College of Business > News & Events > Ethical Leadership and Civility Can Deter Retail Shrinkage, DePaul Research Finds

Ethical Leadership and Civility Can Deter Retail Shrinkage, DePaul Research Finds

Employees at a grocery store
DePaul business faculty Jaclyn Jensen and Bob Rubin co-authored a research study that examines how retail leaders can help their workers successfully navigate performance pressures.
Intense competition leads employers – such as retailers – to set high expectations for employee performance outcomes. “For some employees, performance pressure can drive them to be more motivated and productive, but for others, it can create a lot of stress and potentially some unethical behavior,” observes Jaclyn Jensen, an associate professor of management at DePaul University whose research examines workplace behavior.

What can retail leaders do to help their workers successful navigate these pressures? Jensen examines this question in a study, “Predicting Retail Shrink from Performance Pressure, Ethical Leader Behavior, and Store-Level Incivility” published in the Journal of Organizational Behavior. The research was co-authored with Robert S. Rubin, professor of management at DePaul, and Michael S. Cole, assistant professor of management at Texas Christian University.

Jaclyn Jensen, associate professor of management
Associate Professor of Management Jaclyn Jensen. | Photo by Kathy Hillegonds

Focusing on the retail environment of approximately 110 stores, the study explores the impact of performance pressure and ethical leader behavior on uncivil behavior and shrinkage, an industry term for inventory loss caused by employee theft and customer shoplifting.

Three takeaways from the study’s findings include:

  • Organizations focused on driving results through intense goal setting and external rewards (i.e., high performance pressure) should carefully consider the precarious balance between results-oriented and ethical leadership. “With low ethical leadership, our results suggest there could be an undesirable impact on store-level incivility and greater shrinkage,” Jensen says.

  • The results affirm the critical role that leaders play in helping employees make sense of their work environment and relaying performance expectations to employees.

  • Developing store leaders who can establish ethical expectations that include a focus on balancing results and interpersonal treatment can have an impact on efforts to mitigate shrinkage. “The overall costs of training and developing strong ethical leaders who can help employees productively respond to intense performance goals may have a substantially higher return on investment than large capital investments in technological systems around theft deterrence (like RFID tagging), which ultimately treat the symptoms of theft, rather than the underlying causes,” Jensen says.

"Ethical leaders can help employees interpret performance expectations by signaling that it is not only important to meet performance expectations, but to do so in a way that maintains ethical principles – including treating others civilly or with respect,” Jensen adds. “Conversely, in stores where performance pressure is strong and ethical leadership is relatively low, employees lack strong signals from their store manager about how to ethically manage performance expectations. This can create interpersonal friction and tension amongst employees, and exacerbates uncivil behavior”

An uncivil environment erodes expectations to “do the right thing,” she says. “The result is that in these environments, employees may be more motivated to personally steal, as well as overlook shoplifting, the two primary sources of shrink.”

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