The distributor was distraught. Month after month, inventory was disappearing from the premises, but his efforts to track down the perpetrators had gotten him nowhere. In desperation, he hired an undercover operative. A short time later, he got what he was looking for: The investigator filed a report with the names of two workers he'd observed stealing from their employer.
As the distributor found, undercover investigations can be an effective way to get at the source of problems in logistics operations. Not only can investigators identify thieves, but they can also uncover a host of other costly workplace problems, including on-the-job drug use and distribution, lax supervision, violations of company policies, product tampering, and—perhaps most worrisome of all—lapses in supply chain security.
Not all investigations prove to be as successful as the one described above, however. There have been plenty of cases of investigations that ended in disappointment. More often than not, it's because the company receiving the service or the investigation firm providing it made one (or more) of the following mistakes:
1. Failure to hire a qualified investigation company. What many don't realize is that there's a world of difference between hiring an out-of-uniform security officer and hiring a well-trained, experienced investigator. Make certain that you're working with a company that has a proven track record. Be wary of any firm that won't provide you with client references.
2. Letting too many people in on the secret. The more people who know about a covert investigation, the greater the odds of a leak. People should be brought into the loop only on a need-to-know basis. Two or three executives at most should receive the confidential reports.
3. Responding too hastily. Most executives like to take swift and decisive action. The minute they find out someone's been stealing from the company, they want to fire the offender and stop the bleeding. But that could actually be counterproductive. If management suddenly starts responding to problems that have dragged on for months or years, employees will become suspicious. It won't be long before they've figured out that you have an inside source and the investigation will be neutralized.
That's not to suggest that you should sit idly by while somebody robs you blind. Just make sure that when you do take action, you do it in a way that doesn't compromise the investigation. Above all, you want to deflect suspicion from the investigator. One way to do that is to establish an 800 tip line program for employees to report unethical or illegal activity. That way, when the crackdown comes, you can explain that you were responding to a tip, thereby shielding the real source of your information.
4. Not letting the investigation run its course. When it comes to undercover investigations, patience is a virtue. Better than 95 percent of the time, the first problem that an investigator uncovers isn't the only problem—or even the most significant problem—you have.
Take the case of the distributor mentioned above. When the vice president of operations learned the thieves' identity, his first impulse was to fire the perpetrators and end the investigation. However, we cautioned him to exercise restraint.
He agreed, and his patience was rewarded. As the investigation unfolded, it became clear that the two thieves were mere pilferers compared to some of their co-workers. The undercover operative was able to identify three other workers (one of whom was a longtime supervisor) who were conspiring to steal thousands of dollars worth of inventory a week. It also turned out that these employees were using cocaine on the job and selling it to co-workers. By agreeing to let the investigation run its course, the company not only had the satisfaction of catching the petty crooks but of shutting down the internal crime ring as well.
Gartner, Inc.
