Staples’ Secret Weapon
In the case of Staples, the world’s largest office supply retail store chain, the most effective weapon in the armory is the company’s soul.
What makes a company a leader? Depends on what’s in its arsenal.
The chain’s CEO Ron Sargent once said that to continue its growth path and build an enduring company, Staples would have to have a “corporate soul.”
Accordingly, in 2004, Staples created its first-ever ethics office and named Nan Stout, the company’s internal employment attorney since 1994, the ethics officer.
What does an ethics officer do? Besides creating and maintaining programs designed to promote ethics and integrity across the organization, Stout also takes the lead, along with the VP of loss prevention, in circumventing shrinkage. She is especially involved in a new effort to combat employee fraud—and in today’s economy, that is no small task. In 2008, theft by employees accounted for a staggering $15.9 billion in retail losses, according to statistics compiled by the National Retail Security Survey. Experts suggest that the downturn will only cause those numbers to escalate further.
To mitigate internally generated shrinkage and promote associate accountability, Staples has implemented a program (see related story below) to prevent and detect employee theft and maintain a consistent ethical culture across all of its stores and operations. Under Stout’s watch, the program is having an effect, even though employee theft is on the rise. Senior editor Katherine Field talked with Stout about Staples’ loss-prevention programs and the company’s stand on ethics, integrity and corporate soul.
Are you seeing a lift in employee theft due to the downturn?
Yes, in the past year we’ve seen an increase, and I expect that as long as the economy stays as it is, we’ll continue to see some increases in incidents.
When did loss prevention and ethics become a true focus for Staples?
For as long as I’ve been with the company, it has been focused on ethics and integrity. But in 2004 we began to truly shine the light more heavily on it and created the company’s ethics office, of which I am the company’s first ethics officer.
Describe the programs in place to reduce employee theft and promote a more ethical culture at Staples.
It’s important to understand that we didn’t create an ethics office because of a problem. A lot of companies do that as a response to a scandal. Rather, Staples is known for integrity and for having a strong culture. In creating this program, the company realized if we focused on ethics and integrity more strategically, we could drive even better employee engagement, lower turnover and reduce theft—all to the benefit of our shareholders.
Our CEO gave an inspiring speech a few years ago, in which he talked about how, for Staples to be the kind of company that will be around for the next 100 years, we needed to do two things: We needed to continue to be profitable, and we also needed to develop a corporate soul. Our ethics program is part of a strategic initiative we call Staples Soul, which includes four key areas: ethics, diversity, community and the environment. It’s really a way of doing business.
Tell me more about the ethics program specifically.
We have four main building blocks in place companywide: a strong code of ethics; written policies covering risk areas and our expectations for our employees; proactive awareness and educational programs; and systems on the back end to monitor and audit how we’re doing and where we need to focus next.
We have an ethics statement in every single policy and procedure, in every incentive and reward plan, in our employee handbooks. We communicate very proactively and visibly.
Historically, loss prevention may have been looked at as just an attempt to catch people stealing money or stealing products, but it’s really about working together to create a stronger culture and keep our employees honest and doing the right thing.
What kinds of results are you seeing from the implementation of the hotline and case-management software?
At Staples we call it a “help” line rather than a “hot” line. We’ve branded it internally as Staples Ethics Link, with a philosophy that we want to make it easy for our associates to ask questions and voice concerns.
The vast majority of our people want to do the right thing. We give them plenty of tools to do just that.
The biggest value of the case-management tool is that it enables me, as an ethics officer for a global company, to see what is happening across the company. Every complaint or concern is investigated and the specific information is tracked in the case management tool, giving me greater visibility into what is happening and enabling me to use that information to keep developing better programs.
How do you explain what you do for a living to people you meet outside of work?
I will say that for a company to be really great, obviously it needs to make a profit, but the real measure is how the company does business every day. My job is to help the company focus on the “how” piece—we drive great results, but how do we do that? I help implement practical programs and resources to help the company stay focused on doing business the right way to drive profitable results.