Question

Lauren’s balancing Act

DeMarco’s Department Store manager Lauren Brewster’s “Wow” moment came when she observed a Chicago restaurant staff ’s gushing treatment of an international celebrity. “Everyone dreams of that kind of star treatment,” Lauren told her assistant, Jack Klein. “Think about it. People brag about their bank or the local bar where ‘everybody knows your name,’ or enjoy showing off a favorite restaurant where the hostess always remembers their favorite table.” DeMarco’s, like other upscale department stores, suffered the double whammy of a slumping economy and increased competition from discount retailers and online shopping. How could the store, the “box,” compete, retain its old customers, and build a strong future customer base? “We’ve always known that it’s all about customer service,” Lauren said. “But what’s so great about grabbing a giant plastic shopping cart and slogging through some giant warehouse in your shorts and flip-flops, and then joining the herd at the checkout? That is not a shopping experience.” “And what isn’t great about being treated like Oprah from the moment you knock on the door until the sales associate swipes your card and hands over something lovely that you just purchased?” Jack asked. Lauren’s idea was that store customers receive that personal, upscale, “you’re somebody special here” treatment at DeMarco’s. Sales associates would raise their own professional level, regard customers as worthy of personalized service, and build their own clientele. As added incentive, the entire DeMarco’s sales team was changed over from hourly pay to straight commission. “Your pay is built through your own initiative and individualized service that makes customers return to you again and again,” Lauren instructed the sales force at the outset of the experiment. The idea intrigued Corporate, which approved a two-year experiment. As expected, the new plan created a minor exodus among those who wanted the assurance of a “regular paycheck.” But as the program moved through its first year, both store and corporate management were pleased with the overall results. Marketing pushed the new image of elite, personalized customer service, and statements such as “Katherine at DeMarco’s helped me select this outfit” or “Damien always lets me know when something new arrives at DeMarco’s that he thinks is perfect for me” became the typical boast of savvy shoppers. Now, two years into the experiment, Corporate urged Lauren to submit a full assessment of the program as a potential model for implementation throughout the department store chain. Sales numbers vouched for the overall success, particularly over the last two quarters of the second year. Certain associates, including Katherine Knowles in designer dresses and Damien Fotopolous in women’s shoes, showed significant gains as a result of straight commissions, and sales associates and customers responded favorably overall, urging a continuation of the program. Reliance on commissions inspired these and other sales associates to treat their individual department as if it were their own small business, becoming experts on nuances of merchandise, exploring designs and trends, finding ways to promote their expertise, and building an impressive number of loyal customers. The satisfaction level of customers was apparent in the numbers—not only sales numbers, but in repeat business, customer referrals to friends, and customer comment cards, all of which had been tracked since the beginning of the program. The downside of the experiment was that while some associates soared, others either veered toward an aggressive, pushy sales style or became intimidated by coworkers and teetered, monthly, on the verge of being replaced because they weren’t making sales. The once-proud tradition of cooperation among sales staff was, in many instances, being eaten away by relentless competition. Work assignments away from the sales floor were resented. In addition, the managers and sales associates of certain departments, such as women’s accessories, complained of lower wages because, as one sales associate pointed out, “ My commission on a $50 belt is nothing compared to Katherine’s commission on a $2,800 designer dress.” Resentment was mounting among those who witnessed the extravagant wages of a few. “If we change this program, if we keep straight commission for some and return to hourly pay for others, how does that fit with our new image?” Lauren said to Jack. “How does it deal with the difference in pay scale? How does it assure us that the attitudes of our sales team and the culture of this store will not return to what we were before—just another store?”

What do you see as the advantages and disadvantages of the incentive system that DeMarco’s is using for sales associates? What impact do you think it’s having on the DeMarco’s culture? Explain.

Do you think the complaints of lower-paid sales associates are legitimate? Why or why not? How do you suggest that Lauren respond to these complaints, such as the gripe that the system offers few opportunities for large commissions in some departments?

Answer 1

1. There are numerous ramifications of the motivating force framework presented by Lauren. The focal points include:

The deals partners are roused to work more diligently and better since their compensation gets dependent on commission earned on deals.

The concerned representatives treat potential clients better, prompting expanded deals and consumer loyalty. Thus, this prompts client faithfulness and improving of the organization's picture.

Increase the client referrals to companions, family and colleagues.

The motivating force framework helped the business by developing client base and building client dedication.

Be that as it may, the above framework additionally has its drawback. It has hindrances, for example,

Reduced cooperation among the staff.

Increased rivalry between staff, prompting scorn and blended sentiments between representatives.

Employees who like a normal check are not content with the new motivating force framework and are disheartened to work.

The directors and deals partners of various divisions griping about low wages because of the distinction in commission and affecting the company's way of life.

At the point when DeMarco's chosen to make the move to a motivator-based pay structure, they were doing combating both a poor economy and solid challenge. The upsides of their work day to the motivating force framework spun around the attention on client administration. Workers made enduring associations with clients; prompting increments in income, rehash clients, and referrals. This model is fundamentally the same as the Nordstrom demonstrate, which is considered the "best quality level of client administration" (Spector and McCarthy, 1999, p.3). Nordstrom was not the first to adjust this model, anyway they were the first to make it a durable and effective system. Much like Nordstrom, DeMarco's business relates that had the capacity to adjust started harvesting the honours and treated their specialization like their very own business, along these lines improving their general adequacy. The weaknesses of this framework were seen most inside worker fulfilment. While a few representatives had the capacity to build their compensation while working in higher end divisions, the individuals who worked in the lower end offices, for example, frill, discovered trouble coordinating their friend's income streams. This climate made dissention among the staff and diminished the general resolve. Another disservice was that fundamental obligations that did not include deals were being dismissed trying to concentrate on deals alone. There’re numerous ramifications of impetus framework begun by Lauren. The points of interest are: the business partners are inspired to carry out their responsibilities better and harder, since they get paid by commission on their deals. The kind partners approach potential clients better, adding to expanded deals and consumer loyalty. Consequently, it prompts client faithfulness and improving of the organization's notoriety and the expansion of client referrals to family, companions and colleagues. The framework likewise has a drawback, its burdens incorporates: decreased cooperation between partners, expanded challenge among partners, prompts threatening vibe and blended responses among staff.

2. The lower paid related grievances are authentic. This is on the grounds that commissions depend on deals made. On the off chance that a thing is value low, at that point the commissions is low. Since the partners in divisions with things that are estimated low have a hindered contrasted with their partners in offices with things that are evaluated high. Lauren should focus on the objections and ought to react to the protests right away. Lauren should utilize these systems to balance the protests. Continue changing partners to various divisions since the business costs can't be adjusted or by presenting a perpetual pay notwithstanding the business commission in any case the volume of offers. The grievances from the lower paid partners are real. It is on the grounds that commissions get dependent on the deals made. In the event that a thing is humble evaluated, at that point the commission likewise be low. Consequently, the partners in offices with humble evaluated things will be burdened contrasted with their partners in divisions with exceedingly valued items. The protests require consideration and Lauren ought to react with prompt impact. Coming up next are a portion of the systems that Laure can use to neutralize the complaints. Shuffle the workers in the distinctive offices since the business cost may experience issues altering. Introduction of a lasting pay notwithstanding the business commission paying little heed to deals volume.