Vetements Ltee - Case Study

Jhonloyd De Torres
Organizational Behavior

After the incentive scheme was put into place, a number of inefficient practices
by managers and staff became apparent. Conflicts amongst coworkers regarding client
ownership and "tagging" were the first unsuccessful behaviors, and they frequently
resulted in hostile actions. Employees would congregate near the store door, leaving
unattended sections of the store in addition to frightening off some consumers. Ignoring
inventory duties was another unsuccessful behavior. When this responsibility was
previously divided among the staff, the new incentive program made them concentrate
only on sales, which led to the neglect of this crucial duty. By allocating staff members to
certain jobs and sections of the business, managers attempted to address the problems
of inventory control and consumer hoarding. But this led to another counterproductive
conduct that the staff members displayed. Employees became resentful when they were
given jobs or were required to cover specific sections of the store because they thought
it was unfair and would influence their compensation. Managers also attempted to
address these problems by threatening to fire staff members; however, this led to
another instance of incompetent behavior—employees skulking around the store when
the managers were not there. One clear example of a manager's poor behavior is when
they threaten to fire an employee in an attempt to change their behavior. In the end, this
resulted in declining staff morale and ineffective behavior management.

Employees should compare their own inputs and outcomes to those of others,
according to equity theory, and the ratio of outcome to input should be fairly and equally
compared (McShane, et al., 2021). Giving out yearly merit raises based on sales
exceeding predetermined targets, store appearance, inventory control, customer
complaints, and other performance indicators was one way the corporation rewarded
store managers. This is consistent with equity theory since store managers' input—the
many performance criteria outlined—determines their outcomes—in this example,
annual merit increases. The decision to give sales staff a fixed income with a
commission based on individual sales performance was another intervention by the
store management. In this instance, the employee's contribution consists of their efforts
to close a deal, and their reward is a commission. Equity theory shows that there are a
number of problems with this shop management action. The commission pay structure
was introduced with the intention of encouraging staff to close deals and bring in money,
but it also led to dissatisfaction among workers who thought they were being treated
unfairly by being put in non-salesy positions. These include times when staff members
were allocated to locations in the store with lower traffic or to the back room for
inventory management. The hypothesis states that this leads to a sense of unfairness,
which in turn can lower morale and motivation.

Expectancy theory is concerned with the effects of performance, effort, and

results. It implies that a worker's efforts are focused on actions that will result in positive
results and good performance (McShane et al., 2021). The hypothesis states that by
rewarding good performance, a commission pay system for retail personnel will raise
performance-to-outcome expectations from the standpoint of store management.The
store management is missing the obvious here: if they are solely concerned with
performance in relation to sales, they may overlook other facets of the job, such
inventory chores. Furthermore, store managers may have a tendency to concentrate
only on inventory control, customer complaints, and surpassing sales targets to the
point that it negatively impacts their staff when they are motivated by these factors. This
is made clear when store managers start threatening to fire staff members in order to
get them to finish their inventory duties. As a result, they might go to great lengths to
achieve the requirements for their yearly merit raises without considering the potential
impact on employee morale.

Vetements' executives have a few options for addressing and fixing some of the
issues. The first step would be to examine the incentive schemes and make sure that, in
accordance with the equity idea, they are just and inspiring. They might think about
rewarding teams rather than giving out commissions to individuals in order to promote
cooperation and lessen hostile conduct. In addition to guaranteeing that staff members
are distributed around the business, this might help address the problem of customers
swarming the entryway. To make sure that workers are not ignoring inventory
management duties, they can also provide incentives for doing them. Programs for
managers and staff to receive training can also be implemented by store management.
Management training ought to concentrate on problem solving, handling conflict, and
fostering an environment of open communication and positivity at work. Teamwork and
customer service should be the main topics of employee training. Lastly, it is
recommended that managers and staff at the store have regular opportunities to provide
performance comments. Acknowledging the abilities of individuals and providing
constructive feedback can boost their motivation in their jobs.

References:
McShane S. L., Tasa K. & Steen S. L. (2021). Canadian Organizational Behaviour (11th
ed.). McGraw Hill.

1. What symptom(s) in this case suggest that something has gone wrong?
This instance contains a number of symptoms that point to possible problems.
Store managers began to complain to upper management as the sales team's
performance began to deteriorate. Employees at the store started berating customers
and squabbling about who owned the customers. They also started to disregard other
store responsibilities including promptly filling out order forms and replenishing
inventory. Store sales have decreased and stock shortages have resulted from these
activities. Employee morale has dropped and animosity has started to surface. Store
managers have started threatening to fire salespeople as a means of pressuring
employees to do their jobs right. The fact that workers perform subpar work when a
management departs has further eroded manager-employee trust. These instances all
point to a possible issue at Vetements Ltee.

2. What are the main causes of these symptoms?

In this instance, managers and employees were motivated by money at
Vetements Ltee. According to the principle of reinforcement, people change their
behavior to maximize favorable outcomes or decrease unfavorable outcomes. When
employees made sales, they received monetary rewards for it. So, in order to keep
earning money, the staff members kept trying to close deals—even if it meant neglecting
other responsibilities. The company's issue arose from the fact that, despite receiving
bonuses, staff members were not providing excellent customer or business service.
Everybody has a motivation. Each individual is motivated by four drives, according to
the Four-Drive Theory of Motivation: the drive to acquire, the drive to bond, the drive to
learn, and the drive to defend. The want to acquire—in this case, acquiring
money—was what drove the employees at Vetements Ltee.

3. What actions should Vetements executives take to correct these problems?

The employees' obsession with reaching goals and ignoring other crucial
responsibilities is what drives them to work only toward and concentrate on the
commission. The executives at Vetements may want to consider reducing commission
incentives as a way to boost customer satisfaction, increase productivity, and increase
inventory turnover. But it can also demoralize employees and lead to attrition. Second,
the executives may choose to replace commissions with competitive compensation in
order to instill equity in the company. Lessen rivalry within the team and put more of an
emphasis on customer service, although this may cause employee motivation to
decline. Restructuring incentives would be an additional option. By doing this, the
organization will build stronger teams, have better inventory control, and managers will
have less stress. But, this might also lead to staff turnover, the loss of employees to rival
businesses, an imbalance in compensation that could lower motivation, and a potential
drop in sales because less motivated staff members would be less likely to close deals.