3 Ways to Create an Audit with ROI

You want your audit to have importance to and impact on the company. It takes effort and resources to audit stores, but that work is meaningless if the end product doesn’t have a perceived or actual return on the investment. The purpose of audits, after all, is to both identify problems and to have those issues resolved. Your goal is to create an audit that provides a path to improvement and a return on investment.

In the article, 3 Ways to Know Why Your Audit Has No ROI, we discussed the importance of scores having meaning. When someone sees an audit score, it tells them a story about the location involved.

When the story is unclear and messy, the culprit is usually using an all-in-one audit approach. That’s an audit that is trying to do too much. At the top level, the all-in-one audit has difficulties with meaning, predictions, and correlations.

You can read about the problems and solutions of the all-in-one audit in this free ebook download.

But even if you want to stuff a lot into your audit, there is a way to ensure you correct many audits’ three shortcomings.

1. Don't grade a fish on its ability to climb a tree

Rumor has it that Albert Einstein said (no evidence that he did), “if you judge a fish by its ability to climb a tree, it will spend its entire life thinking it’s stupid.” The “testing” is often a core problem with audits. We have so many questions and suspect weighting that we don’t know what the average of these questions means.

It’s easy to enthusiastically start adding dozens upon dozens of questions into our audit. Truthfully, in one to two hours, you can measure many things in a store. But doing so will reduce the meaning of your final score, especially if every question enjoys equal value.

Your goal is for that final score to communicate clear meaning to others. That score should tell a performance story, a risk story, or a predictive story.

To accomplish that goal, you need to determine, in advance, what story your audit is intended to tell. That answer will guide your design of an audit that stays true to its purpose.

In other words, you’ll avoid mission creep and provide a valuable measuring tool for your company.

2. Weight by the importance of impact

All questions and answers are not created equal. If your audit story is intended to predict the risk of loss, then a cash control question cannot be equal in weight to a question on employee name tags. Failure to wear a name tag has, to my knowledge, never resulted in higher losses.

Weighting is critical to staying true to your audit score’s meaning. If a store with non-compliance to several high-risk questions can score the same as a store that lost points on low-risk questions, your weighting isn’t effective.

I am a proponent of weighting questions in accordance with the audit sections they occupy. I also believe it is beneficial to take “nice to know” questions and give them no weight, simply “yes/no” or “pass/fail.”

3. Identify and score the deal breakers separately

I believe there are “deal-breaker” questions. Questions that, when failed, mean a location doesn’t pass the audit. These are the most important questions. They are tests where exceptions create real potential risk or predict future problems. Late deposits, cash shorts over a certain amount, waste, and damage processes all fit this category.

I call these non-negotiables.

You can use a non-negotiable “section” to see overall scoring and a second score on the really, really important stuff.

Often, it is the non-negotiable score that provides the most significant predictions and correlations.

This method ensures your story (the audit score) stays true to its meaning.

As a final measure, you should test the audit scoring. Run some tests by answering questions in different ways. Ensure that a low score means trouble, and a high score means really sound operations.

The result from these three steps is that your audit will be meaningful, and the results will provide an ROI because they predict an outcome or identify risks. When stores fall below a level, that will be a clear indicator of important issues that require urgent responses.

About the Author

Raymond Esposito is President of Loss Prevention & Compliance for HS Brands Global. He has over 30 years of loss prevention experience and has spent the past two decades building premier LP outsource programs for some of the world’s most well-known brands. He has worked with over 130 retailers within the department store, specialty, restaurant, grocery, and pharmacy industries in the US, Canada, and the United Kingdom.

His articles and interviews have appeared in various magazines and on radio, including Security Source Magazine, LP Magazine, Family Circle, and Small Business Radio.

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