Raleigh Rosse Case Study free essay sample

Considering that luxury retailers unusually discounted prices and could also access the same luxury goods brands, RR used the costumer’s experience and his relationship with the company as a competitive differentiator. Since the main goal of the company was to satisfy its consumers providing better services, we can identify the RR pivotal strategic positions, i. e. those which have the potential to lead to high incremental results for the strategy and value of the company1, as the sales associates, that are the employees who worked on the sales floor, who therefore have more contact with costumers. In order to gain competitive advantage and achieve its goals, RR store managers were in charge of hiring, training, and continually motivating these sales employees. Since the key factor of advantage was costumer relationship, RR afforded to offer to their sales association a salary substantially higher than the one offered by their competitors. The salary could also increase due to an employee performance improvement. The sales associates’ performance was measured by weekly sales, and the performance of store managers was based on eleven measures including weekly store revenues and customer satisfaction. So, we can conclude that the company adapted different metrics to different employees. During this period we can also refer that the career prospects for the ordinary employees were not very optimist, since we face a family company in which the promotion opportunities were very limited to family members. The fact that the career prospects were not very appellative could be an important characteristic to not attract and retain potential talents. In the early 1990’s the CEO Brian Rosse recognized that RR required a more formal Human Resource policy to result in more scalable measures. Due to this problem, he and the HR Director (his cousin), developed and implemented the â€Å"RR Ownership Culture†. The main objective of this program was to make sure that the new employees’ values were aligned with the company’s values, i. e. committed employees to serve in the best way the RR costumers by creating a more entrepreneurial and accountable environment. It is interesting that in the last case we studied, the GE’s CEO Jack Welch implemented, as well, a matrix in which not only the performance was valued, but also the commitment with the company’s values. In GE the matrix was well established, what will not happen in this case. Moreover, one of the main aspects of the â€Å"Ownership Culture† program was to maintain the policy of filling the upper level position by intrafirm inflow2, i. e. promoting employees within the company. However, due to the expansion strategy, RR now promotes opportunities to non-family members. The company also changed the sales associates hiring profile, basing it on biographical data3, by requiring recent college graduates with a strong work ethic. It is also important to refer that for sales associates positions, the company continued with its interfirm inflow4 policy, i. . allocate employees in these positions that did not work previously in the company. Another policy implemented by this model was the higher economic rewards for top sales associates. The company only motivates its employees by giving economic benefits, which could not be the best way to do it. The last two initiatives and policies implemented reinforced the empowerment of store managers, giving them the authority to manage their stores the way they want, including their sales associates. As we will discuss further these policies will lead to several problems within RR. In order to establish the â€Å"Ownership Culture†, Brian Rosse also invented and developed a performance appraisal for which he gave the name of Sales-Per-Hour (SPH). We can define performance appraisal as the process through which an organization gets information on how well an employee is doing his job5. This new system homogenized the metric of measure for sales associates and store managers. In our opinion, this was a negative strategy since different levels of employees have different means to contribute to the company’s value, therefore different types of employees demand different metrics of performance measure6. Collings, D. Mellahi, K. (2009). Strategic talent management: A review and research agenda. Human Resource Management Review, 19 (4): 304-313 2 Madsen, T. , Mosakowsi, E. , Zaheer, S. (2003). Knowledge Retention and Personnel Mobility: The Nondisruptive Effects of Inflows of Experience. Organization Science, 14 (2): 173-191 3 Noe, R. , Hollenbeck, J. , Gerhart, B. Wright, P. (2008). Human Resource Management: Gaining a Competitive Advantage. McGraw-Hill. 4 Madsen, T. , Mosakowsi, E. , Zaheer, S. (2003). Knowledge Retention and Personnel Mobility: The Nondisruptive Effects of Inflows of Experience. Organization Science, 14 (2): 173-191 5 Noe, R. , Hollenbeck, J. , Gerhart, B. Wright, P. (2008). Human Resource Management: Gaining a Competitive Advantage. McGraw-Hill. 6 Deanne N. den Hartog, Paul Boselie and Jaap Paauwe (2004). Performance Management: A Model and Research Agenda. Applied Psychology: An International Review, 2004, 53 (4), 556-569 1 Group 2 Human Resources Management The target SPH was based on each employee hourly wage and department, thus, each employee had different targets. However, according to Management by Objectives (MBO) programs, the company should involve the staff in setting the goals for which the workers are evaluated7, which does not happen in this case. Therefore the company could not establish realistic and achievable targets. To better understand the quality of the SPH program, we did an analysis based on the connections of a MBO that we learned in the article Performance Appraisal, Performance Management and Improving Individual Performance: A Motivational Framework. In the first connection, which is action-to-result, we can detect several problems. The sales associates seek for more sales, but at the same time they must provide all the customer service that RR demand. So during the period that associates are doing customer service, they are accumulating more hours and none sale to their SPH. This could lead to a quicker and worst customer service in return to more sales. Another problem in this connection was the empowerment that store managers had for reallocate and schedule the time periods for each sales associate, which gave no power or flexibility to the sales associates. In order to maximize this link, the company should provide feedback to its employees. Store managers would monthly provide a publicly review of the sales associates’ SPH performance versus its target. Under these circumstances RR did provide feedback but in our opinion not in the best way, because it should be provided individually and not publicly. The second connection is results-to-evaluation, where the company should provide a clear definition of the job and the relevant results that would be evaluated. This is exactly what did not occurred in RR, in which employees complained for not having a straight distinction between â€Å"selling time† and â€Å"non-selling time†, to calculate the SPH. We can also refer that the SPH targets could not be under the control of the employees because it was the store managers who chose the work schedule of sales associates. Therefore a sales associate who works on peak hours will probably sell more than one who works on off-peak hours. This could lead to the problem of self-fulfillment prophecy, i. . if a store manager believes that one associate is good he will put him working on peak hours and consequently this employee will sell really well and be considered an excellent associate. The third connection is evaluation-tooutcome, which in this case was constant over time in result of the fact that RR used always the SPH. The last connection is outcome-to-need satisfaction, in which we can enhance the fact that sometimes the outcome wa s not consistent with an employee current need state. This could lead to a sale associate perceiving his allocation as unfair and then resulting in the following problem8 that combine the first connection as well: â€Å"†¦if participants do not perceived the system to be fair, the feedback to be accurate, or the sources to be credible then they are more likely to ignore and not use the feedback they receive† (Levy and Williams, 2004, p. 897). In result of our analysis we could conclude that the SPH model is not efficient and fair, so as expected the model brings several problems to RR. The work environment was really cumbersome, with frequent sales contest between associates, leading associates to steal credits from each other. However, since the customers are satisfied, the company does not care about this intense work environment. The model also incentives employees to manipulate the system by logging in only in the best hours, and by working extra hours that would not be recorded. This last problem ended up in two investigations, which resulted in two lawsuits against the company as well. Another important aspect of RR is that during the years, the company was only concerned with its customers and did not pay any kind of attention to employees’ issues and complaints. Therefore the RR’s human resource policy resulted in rewarding the â€Å"smarter† employees and not the more committed, which led, as we saw in the last years, to a decrease of the company’s performance. Thus, we can conclude that the employees’ evaluations and outputs are not placed in the correct way so that employees will not focus their efforts in ways that will lead to the desired level of performance improvement 9. In sum, the group concluded that the Human Resources strategy was not aligned with the company overall strategy and the performance management was not aligned with the company goals. Therefore RR should listen to Bill Schwartz and change the company’s Ownership Culture, by developing a Performance management in order to ensure that employees’ activities and outputs are congruent with the company’s goals10. 7 Angelo S. DeNisi and Robert D. Pritchard (2006). Performance Appraisal, Performance Management and Improving Individual Performance: A Motivational Framework.