Category Archives: Article

Loss Prevention and Shortage: Cause and Effect?

8/1/2008 | Palmer, W., RILA Report

(Originally published in RILA Report – Asset Protection – Volume 2 – Issue 6, August 2008)

During the recent economic slowdown, several of my friends have asked me the same basic question, “When retail sales are slow, do companies invest more in loss prevention because they need to protect every dollar of profit?” It might be easy to chuckle at their naiveté about the realities of the retail landscape. However, it is interesting, that my friends, who are not in the retail business, intuitively understand the cause and effect relationship between investing in loss prevention and shortage results.

There continues to be many companies where the senior executives seem content to live with higher than necessary shortage results as a “cost of doing business.” One must wonder why this would be the case. I can only come up with three possible reasons.

  1. We really don’t add value and investing in loss prevention does not have a cause and effect relationship to shortage results. I don’t believe many of us would want to subscribe to this theory.
  2. We do add value but senior retail executives are not a very bright bunch and are unable to see this cause and effect relationship that my friends are able to see clearly. This, too, seems to be an untenable premise (except, perhaps, in a few cases).
  3. We do add value but we have done a poor job, individually and collectively, at demonstrating the return on investment to our senior executive leadership in our organizations and our industry. This, in my opinion, is the likely suspect.

Of course, there are success stories and I can think of several companies over the past few years who have invested in loss prevention by bringing in quality senior loss prevention executives, giving them the mandate for change, funding the necessary resources, and, as a result, seen shortage reductions of 30%, even 40%, over their historical results. In fact, I just got off the phone with a Vice President of Loss Prevention who just received their latest round of inventory results. Over the past 2 years, they have been able to reduce shortage by over $40 million by investing in the loss prevention function. However, I can think of at least as many organizations that seem to be resigned to their fate when it comes to shortage and fail to appreciate the opportunity it represents to their bottom-line. They view shortage as something that is done to them by external forces that are beyond their control and have little faith in their own ability as an organization to mitigate or control this number.

In next month’s column, I will share some of my thoughts as to how we can change this mind-set. As always, I welcome your views, thoughts, and insights into this issue. You can contact us at our contact page.


Originally published in RILA Report – Asset Protection – Volume 2 – Issue 6, August 2008

© 2008, Walter E. Palmer, PCG Solutions, Inc., All Rights Reserved

Stagnant EAS?

7/1/2008 | Palmer, W., RILA Report

(Originally published in RILA Report – Asset Protection – Volume 2 – Issue 5, July 2008)

Over the past several months, as I have spoken with retail loss prevention executives across the spectrum of retail – specialty, big box, mall-based, strip center – I’ve had several bring up the issue of the current status of electronic article surveillance (EAS). In several cases, they have expressed, either directly or indirectly, a sense of disappointment with the stagnation around the current use of EAS. After spending millions of dollars investing in the technology over the past years, it is as if everyone is waiting for a new “magic bullet” or breakthrough advancement in the technology.

Perhaps that disappointment is what gave way to the hyper-excitement around the possibility of RFID at the item-level. Now that most have settled into the idea that RFID is not “just around the corner” for their organization, they are back to EAS, a relatively mature product. Improvements can certainly be made in EAS deployment. Source tagging in its various forms is still an area that some segments are pursuing, with many apparel retailers looking forward with anticipation to deploying hard, visible source tags (VST) in their supply chain. New types of tags and application methods are constantly being developed or improved. Yet, this sense of ennui remains.

Maybe we should consider the statement: “We have met the enemy and he is us.” Is it possible that we are looking for the next big thing to take responsibility away from ourselves for better executing our current EAS program and investment? For instance, how many organizations know the following:

  • What is your EAS pick rate in the real-world (how often the EAS alarm goes off when a tag goes through the antenna)?
  • What is the response rate (how often an EAS alarm is responded to by and associate)?
  • What is the response time to an EAS alarm at your front-end (time between alarm and contact with customer)?
  • What is the quality of the response by an associate if they do respond? Do they check the merchandise to the receipt or follow your policies?
  • How many false alarms do you have in your store?
  • What is the cause of the false alarms?

Studies have shown that less than 10 percent to 15 percent of all EAS alarms are responded to by employees. We have probably all experienced this lack of response as consumers where we have seen EAS alarms ignored or where employees of the retail establishment simply wave on customers with a comment like, “Oh, just go on, this happens all of the time.”

It seems to me that the credibility of EAS systems and alarms are at stake and we are not doing our part in better managing this segment even though we have invested in the technology and have seen the benefit that it can bring about with shrinkage. But, we have become bored. In fact, our move towards source tagging has perhaps contributed to this phenomenon as we have shifted this responsibility for tagging to our manufacturers and, as a result, have less invested operationally in the execution of the program.

Do EAS providers have a role to play in improving the technology and providing analytic tools to assist? Of course they do. Should we keep our eye on the developments occurring with RFID and how it might impact our part of the business? Of course. But, first, we should hold up a mirror to our own efforts.


Originally published in RILA Report – Asset Protection – Volume 2 – Issue 5, July 2008

© 2008, Walter E. Palmer, PCG Solutions, Inc., All Rights Reserved

Process Failures and Shrinkage

6/1/2008 | Palmer, W., RILA Report

(Originally published in RILA Report – Asset Protection – Volume 2 – Issue 4, June 2008)

During the benchmarking session that Adrian Beck and I did at the Loss Prevention conference in Dallas last month, there was a piece of data generated by the audience that was very striking. We asked the audience of 200+ loss prevention personnel the following question, “Over the last 12 months, what has been the biggest problem your business has faced in terms of financial cost?” The choices for response were:

  • Internal theft
  • External theft
  • Process failures
  • Vendor fraud

Based on the historical results from the National Retail Security Survey, one would expect the audience to respond with internal theft since that category is typically assigned 45-49% of total shrinkage in the survey results. However, using an interactive keypad system, most respondents identified process failures as their response. Here is how the results broke down by retail segment:

Retail Segment Internal Theft External Theft Process Failures Vendor Fraud
Mass Merchandisers 24% 21% 52% 3%
Dept. Stores 30% 20% 50% 0%
Grocery 38% 0% 47% 15%
Big Box Specialty 31% 19% 50% 0%
Small Box Specialty 46% 25% 29% 0%

Keep in mind, these responses represent what the respondents viewed as their single biggest problem, not how much shrinkage they attribute to the various causes. What is remarkable is how every segment identified process failures as their number one problem with the exception of small box specialty retailers where it came in as the second biggest problem.

When we asked this same question in the U.K. last October, we received a similar result with 53% of the audience identifying process failures as their biggest problem. The U.K. results are slightly less startling in that European Loss Prevention surveys have consistently ranked process failure as a larger cause of shrinkage than the Americans do with the most recent result in Europe identifying “Process Failure” as contributing to 27% of total shrinkage (versus 17% from the most recent NRSS study in the U.S.).

What are we to make of these results? First, a disclaimer about the method in which these results were generated. This session did not have the type of statistical or scientific rigor that Dr. Hollinger uses when compiling the NRSS. For instance, it is clear that multiple personnel from the same company responded to the survey which could cause one company’s experience or viewpoint to have a disparate impact on the results. Also, the sample population was not controlled and was simply comprised of those who showed up for the session and participated in the responses. That being said, it would seem that the responses can be used as a broad indicator of the direction of sentiment from the RILA attendees.

Second, the manner in which respondents interpreted the question could have an impact on the results. A respondent could respond in this session that process failures were their biggest problem but could also report internal theft as the largest component of shrinkage if they view internal theft as a result of process failure.

Those disclaimers aside, it is an interesting result that begs for further inquiry. We would be interested in hearing from you in regards to how you interpret these results and what your viewpoint is relative to process failures and the impact on your business. You can contact us at:


Originally published in RILA Report – Asset Protection – Volume 2 – Issue 4, June 2008

© 2008, Walter E. Palmer, PCG Solutions, Inc., All Rights Reserved

Selling Your Proposal to Senior Executives – Part II

11/1/2005 | Palmer, W., LossPrevention Magazine

Originally published in LossPrevention Magazine, Nov/Dec 2005

“In God we trust. All others bring data.”

In the September/October issue of Loss Prevention, we focused on mapping out the process by which we sell a proposal to senior executives and identifying the premise on which that proposal might be justified (Part 1). In Part 2, as we continue to explore the framework of gaining approval for implementation of a project, we will examine the final steps:

  • Establishing proof that what we are proposing will bring the desired results and
  • Preparing the presentation that will most effectively communicate our proposal.


A CFO for a major retailer sent an invitation to his executives cordially inviting them to the annual budget review process. He inscribed this message across the top of the invitation: “In God we trust. All others bring data.” In other words, bring proof.

While the premise we identified in step two of this framework is the underlying reason that an initiative or project should be adopted and invested in, there has to be some proof that the proposal will accomplish the results promised.

When presenting the proof, we may take a variety of approaches:

  • Appeal to the decision-maker’s logic or emotion,
  • Cite statistics, research/models, case studies, or pilot test results,
  • Compare another organization’s experience to our anticipated results (benchmarking), and/or
  • Share a personal experience or observation (anecdotal).

We’ll look at each of these types of proofs and identify how they can be used to support your proposal.

Logic. One approach to proof is to simply make a logical argument that the proposed project will have the results intended. For instance, in considering a training program targeted to store employees, one might start with the question, “Do we, as an executive group, believe it is important to involve our store-level employees in the shrinkage control effort?” If not, then any efforts to implement such a program will fail to gain executive support.

However, if there is consensus that getting store employees involved is to the organization’s benefit, the next logical question becomes, “How do we accomplish that objective?” At that point, a logical sequence of questions may lead to a conclusion that supports your proposal.

This process is officially called syllogism and it dates back at least as far as Socrates. The structure is as follows:

  1. Given—We all agree on this basic problem (store-level employees don’t know enough about how they impact shortage)
  2. Since—Addressing this problem will benefit us (if we educate them and get them involved shortage will go down)
  3. Therefore—We should take the following course of action (implement the proposed training program)

While one might not use this formal structure, a proof based on logic can be very straightforward, simple to understand, and appeal to the rational decision maker.

Emotion. When we first look at the word “emotion,” most of us think, “Oh no, I’m a logical, rational business thinker. I wouldn’t use emotion as a proof.” However, it is often used in the business context and most loss prevention practitioners have used it at one point or another.

As we discussed in the previous article, fear is often the underlying premise as when one says something like, “If you don’t do [blank], shortage will go up?” Consider this, “If we don’t prosecute people we catch stealing, word will get out on the street that we are an easy mark.” Or, any number of scenarios where we warn of bad consequences if your proposal is not adopted. These all play on the emotion of fear.

When using emotion as a proof you sometimes hear the term “gut instinct.” Have you ever worked with someone who, in support of a proposal, says something like, “I just know this is the right thing for the business,” or “I have a gut feeling that this will improve sales?”

In fact, many times a “gut instinct” may be right. Malcolm Gladwell, in the business best-selling Blink, details many factors from science that explain how there are times these instincts are correct. Many times those feelings are based on observable, logical, and concrete data that simply cannot be articulated by the individual who is making the judgment. However, Gladwell also gives many examples where these instant assessments (in the blink of an eye) are wildly incorrect.

It is also important to consider our audience when we consider using emotion to establish proof or our proposal. For example, if the decision maker is someone who really wants to deal in data, finances, and rationality, it is not going to be as an effective appeal. According to Ken Blanchard, the famous management consultant and author, their studies show that most senior executives are rational decision makers who are not easily influenced by emotional or idealistic appeals.

Another downside to emotional proof is that we have to be careful not to overuse it. If you go to the point of “drawing a line in the sand” in order to get your way on a project, you can only do it so often before its effectiveness is diminished.

Statistics. Statistics represent the language of business. Senior executives such as CFOs love statistics. Loss prevention executives love statistics, too…when they can find them. That’s the biggest challenge for many LP departments. Once we get past shrinkage and apprehension numbers, there isn’t much else. We really need more data streams, even if that requires manually counting and testing.

Pure statistics, such as averages, medians, distribution, variance, and standard deviation, are all easy to calculate in today’s technology environment if time is taken to collect and feed the necessary information into the computer. It also requires a basic understanding of each measure. But, the “trump” cards in the business environment are the measure of financial return on investment. Some of the more commonly used measures include:

  • Payback period
  • Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Economic Value Added (EVA)
  • Total Cost of Ownership (TCO)

Research Models. Citing research studies and models can be a very effective way to establish proof, but finding this type of information may take a bit of research of our own. A good source of information is the Security Journal, an academic publication. While the journal is not geared specifically to retail loss prevention, it can provide us with helpful data nonetheless.

For example, Bob Leonardo published a study in the Security Journal a number of years ago about EAS/ink tags. The study showed a store in the United Kingdom that had a consistently high shrink rate. They put in EAS/ink tags and the shrink immediately dropped. They took EAS/ink tags out and the shrink went right back up. They put EAS/ink tags back in and shrink dropped again. Anyone arguing for EAS or ink tags needs a copy of that study.

Other excellent sources of research include the RAND Corporation, Martin Gill and his company Perpetuity Group, the work that Dr. Richard Hollinger produces every year, and the Loss Prevention Research Council are a few. [See the Industry Links section of the magazine web site,]

We may also want to explore research that falls outside the retail discipline. Take interview and interrogation as an example. Where does much of the research in this area originate? It comes from psychology, language, and neuroscience studies that aren’t necessarily about interview and interrogation per se, but still may be applied to that environment.

Case Study. When we study one company’s experience, we perform a case study. We may liken this to the Harvard Business Review method because in every issue they present a case study. Sometimes it’s a case study about a company that did a great job, and sometimes it’s a case study about a company that failed miserably. For example, it could be, “What happened at Enron?”

Often, we use a case study in establishing proof, and we don’t even realize it. For example, we may call or email a colleague who is in loss prevention in another organization and ask that person about their company’s implementation of an initiative and the results. That is a basic, simple case study. This can be especially useful when proposing a new initiative and no internal data is available. In those cases, it makes sense to look around to see what has worked for others and then use that information to predict what will happen for our organization.

The caution in using this approach has to do with causality and context. Causality is asking, “Did the stimulus cause the results?” In other words, did the company’s actions produce the results, or was it some other factor? Context is asking, “Just because it worked in that context (that is, at that company), does that mean it will work in this context (this company)?” The more similar the organization studied is to our organization, the more likely we are to experience the same results

Pilot Test Results. A pilot test can be a very effective way to get budget approval for something we haven’t done before because we can avoid making a big investment until we see if a program is going to work. Many companies have done this with EAS, alarm systems, and digital video.

In a successful pilot test, it’s vital to select a correct sample of stores in which to conduct the test. If we are not careful in our selection of locations, then the results from the test may not extrapolate. For instance, if you test a new strategy only in your highest shrink stores and see a dramatic reduction in loss, will those same results occur if you roll out the program chain-wide?

When done right, pilot test results can provide very convincing proof. This is especially true when our proposal is one that we expect will encounter resistance from senior management or requires significant financial investment.

Benchmarking. This is asking the question, “What do others do?” or “What are others spending?” Unlike the case study approach where we look at what one organization does, benchmarking involves looking at a broader cross-section of the industry.

For instance, the National Retail Security Survey is used by many loss prevention executives to benchmark their budget against the industry average. If we see that other companies are spending .52 or .54 percent of sales on their loss prevention efforts, then we can evaluate whether our .41 is enough.

Again, as we discussed in the case study method, the more you can compare your data with companies of a similar nature and industry segment as yours, the more valid this data becomes.

Anecdotal. “Once upon a time…” Anecdotal arguments involve telling a story, relating an incident that occurred, or sharing a personal experience. This is very commonly used and has strong appeal to some individuals.

For example, perhaps you’ve been in a meeting and someone supported an idea by saying, “I was in the stores last week and talked to our Flint, Michigan, store manager, and she was telling me…”

This type of “proof” is often used by store personnel when they are trying to impress upon the loss prevention manager why they need more resources to combat shoplifting. They will give examples and stories about incidents that have occurred in the recent past. They might even use memorable examples for a few years ago to illustrate their point.

While the anecdotal approach to proof has some validity, we need to use it with caution, since stories by themselves can lead to knee-jerk reactions where significant resources are devoted to issues that have not been quantified.

The best use of anecdotal stories is in combination with other, more quantifiable proof. In those cases, anecdotes can be used to give an easy-to-understand glimpse of how the project will make things better while relying on the data to show that it applies on a broad scale.


Once we’ve established the first three components of the framework for our proposal–process, premise, and proof–it’s time for the final step: preparing the presentation that will best communicate our ideas.

Whether we are preparing a paper document or a PowerPoint presentation, it’s important that we dedicate a fair amount of time and attention to how we will present our proposal, striving to communicate it in the most effective manner possible. After all, if our message is not expressed clearly and in a way that will generate the desired response, it really doesn’t matter what we’re proposing.

Organization. The most common problem most of us have is that we write our business proposals as if they were stories we read in a book. We tend to write in a chronological order that starts at the beginning of the project, details all of the steps that have been taken, presents all of the data we have collected, and saves the final recommendation for the very end. A proposal written in this manner often begins as in the “Before” example below. This is not an effective approach.

Do you notice that you are a couple of paragraph into the document and don’t really understand the point of the memo yet? In the newspaper business, they call this “burying the lead.” Most newspaper editors require their reporters to give the essence of the story in the very first sentence, or at least the first paragraph. By giving the reader the “bottom line” at the very beginning, it captures their attention.

We need to write our proposals the same way. Why? Think about it. Senior executives are busy people. It’s hard to get on their calendars. And they receive countless emails and innumerable memos every day. What do you think will happen if we give an entire history of our project and all of the details? They simply don’t have time for it.

What we need to do is present the bottom line first and then give the details. This is not to suggest, however, that the details are unimportant. Rather, we need to employ an underutilized organizational device, namely, appendices.

Perhaps most people have had a bad experience with formal writing while they were in school or find the term “appendix” to imply “boring.” But, whatever the reason, most do not use them.

However, an appendix saves us from having to give an executive a twenty-page memo that buries the lead on page twenty. Instead, we are able to prepare a cover page that is clear, concise, and to the point, and then use footnotes to point the reader to the appendix for details. The executive reads the cover page and gets the main idea of the proposal and then refers to the appendix only when he or she needs more information and background.

Call to Action. The other important component of the presentation that needs to be included in the very beginning of the document is the call to action. In the sales business, this is what is referred to as “asking for the sale.” In fact, some people are very good at the sales process except for one thing–they never ask the person to sign the contract.

To be effective in selling our proposal, we can’t omit this critical component. We have to let the decision maker know what we want them to do. Oftentimes, this is either omitted completely or buried in the conclusion in the back of the document…an area the busy executive may never reach.

Wordiness and Passive Language. How we use words may also hinder the reader from adequately considering a proposal. Go back and reread the “Before” example. Do you notice that the memo tells the reader things they already know? It also tells the reader things they probably don’t care to know – for instance, the history of acousto-magnetic versus RF technologies in the EAS industry. Did you also notice that there is no “call to action” in the opening? Consider how these issues are handled in the “After” memo.

Use the following questions to evaluate the revised memo:

  • Is the revised version more meaningful than the previous version?
  • When the executive reads the subject line, will he or she understand exactly what is being proposed?
  • Does the first sentence communicate the “lead?”
  • Why is the deadline necessary and is it helpful or unhelpful?
  • If we don’t give a deadline, what could happen?
  • Does the memo show proof that the expenditure is justified?

Might the CEO or CFO want to see how we calculated a 43.7 percent return on the revised memo? Clearly, there is more detail that will have to follow for a proposal of that magnitude, but we are aiming for a one- to two-page summary that includes

  • The premise for the project,
  • Proof that identifies why it will meet our objectives, and
  • A clear call to action for what we want the executive to do and when.

Is it reasonable to expect that the executive reader might want to see more details supporting our contentions such as the internal rate of return we cite? Of course, that’s why we will put it in the appendix so they can review the data if they so desire.

Try this four-part framework for your next project or budget proposal, and see if it doesn’t help you better articulate your business case, clarify your own thinking, help you get others involved in the process, and result in a better presentation that includes a clear call to action from your readers.

For more examples and ideas on how to make your business writing more effective, read Deborah Dumaine’s Write to the Top, where she gives more ideas and also addresses how to make your email communication more effective.



To: Senior Executive

From: Loss Prevention Executive

Subject: Meeting Minutes – EAS committee

As you know, we formed a committee to examine the possibility of using EAS back in March of this year. This committee is comprised of representatives from all major functions that would be impacted by implementation of EAS. During the course of the last several months, we have met on a bi-weekly basis and examined the costs, possible benefits, and operational impact of installing EAS in our stores. Additionally, we have looked at the various options available relative to the technology, vendors, and reliability of various options.

There are two major technology standards in widespread use throughout the retail industry – RF and acousto-magnetic. After talking with two major vendors, each representing one of the major technology standards, and speaking with client references for each of them…



To: Senior Executive

From: Loss Prevention Executive

Subject: Capital budget approval needed for $2.1 million EAS implementation

The EAS committee has unanimously approved chain-wide implementation and needs capital approval from the Executive Committee by July 6 to meet the drafted project timeline. This implementation will have the following benefits:

  • Generates a 43.7% internal rate of return over the next three years
  • Supports the corporate “open-sell” initiative
  • Provides a platform for future RFID adoption…

Selling Your Proposal to Senior Executives – Part I

9/1/2005 | Palmer, W., LossPrevention Magazine

Originally published in LossPrevention Magazine, Sept/Oct 2005

“Great ideas are worthless unless they are put into practice”

Most, if not all, of us have experienced this maxim time and time again in our business careers. We have a brilliant plan that will significantly reduce shortage, improve efficiencies, and increase safety of our employees and customers. There is just one problem—we can’t get the organization to approve it.

In presenting his findings from this year’s National Retail Security Survey, Dr. Richard Hollinger highlighted some of these same frustrations expressed by loss prevention executives in trying to accomplish their goals. In his survey, executives identified such issues as “lack of upper management support,” “staffing,” “ineffective training,” and “budgetary pressures and constraints” as major impediments to the success of the LP department.

While there are many factors that go into those responses, we must look within and decide if we are doing a sufficient job in presenting our proposals, plans, and projects in such a manner as to gain support from the organization. This article looks at how we improve our odds of getting approval for what we’re requesting. While it would be impossible to give an exact formula for success in every company and with every project, it is reasonable to explore a framework that can be used to increase our chance of success at getting our proposal approved and implemented.

A Framework for All Levels of Management

It is also important to understand that this framework can be applied at all levels of an organization. Too often, we think in terms of corporate executives maneuvering the political landscape to get budgetary approval, corporate blessings, and senior executive support. However, proposals and projects have to be sold at all levels of an organization. At the same time the vice president of loss prevention is sitting in a budget meeting with the CEO and CFO, the store-level LP manager in a location far removed from the corporate office is having an important meeting with the store manager of operations and his district LP manager trying to sell them on his proposals for addressing issues at his location.

Whether you are a senior executive, store detective, regional LP manager, or an investigator, you have to sell your ideas and proposals to others to get buy-in, approval, and budget. In fact, most senior LP executives want their direct reports to do a better job at presenting proposals. One executive confided, “It seems as if my regional directors believe it is my job to get approval for projects. They simply send in a list of what they want without presenting any real justification or argument for it.”

There are at least two important lessons in that comment. First, no one has a better grasp on the proposal you are submitting than you do. If you really want to see it succeed, you have to help those who are responsible for approving it understand its importance. Second, the manner in which you present proposals reflects on you as a professional and establishes…or undermines…your credibility. An individual who presents well-thought-out proposals that are convincing and effective is not only improving their odds of getting that “Yes” answer they are seeking, but is also building their own long-term credibility as an independent thinker and leader within the company. As a result, your ability to be a salesperson and present good projects in an effective way affects your future success.

This can often be seen at budget time within an organization. It is quite certain that your financial staff has developed an informal list of those individuals who present well-supported budgets that have clear data to support them and those executives that don’t. Do you want to guess who they spend more time with during budget reviews and who they challenge more aggressively? Think about the implications. If you present a budget that gets challenged and ultimately reduced by a significant amount, what reputation are you establishing within the organization? How receptive is your audience going to be in the future to your proposals?

What you need is a framework to improve your odds. The framework we will examine involves four key components—process, premise, proof, and presentation. In this article, we will examine the first two components. Proof and presentation will be discussed in a future article.


When setting out to construct an effective strategy for selling your proposal, the first thing to consider is the process that you will need to follow to succeed. This includes considerations such as the following:

  • What are the protocols in my organization for presenting this type of plan?
  • Is approval dependent primarily on one person or a committee?
  • Who will be the decision makers?
  • How do they feel about me and my department?
  • What are the priorities of my audience?
  • How does my proposal fit into overall corporate strategy?
  • What are the most likely objections to my proposal?
  • How have they reacted to similar proposals in the past? Have they said or written anything in recent months that might give an insight as to how they will react to this proposal?
  • Will there be others who support or oppose the plan?

Do you see the common theme? People. The whole idea of selling your proposal is about persuasion. And, persuasion is about people. We’re trying to persuade someone to adopt an idea or viewpoint they don’t currently hold. Or, at the very minimum, we are asking that they not oppose or fight us on an idea until they have all the facts. In many cases, we are asking them to spend money on an idea that could otherwise be spent in hundreds of other worthwhile efforts.

So, before you think about premises, proofs, and presentation, you simply have to understand that it’s about people. You must consider who you’re trying to influence, how they view the world, how they are predisposed, and what biases they may hold.

This process also involves considering how your proposal fits into the decision maker’s interpretation of corporate strategy. For example, in the retail sector, let’s say the CEO has just been in a chain-wide meeting where she announced the corporate strategy for growing the business is to focus on creating an upscale environment and make the shopping experience as pleasant as possible. How would that impact a proposal you have been preparing to lock up all of the high-shrink accessories? How do you think the CEO is going to respond? In other words, how does locking up accessories align to a corporate strategy of a luxury shopping environment?

In addition to how this affects the current proposal you are considering, you must examine the consequences of the proposal to your long-term credibility and expertise. If you go forward with your proposal to lock up the accessories, what will the CEO’s perception be of your business acumen and understanding of corporate strategy? This is not to suggest, in this hypothetical example, that you should automatically drop your proposal. Rather, these are considerations that must be factored into the process.

During this phase, it’s also helpful to consider the types of arguments that have been successful with the audience in the past. In addition, what types of arguments do they use when they’re selling a proposal? Recognize what works for them, and, if it fits your proposal, you may want to appeal to them on the same level. It is also wise to consider whether there will be people involved in the process who already support your plan or, conversely, may oppose it.

On the tactical level, one of the best ways to answer many of these questions is to meet one-on-one with all key decision makers you want to influence before you formally present your proposal. This will accomplish many of the goals identified above and one more, very important result—it gets them involved in the process. The others involved and impacted by your proposal need to feel as if their input is valued and matters to the direction it will take. Surprisingly, this step is often overlooked to the detriment of the process.

On this point, there’s an interesting article in a recent issue of Fortune magazine about decision-making. Jim Collins, author of business best-sellers Built to Last and Good to Great, says one of the best things CEOs can do to make better decisions is to say, “I don’t know,” and let other people give the answers. While the CEO still makes the ultimate decision, he or she can involve other people by listening to their reasoning as a part of the process.

Unfortunately, when we don’t involve people in the process, we open the door to a potentially hostile environment and possible backlash. Why? Because the others were left out of the process; they didn’t get to buy-in to the result. Remember, the process has to start with people.


In order to effectively sell your proposal, it is critical that you identify the underlying premise that it is based upon. In other words, what are the primary reasons, from the viewpoint of the audience, that your plan should be adopted or invested in?

Identifying your premise is important for at least two reasons. Most obviously, it is the building block for your proposal and subsequent steps in our framework. However, clearly identifying your premise serves perhaps an even more important purpose—it allows you to clearly articulate your message repeatedly and consistently.

Our last presidential election, regardless of your political viewpoint, helps illustrate this important point. You may recall hearing political analysts talk about whether or not the candidates were “on point” or “on message.” In fact, many analysts credit President Bush’s victory largely to his success at staying on point. While many observers find President Bush’s speaking skills to be, at best, average, he excels at being on message. He picks two or three points and sticks with them, repeating them over and over again with great consistency. That is what we mean by being “on point.” It paid off for Bush, and it will pay off for you, too.

By contrast, Senator Kerry often seemed unfocused, inconsistent, or even contradictory in his remarks from week to week. Kerry is considered an intelligent professional, but tended to talk about the nuances around issues and, as a result, often lost his listeners and left them puzzled as to the direction he would take our country.

What you are trying to accomplish is really no different. You are attempting to convince others to “vote” for your plans and that requires you to consistently and repeatedly articulate the underlying premise of your argument. It is important to realize that there are many different types of premises you can use and, in choosing one, you may drastically alter the appeal you are making to your audience.

It is also worth noting that you may use multiple premises, that is two or three underlying reasons for adoption of your plan. However, one should be cautious of trying to use too many. Even if your argument is supported by every category of premise we will explore, you must be careful to avoid “muddling the water” by using them all. You should consider picking the two or three most important and persuasive premises and build a clear, “on point” proposal around them.

Mandate. Perhaps the most straight-forward argument is based on the premise that the proposed action is mandated or required by law. The most obvious example from the past several years are the significant investments publicly-traded companies have made to comply with the Sarbanes-Oxley (SOX) Act.

In addition to SOX, you have legislation and requirements from the American with Disabilities Act (ADA), Occupational Safety & Health Administration (OSHA), Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), and numerous state requirements.

In recent months, the issues of data security and identity theft have led many states to pass regulations around the issues of social security number usage and length of retention for other forms of personal information collected by retailers. While sometimes unintended, many of these laws impact loss prevention operations and systems, such as case management systems or refund databases.

Other legislation that impacts retail LP operations includes various state laws around licensing, regulation, and screening of private security personnel. In some cases, these requirements do not impact retail loss prevention employees, but in many cases they do apply.

But, perhaps the most common “mandate” of all comes from your boss rather than a government agency. The real world fact is that sometimes there is little justification needed for a project if your boss or the organization simply tells you that it has to be accomplished. However, if that is the case, it is a worthwhile exercise to see if you can find another premise to support the initiative in addition to the charge from your supervisor.

Aligning to Corporate Strategy. An initiative’s primary selling point might be that it supports the business and aligns to the corporate strategy. There are several examples of this specific to our industry, including open merchandising of product and brand protection.

Ten to fifteen years ago, the “open merchandising” of women’s accessories, a historically high shrinkage item, was an issue that caused LP executives to examine new strategies. In the past five years, the issues are the same, but the product affected now includes video games, ink toner cartridges, and jewelry. Why would organizations put these high-value items out in easy reach of potential shoplifters? Of course, the answer is to increase sales and make the customer shopping experience more seamless.

As a result, savvy LP executives have had to devise alternate protection or mitigation strategies to limit the losses on these items. This strategy has often involved the use of electronic article surveillance (EAS). The premise behind the deployment of these strategies has largely been around the issue of “supporting the business” or, in other words, aligning to the corporate strategy.

Another current example where corporate strategy plays an important role in the approval of loss prevention initiatives is in “brand protection.” This can mean different things for different companies, but many retailers have been concerned about product diversion, organized retail theft, and counterfeiting of proprietary product in relation to the impact these problems have on brand image and perception. For example, they’re concerned about their products being sold on eBay, not just because of the financial loss if the merchandise was stolen, but, more importantly, because their product being sold in this channel (or in swap meets), cheapens and devalues their brand image.

Please note that if aligning to corporate strategy is not your primary premise or, as importantly, if you’re proposing a project that might conflict with certain aspects of your corporate strategy, you will want to come back and examine this issue. It is not to suggest that you should never propose an initiative that flies in the face of corporate strategy. However, you must recognize the risks this involves and make sure that the other supporting reasons are so strong that it justifies the project.

You must also recognize the possible risks to your professional credibility. The last label you want to have hung on you by the CEO is, “Here’s someone who doesn’t understand the needs of the business.” We simply have to be careful of how our proposals fit into overall corporate strategy.

Financial. In most businesses, this is the most important premise you can utilize. If you use the classic business objective of “delivering shareholder value,” then financial return on investment (ROI) is a great premise. In fact, one of the major perceptions that CEOs have of our functions that we have to overcome is that we are simply a cost center. If, by contrast, we can make a ROI argument for a project, we will capture their attention.

When your premise is financial, you speak the language of senior management. You are also speaking the same language as most of your competitors within the organization. Remember, you are competing for a limited pool of funds within your organization. Your “competitors” are operations, HR, real estate, merchandising, buyers, and any other group who is seeking funding for their initiatives. If they are all speaking in terms of ROI or payback period and you are not, you are out of step and have a harder sell for your initiative.

Emotional. Most executives don’t want to admit they use emotion as a premise for justifying their initiatives. Perhaps this is because they view it as a “weak” premise. But, in reality, it is used quite often. In fact, most loss prevention practitioners have probably said, on at least one occasion, something like. “If we don’t do this, we are going to have [insert fear] happen.” Maybe it was an increase in theft or a lawsuit or a Y2K problem or any number of other possible negative outcomes.

It can also be used to fund an initiative designed to bring about a positive emotion. For instance, there are many times after an incident occurs at a store that extra measures are taken—increased attention, contract guards, improved physical security—in large part to make the store staff “feel better.” Or, in a publicly traded company, many initiatives are undertaken to not only make employees feel better, but also investors who might be concerned about short-term results in the stock market.

Another emotional response can come in the form of a reaction to an emotional event in a company. If an employee or customer dies in a store location from a heart attack, it might prompt a company to make a significant investment in the deployment of automatic emergency defibrillators (AEDs) that are not required nor do they make financial “sense.” Rather, it is an emotional reaction to a tragedy that causes the reaction.

Risk Management. This is a common premise, if for no other reason than the fact that much of the LP discipline is based in risk management theory. Many of our programs fall into such classis risk management strategies as risk avoidance, risk transfer, risk reduction, and risk mitigation. How many times have you argued for a proposal based on the fact it will reduce liability? Or that it will limit losses should an incident occur?

Additionally, many loss prevention groups are getting more actively involved in safety issues and the management of general liability expense. At a recent meeting with senior LP executives, several major retailers reported that their general liability reserves are almost as high as their shrinkage reserves, so the financial impact here is significant.

This can also lead to an argument to support an initiative based on reducing insurance premiums. When dealing with major insurance and reinsurance packages, premiums can run into the millions of dollars and can be negotiated provided that you can convince your insurance carrier you are implementing initiatives that will reduce their financial exposure.

Shift in Environment. A crisis, a competitive threat, or a sudden or gradual change in demographics can drive a need for new initiatives or proposals. For instance, the tragic events of 9/11 caused many loss prevention professionals to face new issues. Mailroom security and safety became a major factor for everyone as the anthrax scares in Washington and Florida caused heightened sensitivity to substances from cornstarch to baking soda to silica. Suddenly, business continuity planning (BCP) was thrust onto the plate of most senior LP executives. While no one might have seen these events coming, the sudden impact of the terrorist attacks caused a major shift in environment that necessitated different strategies, initiatives, and budgets.

Fortunately, not all shifts in environment are so tragic, but may still be extremely important to the business. For instance, a change in the competitive environment may provide an impetus for new strategies or proposals. As briefly noted in an earlier example, many companies have moved to “open merchandising” of high-risk product. In the office superstore segment, this has resulted in the major players merchandising their ink-jet and laser cartridges on the floor. Once one company in this segment takes this action, others may follow. If you are at a company where this strategy has not been considered, you may find yourself implementing the same initiative in your organization because of this “shift in environment.”

Finally, there are major shifts going on with the demographics in the United States. Notable in these shifts are the generational and ethnic changes in the make-up of our customer base and employee population. The aging of the Baby Boomers and their upcoming retirements from the workforce require us to consider how to mine their expertise and knowledge for lasting impact into organizational performance. The entry of Generation Y into the workforce requires us to examine the strategies we use to influence, train, and engage this new demographic group.

The changing ethnic makeup of the workforce requires us to consider language, cultural mores, and different world views when planning our programs, training, and customer demographics. There are now several states where caucasians are no longer the majority, and the trend shows this shift to become even more significant over the next several years.

Continue on to Part II of this article