Jean Fanuchi, manager of a moderately large department store, was worried. Shrinkage in the costume jewelry department had continued to rise for the third consecutive month. In fact, this time it had nearly wiped out the department’s net profit in sales. Worse, it couldn’t be attributed to damage or improper handling of markdowns or even to shoplifting. The only other possibility was in-house theft.

 Fanuchi ordered chief of security Matt Katwalski to instruct his security people to keep a special eye on jewelry department employees as they went about their business. She also instructed that packages, purses, and other containers employees carried with them be searched when workers left the store. When these measures failed to turn up any leads, Katwalski suggested they hire a couple of plainclothes officers to observe the store’s guards. Fanuchi agreed. But still nothing turned up.

“We’re going to have to install a hidden camera at the checkout station in the jewelry department,” Katwalski informed the manager.

“I don’t know,” Fanuchi replied.

“Of course,” said Katwalski, “it won’t be cheap. But you don’t want this problem spreading to other departments, do you?” Fanuchi didn’t.

“One other thing,” Katwalski said. “I think we should install some microphones in the restroom, stockroom, and employee lounge.”

“You mean snoop on our own employees?” Fanuchi asked, surprised.

“We could pick up something that could crack this thing wide open,” Katwalski explained.

“But what if our employees found out? How would they feel, being spied on? And then there’s the public to consider. Who knows how they’d react? Why, they’d probably think that if we are spying on our own workers, we were surely spying on them. No, Matt,” Fanuchi decided. “Frankly, this whole approach troubles me.”

“Okay, Ms. Fanuchi, but if it was my store . . .” Fanuchi cut in, “No.”

“You’re the boss,” said Katwalski.

When the shrinkage continued, Fanuchi finally gave in. She ordered Katwalski to have the camera and microphones installed. Within ten days the camera had nabbed the culprit.

The microphones contributed nothing to the apprehension of the thief. But because of them Fanuchi and Katwalski learned that at least one store employee was selling marijuana and perhaps hard drugs, that one was planning to quit without notice, that three were getting food stamps fraudulently, and that one buyer was out to discredit Fanuchi. In solving their shrinkage problem, the pair had unwittingly raised another: What should they do with the information they had gathered while catching the thief?118

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