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R&R Retailer’s Employee Performance Management Case Study

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Updated: Aug 8th, 2020

Introduction

Human resources is one of the most valuable assets in any business. Unlike technology, it can grow skills and improve performance due to psychological influence from management. Employees are especially valuable in fields dealing with direct customer service, as their attitude predicates the company’s success through the reputation they create. The case of R&R, a retailer of luxury brands primarily from Europe, is an example of outcomes that each company would face after neglecting its personnel. With a key issue being an imperfect system of performance measurement, R&R should now look for a new system of recognition that would satisfy its sales employees.

Key Issues and Challenges

SPH

The so-called system of Sales Per Hour (SPH) became the primary issue that is currently facing R&R. Its main idea lies in calculating the average revenue each sales associate makes an hour. For instance, there was a target value of $412 per hour in 2009. It did not look unachievable since the market of luxury brands features expensive products. However, the system was built in a way that the most successful sales associates received the most advantageous hours when they were able to sell more. It is a fact that the number of customers is different throughout the day and during a week. This measure created a situation where top employees would receive all options for growth, while other workers were put in conditions where they could not perform as effectively.

Off-Hours Work

While sales associates had to maintain the required level of SPH performance, their work outside of direct sales was rarely recognized. The company’s policy calls for performing all sorts of tasks to keep a client satisfied with the service and be willing to return to the store. It sometimes took sales employees hours to search for an item that their client wished to have, made them run around the city carrying clothes for customers, and required a lot of other out-of-office tasks to be performed. Although these duties resulted in customer loyalty, they were not reflected in the SPH measurement system. Thus, the employees’ input could not be recognized properly. Besides, the SPH system allowed some manipulations with it, which was carried out by several employees at some point in their career.

Lawsuit

The situation described above resulted in a major conflict with several sales associates filing a claim to a court where they identified the issue of their employer being too demanding. Those employees recognized their rights to be paid for work they were doing outside of office hours. Besides, the economic crisis that started in 2008 dropped the luxury market in the US by 14%. With income level decreasing, management stressed the importance of bigger efforts among the personnel, which could serve as a trigger for the growth of dissatisfaction. At this point, the top manager of R&R recognizes the importance of the lawsuit and needs to develop a strategy for satisfying the sales associates.

Performance Management

One of the adequate solutions to this problem lies in reviewing the system of employee recognition. It must be an essential skill of the company’s new HR director to find the motivation of each sales associate. It could be a great solution in the long run to let workers invest in the company and let them make their own decisions to keep a feeling of control and belonging.

Equity and Expectancy

There are two fundamental theories explaining the motivational factors of employees. Although they discuss the same concept, the approach of each theory is based on different values. The expectancy theory works with benefits, while equity focuses on the concept of fairness.

The expectancy theory implies that people imagine certain benefits that they will receive as a result of their work (Latham, 2012, p. 47). This is not necessarily the financial side. Some workers are interested in community, job security, career growth, etc. They would choose an option that offered more benefits if they had to make a decision.

The equity theory (Latham, 2012, p. 45), on the contrary, states that employees are most motivated when they recognize that they work in fair conditions. It is important for them to know that their colleagues are receiving the same attitude as they do. No exceptions should be made to keep an employee motivated in further development.

Leadership Style

Instead of giving orders and setting standards, managers should become role models for their subordinates. Even the Army commanders recognize the importance of shaping someone’s behavior through an appropriate leadership style (Abrashoff, 2002). While it may seem effective to make people conform to the rules, the best strategy is to motivate employees instead of pressuring them.

Sharing the Control

Some managers choose to be a single decision-maker. While this measure brings a certain order to internal processes, it does not work towards motivating people in the long run. The best strategy for R&R would be letting employees make some portion of decisions on their own. For example, sales associates work directly with customers, thus they are able to evaluate the level of client satisfaction. Moreover, this group should be responsible for measuring the overall behavior and attitudes inside the working community.

Creating a corporate culture that actively engages employees is crucial for R&R. Every sales associate should be able to identify the company’s goals for the future and work towards achieving them. Furthermore, this culture should become a base for creating a board of employees that would discuss the issues regarding workers’ satisfaction and motivation level. Of course, no progress can be made without offering opportunities for career development. Succession plans and recognition categories must be developed for all sales associates to make them interested in putting effort for the sake of personal growth. Besides, growth is not achievable without regular education. All workers should attend sessions that would help them develop their professional skills. The most successful employees should take charge of others to mentor them and teach ways to improve performance. Trips to production sites should also become a part of educational sessions to create a better understanding of the company’s functioning.

Finally, the level of motivation and commitment can be significantly increased if employees knew their input is valued. Their feedback should become a very important source of information for the top management, which has to be collected in a proper manner. All feedback must be documented to avoid putting too much weight on fresh information (Bach & Edwards, 2013, p. 231). Allowing employees to buy the company’s shares should also work towards their motivation as they would be interested in putting efforts into developing R&R and increasing their revenues.

Remodeling the Performance Measurement System

Apart from shaping the level of employee motivation, it is important to change the system of performance measurement. Instead of maintaining the current model of SPH, it is more beneficial to set weekly goals. The stress on individual achievements should be shifted more towards the team effort. The overall distribution of measurement would include 43 percent on team performance, 42 percent on individual achievement, and 15 percent on tasks performed outside the direct sales.

References

Abrashoff, D. M. (2002). It’s your ship: Management techniques from the best damn ship in the Navy. New York, NY: Warner Books, Inc.

Bach, S., & Edwards, M. R. (2013). Managing human resources: Human resource management in transition. West Sussex, UK: John Wiley & Sons Ltd.

Latham, G. P. (2012). Work motivation: History, theory, research, and practice. New York, NY: Sage.

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