Question

Read VeTEMENTS LeTE's strategy, Selected Cases, of the textbook. The Case Study is found in the Word document below. Answer, discuss, and examine the following questions: How would you characterize VeTEMENTS LeTE's strategy? Using four theories, what advice would you give VeTEMENTS LeTE in terms of leading and managing change? Using two theories of motivation, propose a new incentive plan for VeTEMENTS LeTE? What would be included in your "first 100 days" action plan?

CASE 11: VêTEMENTS LTéE

By Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Vêtements Ltée is a chain of men’s retail clothing stores located throughout the province of Quebec, Canada. Two years ago, the company introduced new incentive systems for both store managers and sales employees. Store managers receive a salary with annual merit increases based on store sales above targeted goals, store appearance, store inventory management, customer complaints, and several other performance measures. Some of this information (e.g., store appearance) is gathered during visits by senior management, whereas other information is based on company records (e.g., sales volume). Sales employees are paid a fixed salary plus a commission based on the percentage of sales credited to that employee over the pay period.

The commission represents about 30 percent of a typical paycheck and is intended to encourage employees to actively serve customers and to increase sales volume. Returned merchandise is deducted from commissions, so sales employees are discouraged from selling products that customers do not really want. Soon after the new incentive systems were introduced, senior management began to receive complaints from store managers regarding the performance of their sales staff. They observed that sales employees tended to stand near the store entrance waiting to “tag” customers as their own.

Occasionally, sales staff would argue over “ownership” of the customer. Managers were concerned that this aggressive behavior intimidated some customers. It also tended to leave some parts of the store unattended by staff. Many managers were also concerned about inventory duties. Previously, sales staff would share responsibility for restocking inventory and completing inventory reorder forms. Under the new compensation system, however, few employees were willing to do these essential tasks. On several occasions, stores have faced stock shortages because merchandise was not stocked or reorder forms were not completed in a timely manner. Potential sales have suffered from empty shelves when plenty of merchandise was available in the back storeroom or at the warehouse.

The company’s new automatic inventory system could reduce some of these problems, but employees must still stock shelves and assist in other aspects of inventory management. Store managers have tried to correct the inventory problem by assigning employees to inventory duty, but this has created resentment among the employees selected. Other managers have threatened sales staff with dismissals if they do not do their share of inventory management. This strategy has been somewhat effective when the manager is in the store, but staff members sneak back onto the floor when the manager is away. It has also hurt staff morale, particularly relations with the store manager. To reduce the tendency of sales staff to hoard customers at the store entrance, some managers have assigned employees to specific areas of the store. This has also created some resentment among employees stationed in areas with less traffic or lower-priced merchandise. Some staff have openly complained of lower paychecks because they have been placed in a slow area of the store or have been given more than their share of inventory duties.

Answer 1

Answer:

How would you characterize VeTEMENTS LeTE's strategy?

VeTEMENTS LeTE's strategy can be characterised as the competitive sales driven strategy for maximising its profits where the employer has created a competition among the sales force for securing their incentives that are dependent on the number of customers being attended and converted by them. This has resulted into the increase in sales for the company and hence the revenue.

Using four theories, what advice would you give VeTEMENTS LeTE in terms of leading and managing change?

Theories of effective leadership include the trait, contingency, behavioural, and full-range theories. VeTEMENTS LeTE should match its strategy according to the behaviour and traits of their sales team. Naturally, when the firm will create strategy that drives the competition among the internal employees, they will move follow that strategy which would provide them with the higher benfits rather than those activities which brings in less benefits for them. Hence, it is the responsibility of management to formulate the profit maximising strategy in such a way that it should not drive an internal competition among the employees rather it should be focused on overall development of the company.

Using two theories of motivation, propose a new incentive plan for VeTEMENTS LeTE?

For leading and managing change, management of the company should ask all of its employees for completing the overall target of the company and should provide all of them with a single target that the company wants to achieve and should ask the employees to achieve this target collaboratively rather than individually. Depending on the completion of target through this strategy, management should offer them with the incentives. Management of the organisation should increase the fixed payment of the employees and should decrease the percentage of incentives. Management of the company should also make it clear that if the employees fail to achieve the target collaboratively then all of them would end up losing incentives and only fixed pay will be provided to them.

What would be included in your "first 100 days" action plan?

In the first 100 days of action plan, employees will be provided with the training on the communication and behaviour that the employees should follow while dealing with the customers. They would be provided with the on job training for evenly distributing the customers among themselves on a sequential basis and the strategy that they are required to follow to convert the customers into effective leads.