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Auditing the Audit and Auditor
 By
Larry Evangelista
Regional Asset Protection Manager
Toys R Us
Is this an all too familiar conclusion when the Loss Prevention Manager finishes
their auditing process and debriefs with store management? Store Manager “so how
did we do?” LP Manager, “you passed, you scored an 83%. You missed questions 9,
11 and 23 in Section I and 37, 43 and 55 in Section II. Correct those and I’ll
back in 8 weeks to follow up.”
Hold on there! What just happened?
The Store Manager thinks; Hmmm 83% I passed that will keep LP out of my hair for
a couple months. I’ll give these audit misses to my Assistant Manager to correct
and I’m back to what my priorities are.
Loss Prevention Manager thinks; Hmmm 83% not great but better than others.
Probably good enough to make my shrink goal if they maintain and at least I
won’t have to come back here for a while.
Hold on again. What just didn’t happen?
What didn’t happen was just about everything that under-trained or more likely
misguided Loss Prevention Managers make in their store auditing effort. It all
starts with misunderstanding the goal of auditing store performance. Actually
and more appropriately it’s about misunderstanding what to measure in an
audit...and that more closely is store Operating Competency. With performance
being a symptom of either solid or weak Competency.
Here is the argument against checklist style, robotic auditing.
| - It prompts a LPM to check the same store
functions time and again. Well ok but if the store’s performance
metrics, which should be carefully reviewed prior to conducting the
audit indicate “solid” performance, ie..solid competency, then
shouldn’t more of the available time be spent on the deficient
areas? |
| - What responsibility does the store have to
prepare for an audit assuming the announced variety? Did the store
management team prior to the LPM setting foot in the store review
their self-audits, did they review their performance metrics related
to expected operational performance? Here again is a measure of
store operational competency...are they readily aware of their
metrics and can they identify their deficiencies? |
| - Before a single store function is reviewed is
there a sit down review of store metrics lead by the management
team? A mature, competent management team should be able to identify
their own issues and present them to the LPM with ideas and action
steps for solutions. The LPM is there for support and guidance, not
to point and say “fix it” |
| - When a store management team is challenged to
understand the “root cause” of a deficiently performing metric then
the LPM should lead that exercise. Working down to 5 “whys” if
needed to get to the real cause of why an operating function
continually fails. |
| - This is also the time to bring in assistant
managers or department level supervisors who own elements of store
operating performance metrics. This is the time to probe these
associates knowledge of YTD performance metrics that have origins in
the area they provide supervision for. Can Receiving Managers speak
to Inbound and Outbound Compliance, can Front End Managers speak to
their YTD performance on cash handling and refund %. Are this
associates mature in their position knowledge and do they
demonstrate ownership of their respective areas? |
Did I mention that this all should be happening before a single store
operational function gets audited...good!
Remember the manager who was happy to get his 83% and call it a day? I’m sure
that the score is irrelevant to him/her, what is relevant is that it’s enough to
keep them off some naughty list, or getting DM heartburn and keep my LPM out of
here for a while.
Now that every key performance metric has been reviewed and those
under-performing metrics have gone through a root cause analysis with action
steps, time-frames and ownership set should the audit walk begin. This is often
referred to as the “trust but verify” part of the audit.
Managers are quick to say “oh yea, were good with that”. If the previous metric
review supports that great, move on, if not dig in.
After the LPM finishes the store walk and makes “trust but verify” observations
then phase III begins. This should entail a brief review of phase I (metric
review) and phase II (walk observations) then with the management team present
ask” give me the three most critical performance areas your team should focus on
improving”.
A mature, high competency team will likely get 2 or all 3 critical focus areas
without much LPM intervention. In the beginning the LPM may provide more
guidance in this phase and then slowly be able to back off direct suggestions.
What we are looking for here is that while we want the store management Team to
correct those less critical issues that may have been found on the store walk
can they Win Big in the key areas that drive profitability. That could take the
form of improved in-stock and receiving accuracy execution to help sales, shrink
reduction from solid merchandise protection compliance and improved risk
management performance from safety awareness and execution.
When all three phases are introduced during an audit the whole array of what
makes a store operational competent comes into play. The conversation often and
appropriately leads to talent and that discussion should be on the table. Does a
manager, audit after audit, point to an under-performer who is “killing his
operation” yet the associate’s direct supervisor or the manager themselves never
use any of the multitude of available metrics to performance manage that
associate up or out?
Going back to that 83%....is that good or fair? How much does it matter what
they scored last time if it was an 86% or a 79%? I would suggest to frustrated
LPMs not seeing improvement; if you keep doing what you’re doing you’ll keep
getting what you’re getting”.
Time for LP Managers to think about their approach and how to effect positive
change. In fact this is a perfect way to effect change by incorporating many
Leadership tactics; providing education, assessing talent, challenging store
teams on root cause analysis, identifying priority and critical focuses.
So to go back to the underlying point; LP Managers should think of auditing in
terms of opportunities to measure store operating capability and competency and
not leap straight to performance which will fix itself once the former is
addressed. Diagnose and correct the root cause and don’t get bogged down with
the symptoms of poor performance. Ditch the robotic checklist in favor of
fostering competent, capable store teams.
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