Business Research
BaylorBusiness

Demography and Disappearing Merchandise

by Franci Rogers

Every year, missing inventory in the United States and Europe cost retail businesses around $70 billion. Estimates are that these losses, known as shrinkage, are mainly due to employee theft (approximately 47%) and customer shoplifting (approximately 32%), but are also related to administrative and vendor errors, as well as unknown factors.

This shrinkage has important consequences not only to the businesses involved, but also to consumers who end up paying higher prices for their products. But even though the stakes are high, there has been very little research on the topic.

Emily Hunter, assistant professor of Management, found the topic irresistible.

"I am most fascinated by workplace deviance," she said. "There is such a prevalence of deviance at work, and it's not just one or two bad apples. Everyone is deviant at some point, whether it's as small as being rude to someone or taking longer breaks than you should, or something much bigger like stealing."

Hunter, who has an undergraduate degree in Psychology from Loyola University, as well as a master's degree and PhD in Industrial- Organizational Psychology from the University of Houston, set out to discover if the make-up of the store employees could determine the level of shrinkage in a store.

Along with colleagues Derek R. Avery, associate professor in the department of Human Services at Fox School of Business at Temple University, and Patrick F. McKay, associate professor of HRM in the School of Management and Labor Relations at Rutgers University, Hunter began researchinginvestigated this question at a Fortune 500 retail organization with more than 83,000 employees in 726 of their stores. Their article, "Demography and Disappearing Merchandise: How Older Workforces Influence Retail Shrinkage," was recently published in the Journal of Organizational Behavior.

"What we focused on was the age of the employees and how they felt about the store's whistle-blowing policy," Hunter said.

They theorized that stores with older workers would have less of a problem with shrinkage.

"Older workers tend to get a bad rap, and there is a lot of negative stereotyping and a bias against older workers," Hunter said. "But we know that older people are more prone to behave ethically, that they are more emotionally stable and that they are more prone to helping behaviors than younger workers."

For purposes of this study, "older" was defined in a relative sense, and did not denote a particular age category. The researchers discovered that older workers were indeed less likely to steal from the stores, and were also more vigilant about shoplifting and more likely to whistle-blow if they witnessed wrong-doing.

"We found that the more older workers a store had, and the less variety in ages of the workers, the less shoplifting and theft occurred," Hunter said. "However, that effect levels out if there is not an environment that supports whistle-blowing."

Employees were asked in a survey whether they felt they could report possible violations of law, ethics or company policy without fear of retaliation, and whether or not they perceived that action would be taken if they reported such violations.

"When there was a climate that supported whistle-blowing with a strong policy, and when there was a good, clear way to communicate and protect the whistle blower, shrinkage went way down," Hunter said. "But, without that environment and the proper channels, age didn't make any difference at all."

Hunter is continuing to study workplace deviance by looking into the potential positive influences of deviance.

"It sounds strange, but a little deviance can be a good thing," she said. "For instance, if someone takes a longer break than they should, but it helps them to cope with a stress they're experiencing, it could be good. We're not condoning deviance, but if we can help managers understand why it's happening, they might be able to provide other, more positive ways for employees to cope. It's a fascinating subject."

Emily Hunter
Baylor University