Synopsis of Case Study
Vetements Ltee is a chain of retail clothing stores for men that is located throughout Quebec province, Canada. The company introduced an incentive scheme to have increased sales resulting in more profits. However, on the introduction of the new incentives, the top management began to receive complaints from store managers, other areas and customers, regarding the type of services their employees offer. Firstly, the employees stand near the entrance of the store, thus creating a customer service problem in various segments with the aim of tagging specific customers (Vetements Ltee Mini Case, 2016). Some parts of the store are also left unattended due to the occasional conflicts among the employees over customer's ownership. The employees also are not willing to re-order or restock the inventories.
Therefore, to correct the issues of inventory, managers have tried assigning each employee to inventory duty creating resentments towards them as well as their co-workers on the selected employees. Also, the morale of the employees has fallen relating to poor relations with the store managers. Additionally, mistrust is occurring between the management and sales such that when the management is on watch, the members of the sales participate in the inventory duty due to the management threatening dismissal for them, but once the management leaves, the employees sneak back quickly to the sales floor to meet the sales goals (Vetements Ltee Mini Case, 2016).
Diagnosis of Case Study
Substantial incentives in the company lead to poor teamwork and productivity as the commission only represents thirty per cent of a typical paycheque. The employees end up looking for ways of receiving high commissions not concentrating on the success of the business because they assume that it is a worldwide enterprise that markets itself. The productivity also reduces when they stand idle at the entrance of the store instead of doing constructive work in the store with the aim of grabbing potential customers (Vetements Ltee Mini Case, 2016). Also, since there is no equity theory, the employees hold their own beliefs about their outcomes and inputs not considering that of the company. They compare themselves to reference others and become aggressive if they find that their outcome or input is ration is lower than other workers.
Additionally, the organization has a problem with quality services delivered. Due to the commission based on the percentage of credited sales to employees over their pay period, employees are motivated to hoard customers at the entrance of the store rather than completing the inventory duties and attending to the lower traffics parts of the store. The store managers have tried to solve the inventory problem by assigning each employee to an inventory duty, but in the absence of the management, the workers sneak back to get more clients, thus hurting the morale of the staff's relationship with the managers. Also, the resentments created makes the team complain of lower paychecks because of being placed in slow areas of the store. Therefore, the company was using money as the staffs' and managers' motivator and the workers altered their behaviour to maximize the positive consequences or minimize the adverse effects. Employees were being reinforced positively with the money they made from the sales thus motivating them to make more sales to increase their income (Vetements Ltee Mini Case, 2016).
The high incentive system makes employees aggressive towards customers. Every person competes against the other in the company with the aim of receiving more money in the end. They struggle to achieve their goals through their aggressiveness such that slow areas of the store are left unattended as they will make them not receive incentives. Employees fear the inventory duty when left alone since they think it has no profit to them but only wastes their time instead of looking for commissions that might help at the end of the day. Restocking the shelves is also an issue as they fear their customers will be lost to other employees whose shelves are full thus dragging the company and making the company sell merchandise products. They are also aggressive on products that generate good income, and those customers who are good at buying the products are given priority, neglecting other customers.
The need for achievement is causing the employees to neglect essential duties as they only focus on selling products. Since their salaries are not the same, each one focuses on making their pay higher through commissions (Vetements Ltee Mini Case, 2016). The company introduced the incentive scheme knowing that it will be efficient, effective and delivers quality services to customers but the incentives only make the company fall. It will incur good profits, but restocking takes a long period that wastes time, which might change the decision of customers towards Vetements Ltee. The employees are so self-centred forgetting that the success of the company is also their success and through adhering to the inventory duties, the company, as well as their jobs, will be a long-term entity. The store managers have to be strict for them to work and their absence is the best feeling for the employees as they will have all the time to get more money and more customers (Vetements Ltee Mini Case, 2016).
Proposed Solutions to Case Study Problems
Offering lower commission incentives that would help increase the productivity of the company. Employees will not have the urge of being aggressive to customers as the commission that they will receive will not have a significant impact on their basic salaries. The inventory turnover would also increase as workers will be willing to stay at their assigned areas and restocking their shelves for customers to be attracted on their own to them. The activity would make the company run smoothly, and the employees will have good relations towards each other as they will be on the same level financially (Goworek, 2011). Also, the service given to customers would improve as there will be people to attend to the clients and giving them a good time while choosing their clothes or helping them in selecting the best products. Therefore, the advantages of the proposed solution are that there will be increased productivity, improved customer service and increased inventory turnover. However, the disadvantages would be a discouragement for the sales staff as the level of income would have reduced, there might be possible lower wages in the market and high turnover for staff.
Replacing the commissions with competitive salaries is another proposed solution. There will be equality within the team regarding wage, workplace and customers. The commissions should only be given for those who work as per the requirements of the management in ensuring the company remains stable. The activity would make the employees restock their shelves regularly, have good environmental conditions for sales and attract more customers or giving them high-quality services (Campaniaris et al. 2011). Also, unnecessary team competition would be reduced as the commission imposed is on hard work in your assigned area and not high sales. Therefore, the advantages of this proposed solution would be creating equality within the team, reducing competition in the team and a higher focus on the customer service. However, the disadvantages would be the sales team will be less motivated to work or deliver quality services, they will also be more self-involved and have negative relationships towards each other (Campaniaris et al. 2011).
Another proposal would be completely removing the incentives or restructuring them as they make employees quarrel every time. Eliminating the incentives will reduce the lousy treatment some employees would have offered with incentives as their salaries would be the same. Therefore, strong teams would be created, who focus on quality but not quantity. The teams will compete positively against each other on delivering excellence to retain customers or attract more, thus, improving the company. And, in the end, the best team might be given bonuses to motivate them in working harder. Also, there would be procedural justice as the inventory will be controlled well. Every employee will be fighting to fill their inventory, checking on the missing products and restocking them regularly to save on time that would have lost restocking an empty shelf. The store and company managers will also not have the stress of supervising employees every time as the workers will always be self-driven to their work (Goworek, 2011). The managers might only oversee the assigned areas to ascertain that quality work is taking place. Therefore, the advantages of this proposed solution would be the creation of stronger teams among employees and also the managers, reduced stress for the managers and procedural justice. However, the disadvantages would be employees might be lost to competitors as they will be looking for jobs with good salaries, under reward inequity and a decline in the sales revenue (Campaniaris et al. 2011).
Therefore, my preferred solution would be restructuring the incentive, based on behaviour modification and the employee's expectations. The company should redesign the incentive scheme for the sales employees so that they can also receive financial compensation for the goals of the organization. For instance, apart from the sales commissions, the sales employees can share a quarterly reward for the store that has the best appearance and more organized. Thus, the goal would be positive for not only the employees in the winning store but also other employees to improve their store in the next reward session. It could also work for managing the inventory duties such that by restructuring the commission system to motivate groups rather than an individual, the problem of intimidation and customer ownership would be reduced. Also, the team's work will be divided equally thus stimulating the team's performance (Goworek, 2011).
However, it might be unpleasing if some sales representatives slack but should balance out by other representatives motivating them and also, if needed, the management could fire or punish the employees. Nonetheless, the advantages of the preferred solution are that restructuring the incentive would improve the morale of the employee and have a long-term involvement in the company. Also, rewards might result in employees improving on sales and the appearance of stores. Conflict among employees will also be reduced. However, the disadvantages of the preferred solution would be the restructuring might result in slacking in some employees and might leave the top sales representatives financially unsatisfied (Campaniaris et al. 2011). Therefore, I would address the advantages by encouraging the employees on hard work in the company to enhance a long-term goal for the organization as well as their jobs. Also, I would urge the management to issue rewards to the best and improved stores to motivate the morale of an employee in his or her work.
Campaniaris, C., Hayes, S., Jeffrey, M., & Murray, R. (2011). The applicability of cluster theory to Canada's small and medium-sized apparel companies. Journal of Fashion Marketing and Management: An International Journal, 15(1), 8-26.
Goworek, H. (2011). Social and environmental sustainability in the clothing industry: a case study of a fair trade retailer. Social Responsibility Journal, 7(1), 74-86.
Vetements Ltee Mini Case. (2016, Jun 08). Retrieved from https://parsonscollegemuseum.com/free-essays/vetements-ltee/
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