Deo’s formula for optimal employee density to reduce theft-related shrink

Abstract

Theft-Related Shrink (TRS) is a common problem in the retail industry and researchers and retail managers have proposed various solutions to reduce it. Most of the solutions proposed and discussed in literature are in the domains of retail surveillance systems and structures, surveillance technolog y installation and its upgradation, economic incentives to employees, training and development of employees, and recruitment and hiring full time employees. A few quantitative studies have reported the negative relationship between the retail floor employee density (ED) and TRS. These studies have indicated that an increase in ED leads to reduction in TRS. However, there is a gap in the literature related to optimizing employee density to reduce TRS, as this idea has not been explored and presented in the extant literature. In this paper, a formula is developed and presented for optimal employee density (OED) to reduce the sum total of TRS and employees cost (EC) to the minimum. The formula could be useful to researchers, retail store managers, and human resource professionals in the retail industry to assess the number of employees required to minimize the sum total of EC and TRS and then accordingly plan the employee recruitment and hiring process.