The Pros And Cons Of Amazon’s Internal Security Tactics

When it comes to retailers dissuading theft from external sources, consumers, more or less, expect such attempts to be highly visible — or, at least, they aren’t bothered when they are.

Be they in the form of conspicuously placed cameras, electronic tags on items or even old-fashioned, basic signage warning against shoplifting, such elements are regarded as commonplace in modern retail, and honest consumers — if they pay them much attention at all — don’t take them personally. From the shopper’s perspective, there largely exists an understanding that businesses are within their rights to not blindly trust the behavior of “outsiders” — i.e., people who are not part of their company.

By that same token, however, is it as reasonable for a retailer to treat its own employees with, more or less, that same, highly visible lack of trust?

That is arguably what Amazon is doing with its method of internal security at some of its warehouses, which — as reported earlier this month — broadcasts on flatscreen TVs incidents of attempted (and failed) theft by workers and the penalties that befell them for their efforts (always job termination, sometimes arrest).

In a more recent exploration of that methodology, Retail Dive takes the position that it is not the most effective, finding that what amounts to scare tactics can actually be counterproductive — both in the literal sense of workers’ effectiveness, as well as in their intended purpose to reduce internal theft.

The outlet does acknowledge, first and foremost, that employee theft is a genuine concern for all retailers, Amazon included. It shares data from the University of Florida’s National Retail Security Survey showing that employee theft from retailers (including warehouse thefts) amounted to around $15.9 billion out of the total inventory shrinkage of $35.3 billion that occurred in 2010 — $5 billion more, notably, than the $10.9 billion that retailers lost due to customer shoplifting in that same year.

It’s obviously a serious problem, and it stands to reason that Amazon would want to address the issue of internal theft at its warehouses.

But as for its broadcasting tales of crime and punishment involving ex-coworkers to its warehouse employees, James McCracken, a former Amazon warehouse worker in San Bernardino, California, for one, told Bloomberg Business that it’s “a weird way to go about scaring people,” adding that he finds the practice to be “offensive.”

Should current Amazon employees — particularly those who never had any intention of stealing from the company — increasingly share McCracken’s perspective, it could create a problem for the eCommerce giant in terms of staff turnover, which itself could increase the risk of employee theft.

Retail Dive posits that on-the-job reminders of what has happened to workers that tried to steal from the company — in effect, acting as a constant, implied threat — can, rather than deter theft, just as easily compel honest employees to leave their jobs of their own volition. The more this happens, according to a recent report on loss prevention and shrink management from PricewaterhouseCoopers (PwC), the greater actually becomes the likelihood that theft will occur internally.

“Employee turnover is a good indicator of risk trends,” states the PwC report. “It’s intuitive that increased turnover can lead to increased shrink, and our survey findings confirmed there’s a link.”

With the PwC survey finding that the average employee turnover rate for retailers with high shrink rates (i.e., greater than 1.4 percent) was 45.1 percent, while for those with low shrink (below 1.4 percent), the turnover rate was 33 percent, Retail Dive puts forth that Amazon’s anti-theft methodology at some of its warehouses could be making its problem worse rather than better.

Joseph Flahiff, who runs leadership, business process and management at consultancy Whitewater Projects, recommends that a potentially more productive tactic by Amazon — or any retailer, for that matter — would be to leverage peer pressure in a more positive fashion.

“Even more effective would be to encourage teams of people to accomplish things,” Flahiff told Retail Dive. “Use the positive peer pressure effect, encouraging one another to improve productivity because it helps us all out. Move from being self-focused and ‘What’s good for me’ to ‘What’s better for the group and this society that we’re in.'”

Beyond the potential for Amazon’s broadcasting of failed employee theft attempts to actually increase those incidents as a result of employee turnover, it could also, posits Retail Dive, lead to a rise in employee theft even more directly.

As Flahiff told the outlet that while Amazon, with its aforementioned video bulletins of stories of failed theft, is “trying something psychological,” the company doesn’t “realize that when you start to focus people on not doing bad things, they start to focus on those bad things. By showing theft and talking about that and saying those things, they’re actually normalizing the behavior. It’s completely backwards.”

There remains, for the time being, at least, a grey area as far as determining what is “acceptable” behavior regarding anti-theft measures directed at retail employees versus those aimed at consumers. As for whether or not something like Amazon’s warehouse video screen method can be largely productive in the long term will require further research, expresses Retail Dive.

As Stephen A. LeMay, an associate professor of marketing and logistics at the University of West Florida, told the outlet: “I don’t fault Amazon for trying to find ways to slow down theft. There’s never going to be a perfect solution. The question is: Is it effective? And, if so, is its effectiveness worth the cost on the other side — turning off the people who they really might want to employ? There’s that creepy factor, and that’s a question I’d like to answer.”

As would everyone, no doubt. When it comes to retail security, it’s certainly not good business for anyone — consumers and employees alike — to view it as “creepy.”