Eyes open in 2012

February 2012 Integrated Solutions, Retail (Industry)

The first issue of the year is always the time to look forward at what we expect to see happening in the industry over the coming year. For the 2012 round-table, we decided to leave the usual technical predictions to others and look at another angle, insider threats and what people are doing to avoid them, as well as what we can expect from the criminal element this year.

Our guests, who made it through another insane day of traffic and rain in Gauteng were: Mariette van der Watt from iPAC, Leigh Brown from the Consumer Goods Council (CGCSA) and Jenny Reid from iFacts.

From left: Jenny Reid - iFacts, Mariette van der Watt - iPac 
and Leigh Brown - CGCSA
From left: Jenny Reid - iFacts, Mariette van der Watt - iPac and Leigh Brown - CGCSA

iPAC specialises in human risk profiling and background screening. This includes all verifications of staff and potential employees, including credit and criminal checks, as well as reference checks and psycho-metric testing, which is then all integrated into a holistic predictive assessment report to their clients.

Jenny Reid notes that profiling (or screening) was less important ten years ago than it is now. She says less than one-third of companies considered it important and those that did were probably satisfied with a call to the police to check the person had a valid identity number. Since then screening has developed into a sizeable industry within the security environment.

Jenny Reid, iFacts
Jenny Reid, iFacts

iFacts conducts employee screening programmes as well as working to instil honesty, loyalty and productivity throughout the workforce via its sister company, The Orange’s Business Boost Programme.

Van der Watt says that to be certain you have got the right people, one cannot only rely on part of the verification process, such as credit and criminal checks. “You have to follow an holistic approach in order to make an informed decision based on the right personal profile that takes competency as well as integrity into account.

Mariette van der Watt, iPac
Mariette van der Watt, iPac

“There are various integrity tests and we use a couple of them depending on the level required. So for a low level, we will use a lower level integrity test, but we always use the integrity test in combination with a personality profile and potential test as the integrated results have been proven to be the best predictor for future productivity, competency and dysfunctional behaviour.”

The question to ask is, do companies want to use these measures when hiring? Or perhaps, do they feel compelled to use them to avoid expensive hiring mistakes?

Van Der Watt says psychometric testing has not had a good history and companies have been reluctant to use it for a number of reasons. For one, unions felt it was not culturally fair and did not want to buy into it. However, since then tests have been well regulated by the Health Professional Council of South Africa (HPCSA) and they have lifted the profile of psychometric tests by ensuring that tests meet all set criteria, thus more buy-in has been achieved and we can expect that psychometric tests could have a more extensive application in future.

Naturally, people do not always want to do a full process due to the cost implications, but she believes one has to integrate all input, such as from psychometry and verified manifested behaviour, for a true and holistic profile. “Most psychometric tests are a reflection of your opinion about yourself, but if you go into manifested behaviour (such as patterns of coming into work late, for example) you find a much better profile of the person you are screening.”

These processes have grown in popularity and will continue to do so in future.

Proper profiling

iPAC therefore advises companies to adopt both testing and good reference checks in pre- and post-employment screening. Van Der Watt recommends that reference checks are not simple checkboxes you fill in when calling the referees the applicant provides. “All our consultants have a degree in Social Science and we also have an in-house training curriculum to teach them how to identify the profile of a fraudster, identify specific trends and red flags etc. So when we conduct our interviews we really do it in-depth and once the person has done psychometric tests, we compare and verify it with manifested behaviour.”

Often companies are too scared or reluctant to give references for ex-employees. In these instances, she says the job of the interviewer/consultant is to dig deeper or to ensure he/she finds the information to make a viable assessment.

An interesting, or perhaps concerning fact is that only about 34% of people pass the full profile – including integrity testing. The theory of the Swing Group indicates that 25% of people will always lie, steal and deceive; 25% will never lie, steal and deceive and the remaining 50% are the Swing Group that can go either way depending on the ethical leadership displayed in the company. This provides food for thought in a country not renowned for ethical behaviour in the highest positions.

Reid adds that as fraud has increased, more companies have found screening a relatively inexpensive way of preventing much of it, because the costs of dismissing staff today are huge. “Screening saves on the labour side as well as adding value to the risk management policy.”

Reid also says post-employment testing has increased as, “your criminal record now could be different at lunch time. . . You often hear of people taking leave, find out that they actually had to be in court because they were on trial. I had a client where the person actually was in jail and the company had to pay him until it had fulfilled its obligations according to the Labour Law. If you employ somebody and, while he is working for you he is convicted of a crime, you cannot just fire him since it is not job related.”

One of the problems with post-employment profiles is that it must be sold to employees first. “You cannot just randomly say, I am going to go and screen this person, department or even the whole company,” says Reid.

Van Der Watt adds that it is important to motivate why it is necessary and how employees will benefit from the process. Removing bad apples reduces the potential of fraud and financial harm to the company, offering more security to honest employees.

And a poor economy is a great excuse for more people to cross the line, making profiling more important in the pre-employment process. Post-employment screening is more difficult in general since an employer cannot pick on one person, so whole sections or companies will need to be profiled – assuming their employment contracts make provision for this.

The downside to this is that if companies make use of cheap profiling services, they get what they pay for and the results may be inaccurate. If the company uses this information to decide who will be retrenched for economic reasons, for example, the damage to the company could be immense.

Risk assessments

More companies are also increasingly interested in broader risk assessments that look beyond only their employees or potential employees. These assessments include various principles that ensure the security of business processes as well as its people.

Reid says iFacts conducts these assessments and then provides the company with recommendations to improve their security and close the door to criminal activity. A risk assessment looks at how technology is integrated into the business processes and the human element, again through screening and profiling.

She adds the process involves examining the company’s security holistically: “you look at your physical security, such as gates, lighting, fences and the physical side of things. You also examine systems and procedures to determine the risks associated with them.”

This is often where businesses back off as they see this as the company’s intellectual property (IP) that makes the business work. Unfortunately, the problem often lies within this IP because people, often unwittingly and sometimes purposely find ways past proper procedures to make the business flow as efficiently as possible. While this is exactly what companies want, by bypassing security processes, employees leave the business at risk.

An example she provides is a company that spent what was required to implement first-class access control and CCTV systems, but then appointed E-grade guards, which proved the weakest link.

Crunching the numbers

Taking a more public approach, Leigh Brown is part of the Risk Initiative of the Consumer Goods Council. She runs the Shopping Centre Security Initiative and the Jewellery Council Risk Initiative. The organisation collects statistics of crimes targeting member companies and analyses them to find best practices and trends to assist the industry.

Leigh Brown, CGCSA
Leigh Brown, CGCSA

While the other two participants are involved in stopping criminal activity within companies, the CGC is responsible for reporting on what happens in areas everyone is part of – shopping centres etc, – analysing crime trends and creating best practises in order to mitigate crime in these sectors.

The good news is that while there has been an increase in burglary in the retail sector, violent crime has come down considerably over the past year and the trend is expected to continue. “In shopping centres, we are seeing almost half of the figures that we were this time last year,” she says.

While the SAPS does not always garner the best reports in the media, Brown says the police have been very involved in cutting the violent crime figures, especially in the shopping centres with high visibility. Sadly, there is still a substantial amount of commercial crimes like shoplifting, scams and jewellery theft, where people come in, unlock cabinets, and steal rings while somebody else is distracting the staff. While these crimes are not normally violent, they contribute to substantial losses.

Moreover, card fraud, ATM skimming and follow-home robberies are still going to be a growing issue in the coming year.

The CGC plans to increase its training initiatives with respect to shopping centres this year. The goal is to create awareness in terms of how people handle their money. For example, crime syndicates have spotters at many centres and they quickly learn the patterns people get into. For example, they know when tenants take their days takings and walk it to the bank – an easy target.

This is an important initiative, says Van Der Watt, as there is often collusion between the criminals and trusted employees that results in crime.

Brown notes that many of the shopping centres are very risk aware and try to put measures in place to protect themselves, tenants and customers, but it is almost impossible to exercise 100% effective control in a mall with thousands of people milling about – the point of these centres is to attract as many people as possible.

A problem we may see in the coming year, as more centres strengthen their security, is that crime evolves to the client. This will require an increased awareness among the public in an effort to avoid follow-home attacks and the like.

The CGC will also be focusing on background checks as it furthers its retail employee database. Not only will the database record a history of an employee’s work in the retail industry, but the plan is to include screening, such as criminal record checks to improve the hiring process.

While some crimes are expected to be lower this year, others will be moving ahead, driven by the expectancy of poor policing and easy pickings from unaware victims. Insider fraud will also continue, or will at least continue to be exposed, leading more companies to take the procurement of staff more seriously by opting for screening, profiling and risk assessments as they try to restrict the opportunities available to the less ethically inclined.





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