Commentary by Laurie Cozart, CPC, CEO/Co-founder, TeamSpringboard (http://www.teamspringboard.net/)

If you are like most retailers, you hire teens transitioning from the schoolyard to the workforce believing this will keep your costs low and your profits high.

The troubling reality of this practice is it often means businesses are putting the responsibility for achieving profits in the hands of under-trained and, all too often, unethical employees.

A survey of nearly 25,000 high school students by the Josephson Institute of Ethics found 62 percent admitted to cheating on an exam in the past year with 38 percent saying they had done it more than once.

Twenty-seven percent of the students admitted to shoplifting in the previous 12 months while 22 percent said they stole from a family member and 18 percent admitted stealing something from a friend.

The truly troubling aspect of the Josephson research is that the teens do not have a problem with their behavior. Most seem to have the misplaced notion that ethics have no place in the academic or working world. Some honestly believe if they lie, cheat and break the rules, they are more likely to succeed. In fact, 59 percent (66 percent of boys and 52 percent of girls) agreed with the statement "in the real world, successful people do what they have to do to win, even if others consider it cheating."

Moving these students to the workplace means, in many cases, profits are quite literally walking right out the store door.

In a survey, our firm, TeamSpringboard, conducted with 500 young adult employees within a juniors clothing retailer, 41 percent admitted to stealing from their employer.

Thirty percent said they had given away merchandise to friends or family members, 35 percent stole for personal gain of either money or merchandise, 10 percent gave unauthorized discounts and 25 percent admitted to charging back their own credit cards using false refunds. Forty percent said they had lied about their education and experience to obtain employment, compete for a promotion or negotiate a raise.

So what can retailers do to keep more of their profits and their teen and young adult workforce at the same time?

The answer is ethics training and workplace skills development. Unfortunately, most retailers do not spend nearly enough time training new hires, with two to three days being the norm. The same is true even for managers. Eighty-five percent of small businesses that hire young adults put them in supervisory positions.

So with only two days of training a new manager is put in charge of customer service, sales, money transactions, inventory and, most alarmingly, the mentoring and supervision of other young adults. Does this seem reasonable?

Savvy employers are realizing the need to allocate more of their budgets to on-board training. Studies show increased job training can increase productivity by 22 percent. A truly comprehensive training approach that includes developing jobs skills, workplace ethics and behavior management supported by continued coaching increases productivity by 88 percent.

Many retailers do not believe they have the resources, human or financial, to do the type of training described. It's clear they can't afford training as usual. Studies show that ethics and skills training improve morale and confidence. Keeping your employees honest, productive and living the company vision has dramatic effects on your bottom line. The money spent on training is returned three fold with increased sales through increased productivity, decreased employee fraud, reduced absenteeism, improved communication and less employee turnover.

Moderator's Comment: In your experience, do most retailers realize how much their employee training programs are costing them at store-level? Are there any retailers with new employee and on-going training programs you would hold up as a model for others to emulate? - Laurie Cozart - Moderator

• 2004 Report Card: The Ethics of American Youth - The Josephson Institute of Ethics

As to the question of ever stealing anything or cheating on an exam in one's LIFETIME, I'd like to meet some of these people who haven't. Perhaps their memories have faded, or they are the Pope or something. For us baby boomers, think back to those days so long ago, what we did when we were teenagers and how our hard working parents seemed so ridiculous. Of course teenagers are going to misbehave - they are teenagers!

So, for retailers, it's a case of realizing that they can hire teenagers more inexpensively than "regular" workers, but they need to spend more time with them, assign mentors, and communicate (both give and take) what the company is all about, what is the mission, what's the corporate philosophy, what the company does for the community. It's an opportunity to hire young workers, make them part of the team, and even learn a bit about young people and their culture.
- Al McClain- RW Commentator

I'm with Al. Sure, most teens haven't lived long enough to graduate to such ethical adult activities as tax evasion, marital infidelity, or insider trading. Pay people well enough and they'll be disinclined to steal. Oh, well, that works for salaried workers...ceos require extra supervision; they sometimes steal even after being over-compensated. Of course, if they're caught and prosecuted their personal net worth might go up.
- Ryan Mathews- BrainTrust Panelist

I think the problem is that ethical behavior is not rewarded. An employee who does not steal makes the same minimal wage as one who does. Employers will get what they pay for. If they spend nothing preventing shrinkage, or even provide economic incentives that inadvertently promote shrinkage, it will happen.

See Adam Smith. I think he wrote something about everyone acting in their own best interest...
- mfbenson

In a small retail environment, internal controls are impossible to put in place and enforce. Because a small retailer cannot afford more highly trained workers, we are at the mercy of taking the best of the worst. In my experience, it's not just the teenagers that are committing crimes but just about anyone you hire to handle money. The closest thing I have found to internal controls is to try and make complicity necessary if a theft is going to take place. Alas, even that doesn't work. Every time I catch a thief, there is always some employee who pops up and says, "Yeah, I thought he was stealing." When asked why the owners were not informed, the answer is always, "I didn't think it was my place to say anything" or "well, I wasn't sure he was stealing."

My solution is covert cameras and a strong policy of pressing criminal charges against anyone I catch. It's not foolproof but it addresses a very serious problem that man hours spent on trying to teach ethics would not accomplish.

I honestly don't think that effectively teaching ethics is even possible. If the person hasn't learned some ethics and morals by the time they enter the workforce, the workforce trying to successfully teach them ethics is a waste of time.
- alcrandall

I'm sure these store level training programs do have a cost involved. I've worked at all levels of retail and have seen fraud committed to various degrees. At the executive level, the stakes become so much higher. Payoffs, kickback schemes, embezzlement, insider trading etc, can go just as unnoticed as if someone were taking pens and post-it notes home. Often, just as it is done at store level, executives will even flaunt the fraud, disguising it as legal business activities to include SEC filings with the details. The costs are always passed on to the consumer. I've found that the employee-owned retailers seem to have the least amount of fraud. When someone steals, he steals from his coworkers. I've heard a few stories about how justice is carried out behind the store when someone is caught.
- David Livingston- BrainTrust Panelist

I bet the numbers cited in that report aren't much different from the equivalent numbers 20 years ago. Virtually all young people cheat -- it's part of growing up. (And then in later years, they lie about not doing it, as evidenced by the survey here.)

There's a cure for this cheating -- it's called maturity. And many teens first get a taste of it through a steady job. Yeah, sure, it takes some kids longer than others to drop their bad habits, but the ROI of hiring teens in a retail setting (and for society as a whole) is very positive.

Signed, PF (reformed cheater)
- Peter Fader- BrainTrust Panelist

Regardless of age, workers need to be trained. Customer service couldn't be worse than it currently is (she said, tempting fate), and it is not a function of age. Yes, I shoplifted when I was 11, but ironically (perhaps), I never stole from someone I worked for. It just seemed wrong - biting the hand that feeds me, etc. But I did mature. I don't believe there is any cost that won't be improved by an investment in training.
- Karen Kingsley- RW Commentator

If a young employee hasn't been taught ethical behavior by his or her parents, their first employer hasn't a prayer of doing it, either. Instead, the employer's job becomes finding youngsters who already have ethics and putting them in positions of authority.

Do you, like me, also wonder what role employee unions should be playing in reducing employee theft? Do they, in order to protect and reinforce the integrity of their organizations (quit snickering), coach and/or train their members to be the best, most ethical employees they can be?
- Michael Banks, Ph.D.- BrainTrust Panelist

Currently I'm re-reading the book, "Fast Food Nation," and I am reminded of how those in the food industry have often taken advantage of this same group of employees. Even for those just entering the work force, doesn't there need to be mutual respect between employer and employee in order to flip a good burger, or simply push a button to get the robotic chef started? Ethics training is crucial for both sides of this question.
- Jerry Gelsomino- BrainTrust Panelist