional ‘internal control systems’, such as private security, surveillance, audits (like annual stocktakes) and even incentivised whistleblowing. But, the Henley research has revealed the limitations of solely relying on this approach in a South African context.

“Internal controls can be circumvented by those determined to do so,” says, Dr Beate Stiehler-Mulder, who holds the W&R Seta Chair at the University of Johannesburg (UJ). “What’s more, increased surveillance and mistrust can cause alienation among employees, and contribute to a hostile work environment that, paradoxically, can give rise to employee theft.”

Dr Beate Stiehler-Mulder adds that there is decades of research to show that employees may steal because big business has eliminated the personal relationship between employer and employee. “An American paper published in 1976 illustrates that nearly half a century ago researchers proposed that employee theft can be reduced if employers are more ‘responsive’,” she says.

So what is a responsive employer and can these capabilities be cultivated? The new research sets out to explore this question, speaking to nearly 40 employees and managers in SA’s FMCG retail industry in an effort to understand the potential drivers and motivation for employee theft as well as the mechanisms that have worked in helping to limit it.

“We were seeking to contextualise the lived experiences and working conditions associated with FMCG retailing,” comments Norman Mafuratidze, a researcher at the University of Johannesburg and co-author of the report.

A complex array of forces driving employee theft in SA

Mafuratidze adds that the researchers found that there’s a complex array of forces that all play a part in employee theft.

“The willingness to steal can be influenced by personal circumstances. Then there’s peer pressure that comes from observing other employees who steal and go unpunished. Employees may be frustrated at the lack of opportunities in the company. Employee theft is more likely if employees feel managers are unapproachable or do not treat them with respect and fairness. Broader organisational factors like low morale and poor communication can also contribute.”

Frans van der Colff from Henley Business School, the 2nd co-author of the paper, adds that a prevalent theme they encountered in their interviews was that there was often just a very real need driving employees to steal.

“Salaries in the sector are relatively low, and economic pressures on people are real,” he said. “As one employee told us ‘whether it’s to help pay bills or just have something to eat over lunch, [an employee] is going to be tempted in the stock room, he’s gonna do something, he’s gonna eat’.”

In addition, challenges facing employees include long hours and limited time to spend with family, and negative perceptions from society of retail jobs. Many also voiced mixed experiences regarding their sense of belonging and perceived level of engagement.

Bridging the gap between employees and employers

The Henley research takes its cue from the 1976 paper on the disconnect between employees and those they work for, and makes six recommendations to bridge that gap. These focus on motivation as oppose to punitive strategies that promote behavioural change and a positive work environment and are in part based on suggestions from employees and managers interviewed. They are:

1. Share information continuously and create opportunities for input from employees.
2. Celebrate employees’ contributions and company successes, be it through personalised messages or award ceremonies.
3. Provide financial support to employees, whether through small pay increases or subsidised meals.
4. Foster a relationship- and team-centred work environment.
5. Provide career guidance and opportunities for career advancement.
6. Implement awareness campaigns highlighting the challenges facing FMCG retailing and to help improve the perceived status and treatment of retail staff.

“There are no easy answers to curbing employee theft,” concludes De Villiers. “There are social and broader forces at play – including the operation of sophisticated crime syndicates – that individual companies simply do not have the capacity to address. We can’t lay the blame for employee theft entirely at the doorstep of ‘non responsive’ businesses. However, there is so much that owners and managers can do that is within their sphere of control to make employees feel like they are part of something bigger than themselves and to give them the opportunity to thrive and grow that can help reduce theft.”

For more on research at Henley Africa go to www.henleysa.ac.za/research The research paper: ‘Exploring a Motivational Approach to Curb Employee Theft in FMCG Retailing in South Africa’ was written by Ms Vickey de Villiers and Mr Frans van der Colff of the Henley Business School South Africa, and Dr Beate Stiehler-Mulder and Mr Normal Mafuratidze of the University of Johannesburg. It can be downloaded here.