Group dismissal for poor performance as a response to excessive stock shrinkage : a study of owner-managed franchised grocery retailers

Brown, Timothy Glen (2008-12)

Thesis (MBA (Business Management))--Stellenbosch University, 2008.

Thesis

ENGLISH ABSTRACT: Excessive shrinkage threatens the viability of retailers, especially grocery retailers because they operate on low profit margins. One possibility is for retailers to dismiss employees who are perceived to be responsible for excessive shrinkage, but South African law generally requires that the employer prove individual culpability or poor performance to justify a dismissal. In most cases, retailers are not able to identify the exact causes of shrinkage or those employees who may be responsible for the shrinkage. Pep Stores has developed a novel group dismissal model, using a poor performance process, in terms of which a store's entire staff complement is dismissed on the basis of collective responsibility for failing to avoid excessive shrinkage. The Pep model is attractive to retailers because it overcomes the retailer's inability to produce evidence relating to excessive shrinkage. This Study Project seeks to determine whether collective responsibility for shrinkage may be introduced in owner-managed grocery stores and, if not, whether adaptation of the model or new technology might facilitate its introduction. A further objective is to determine whether the applicability of the Pep model correlates to factors such as the size, activity level and complexity of retail stores. Three barriers to the application of the Pep model in grocery retail stores were identified: firstly, the determination of an "acceptable level of shrinkage" that is reasonably attainable; secondly, the conducting of sufficiently accurate stock takes to support dismissals and, thirdly, the existence or creation of circumstances allowing the implementation of collective responsibility for shrinkage. Grocery retailers have no difficulty in identifying an attainable "acceptable level of shrinkage" or in conducting highly accurate stock takes and stock counts. Circumstances allowing the imposition of collective responsibility for shrinkage were, however, clearly not present. Collective responsibility was precluded by the specialised nature of the employees' tasks and a lack of co-responsibility arising from employees' inability to directly observe each other. However, an adapted Pep model is applicable in grocery retail stores at departmental level if the departments are insulated from fraud or error by receiving clerks and cashiers. This insulation may be achieved by implementing joint receiving procedures that involve each department in receiving departmental stock and an increase in cashier monitoring. The introduction of Radio Frequency Identification Technology will ultimately facilitate the implementation of the Pep model through the enhanced insulation of departments. This enhanced insulation is achieved through the ability to track the movement of individual items in stores and the reduction of receiving and cashier error and fraud as a result of the automation of aspects of these functions. This technology, however, is unlikely to be implemented in the short term given the significant cost of RFID tags and the technical and organisational constraints to adoption. Perceptions on the applicability of the Pep model are correlated in smaller stores to total store floor areas, while the applicability of the model in larger stores is correlated to the size of staff complements. This suggests that the model may be ideally applicable in smaller stores, where the total store floor area is relatively smaller and in larger stores, where the staff complements are relatively larger.

AFRIKAANSE OPSOMMING: Oormatige voorraadverlies bedreig die lewensvatbaarheid van kleinhandelaars, veral kruidenierswarehandelaars, omdat hulle met klein winsmarges werk. Een moontlikheid is dat kleinhandelaars werknemers ontslaan wat gesien word as die verantwoordelikes vir oormatige voorraadverlies, maar die Suid-Afrikaanse reg vereis oor die algemeen dat die werkgewer indiwiduele skuld of swak prestasie bewys om ontslag te regverdig. In die meeste gevalle is kleinhandelaars nie in staat om die presiese oorsake van voorraadverlies, of die werknemers wat vir die voorraadverlies verantwoordelik mag wees, te identifiseer nie. Pep Stores het 'n vindingryke groep-ontslagmodel ontwikkel, met gebruik van 'n swakprestasieproses, ingevolge waarvan 'n winkel se hele personeel ontslaan word op grond van kollektiewe verantwoordelikheid weens versuim om oormatige voorraadverlies te vermy. Die Pep-model is aantreklik vir kleinhandelaars, want dit oorkom die kleinhandelaar se onvermoë om bewys te lewer in verband met oormatige voorraadverlies. Hierdie navorsingsprojek probeer vasstel of kollektiewe verantwoordelikheid vir voorraadverlies ingestel kan word in eienaarbestuurde kruidenierswinkels en, indien nie, of aanpassing van die model, of nuwe tegnologie, die invoer daarvan sou kon fasiliteer. 'n Verdere doelstelling is om vas te stel of die toepaslikheid van die Pepmodel korreleer met faktore soos die grootte, bedrywigheidsvlak en kompleksiteit van kleinhandelwinkels. Drie struikelblokke vir toepassing van die Pep-model in kleinhandelkruidenierswinkels is geidentifiseer: eerstens, die bepaal van 'n "aanvaarbare voorraadverliesvlak" wat redelik haalbaar is; tweedens, die uitvoer van voldoende akkurate voorraadopnames om ontslag te steun en derdens die bestaan of skep van omstandighede wat die implementering van kollektiewe verantwoordelikheid vir voorraadverlies moontlik sal maak. Kruidenierskleinhandelaars ondervind geen probleme met die identifisering van haalbare "aanvaarbare voorraadverliesvlakke" of met die uitvoer van hoogs akkurate voorraadopnames en - tellings nie. Omstandighede wat die oplê van kollektiewe verantwoordelikheid vir voorraadverlies moontlik maak, was egter duidelik nie aanwesig nie. Kllektiewe verantwoordelikheid is uitgesluit weens die gespesialiseerde aard van die werknemers se take en 'n gebrek aan mede-verantwoordelikheid weens werknemers se onvermoë am mekaar direk waar te neem. 'n Aangepaste Pep-model is egter toepasbaar in kruidenierskleinhandelwinkels op departementele vlak indien die departemente van bedrog of foute deur ontvangsklerke en kassiere afgeskerm word. Die afskerming kan bereik word deur die implementering van gesamentlike ontvangsprosedures wat elke departement betrek by die ontvangs van departementele voorraad en verskerpte kassiermonitering. Die invoer van Radiofrekwensie-identifikasietegnologie sal uiteindelik die implementering van die Pep-model fassiliteer deur die verhoogde afskerming van departemente. Hierdie verhoogde afskerming word bereik deur die vermoë om die beweging van indiwiduele items in winkels na te speur en die vermindering van ontvangs- en kassierfoute en -bedrog as gevolg van die outomatisering van aspekte van die funksies. Hierdie tegnologie sal egter waarskynlik nie oor die korttermyn toegepas word nie weens die aansienlike koste van RFIO-etikette en die tegniese en organisatoriese beperkings op die invoer daarvan. Persepsies oor die toepasbaarheid van die Pep-model word in kleiner winkels gekorreleer met die totale winkelvloeroppervlak, terwyl die toepasbaarheid van die model in groter winkels gekorreleer word met die grootte van die personeelkorps. Dit suggereer dat die model ideaal toepasbaar mag wees in kleiner winkels waar die totale winkelvloeroppervlak relatief kleiner is en in groter winkels waar die personeelkorps relatief groter is.

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