Raleigh & Rosse was a luxury retailer founded in 1903 that utilized a sales per hour (SPH) metric to measure employee performance, which led to a cutthroat work environment and lawsuits over unfair wage practices. While the SPH system helped drive sales, it also caused legal issues and an unhealthy organizational culture, so the company needs to improve its performance management system in order to prevent future problems and engage employees.
Raleigh & Rosse was a luxury retailer founded in 1903 that utilized a sales per hour (SPH) metric to measure employee performance, which led to a cutthroat work environment and lawsuits over unfair wage practices. While the SPH system helped drive sales, it also caused legal issues and an unhealthy organizational culture, so the company needs to improve its performance management system in order to prevent future problems and engage employees.
Raleigh & Rosse was a luxury retailer founded in 1903 that utilized a sales per hour (SPH) metric to measure employee performance, which led to a cutthroat work environment and lawsuits over unfair wage practices. While the SPH system helped drive sales, it also caused legal issues and an unhealthy organizational culture, so the company needs to improve its performance management system in order to prevent future problems and engage employees.
1715075060 (Ehsaan) 1715077060 (Mahmud) 1715132660 (Shabnam) Industry Background (Key Facts)
• The industry bloomed in US after WWII. Previously, goods were custom
ordered from Europe • 1980’s Luxury Retail Stores acquisition by fashion/luxury giants • 1995-2007: Global Sales Doubled • 2009 Global Sales - $214 Billion In 2009 U.S. Largest Luxury Market ($57 Billion) • 1950s-1980s Expansion of merchandise and retail stores Company Background (Key Facts)
• Founded by Michael Raleigh and Conor Rosse
• 1903: Saddlery and Equestrian Shop • 1920’s – Additional Luxury Imports • 1980’s - leading Luxury Retailer with exceptional Customer Service and Highly Rich clientele • 2002 - Top 100 Employer • 2005 - Negative Press (Fortune Magazine article) • 2007 - Peak Revenues of $524.2 Million Rayleigh &Rosse’s Customer Service • Impeccable customer service and loyalty was a core value “a calling, a • Managers at R&R were meant to vocation to serve hire, train and continually motivate sales associates our clients at the highest level of • Sales associates were vital in this company devotion” • In many occasions, they were more than a sales associate R&R’s Ownership Culture A revamp in the company’s culture happened in 1992 in order to make sure new team members were capable of carrying the firms values. Measuring SPH
Selling and Non- selling hours
Selling Hour - Attending Customer on sales floor.
•Distinction is often vague and confusing.
Non-Selling Hour - Off floor work such as
restocking merchandise and attending meetings. •Recoding non-selling hour would decrease SPH Cons Intensely fierce Work Environment ▪ Sales contest ▪ Managers read customer testimonial letter publicly ▪ Repeated honorees recognized as “All Star”. ▪ Pressure lead to “Sharking” #'s are not the only way to judge customer satisfaction and employee success Unfair wage policy Favoritism of top performers Peer pressure to not report hour Organizational culture became "Every man for themselves" Broad Line Impact
• Store managers overlooked employee complaints
• Fortune Published article criticizing R&R practices • Sued for unlawful termination (2004) • Investigation by New York Department of Labor • Violation of State wage and hour law Other economic factors 1. Recession 2. Growth in market 3. Operational framework redesign 4. Alternative approach in performance analysis • Pros: R&R will maintain its harmonious Alternative Course #1 operations and will recover once the recession is over. Status Quo or Continue with the Current HRM Process • Cons: Watkins will continue with its The current system may once again produce lawsuits towards the current process, culture and company performance management system. Elicited behavior might impact the company negatively amongst its employees • Pros: Alternative Course #2 Watkins will prevent future lawsuits related to the SPH program Improve the SPH program as The overall behavior will shift to a per state laws healthy competition rather than “sharking” Watkins will improve the current SPH program as per minimum requirement of the • Cons: state law. The company will still be affected by the current economic downturn and loose more profit. • Pros: Watkins will prevent future lawsuits related to the SPH program. Alternative Course #3 Watkins will help the company Change the current performance from further losses and cope with management system the current economic downturn.
Watkins will change the SPH and
• Cons: create a new performance Watkins will encounter huge management system like the resistance within the company balanced scorecard and other since the SPH is a time tested evaluation programs. program. Recommendations • Improve the SPH program • Restructuring the unprofitable company stores. • set up a strategic plan for long run through integrative HR & CRM ERP • Employee Engagement to achieve OCB through POS • A better HR supervision & periodic reporting to management as per employees’ concerns