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Raleigh & Rosse

Measures to Motivate Exceptional Service

Presented By:
Group No.7
Situational Analysis
Categorized into Apparels, Accessories, Perfume & Cosmetics, Hard luxury goods
Currently concentrated in Europe and Americas with growing demand in Asia
Two-third market controlled by 35 brands
Industry Growth hampered by global recession; down by 8% from previous year (2008)

Specialty retailer with 35 stores across US


Avg. revenue of $1200/sq. feet which is 1.8 times the industry
Hit harder than competitors from global recession
R&R Currently facing class action law suit from sales associate

Personalized customer service as a foundation to client retention and primary competitor differentiator
Strategy

One store manager and multiple sales associates per store


Structure
Situational Analysis
Systems & Processes

Recruitment, Selection and Promotion

Recent college graduates with strong work ethics; Internal promotions

Staffing & Scheduling

Staffing optimization through sales force automation systems


Scheduling controlled by store managers
Policy of allocating better hours to SA who meet/exceed targets

Clocking systems

Post 2004 lawsuit, Mandated timekeeping systems and audit compliances in place

Compensation system (SPH)

Target SPH : (Sales - sales return)/ hours worked based on hourly wage ; SA = $412
Store Managers (actual SPH) : (Total store sales sales)/ ( Total selling + non selling hours clocked in store)
Sales Associate : (Total store sales sales)/selling hours;
if actual SPH > Target SPH : 7.35% of sales in lieu of hourly pay + hourly wage * non-selling hours
Else Total hours clocked * hourly wage

Termination

Based on inability to meet target SPH continously


Issues Identified
Issues Causes
Flawed scheduling feeding to vicious circle of poor Best hours to SA with best SPH
performance Scheduling on managers discretion;
Clocking of hours will be manipulated based on Vague distinction between selling & non-selling hours
meeting target SPH ($412) The formula allows gaming by SA:
An SA meeting target SPH would show min. needed
Sales/ selling hrs $20000 $25000 selling hours and clock remaining time as non-selling1
30 $ 666.67 $ 833.33 hrs. getting compensated for the (actual clocked
40 $ 500 $ 625 selling) hrs. as non-selling hours.
50 $ 400 $ 500
60 $ 333.34 $ 416.66

Store managers prevent employees from logging in Non-selling hrs. Clocked in store reduce actual SPH of
non-selling hours managers
Class action lawsuit by SA for violating federal and state SA not compensated for overtime in accordance with
wage and hour law FLSA

Note: Sharking is also a concern in the organization but cannot be addressed through a compensation system
1. No stringent checks for non-selling activities being clocked
Problem Statement

Design a sustainable compensation


system for Rayleigh & Rosse that:
Incentivizes sales
Does not hamper customer experience
Does not lead employees to bypass/violate
statutory compliances
Prevents vagueness in the measurement of
sales metrics (#revenue, hours clocked)
Recommended Compensation system

Salary

Fixed: Hours worked * hourly wage (Weekly hours limit : 40 hrs.)


Overtime : (Total hours worked 40)* (1.5* hourly wage)
Pay for performance : sales commission based with quota
Individual sales for SA & store sales for managers

Scheduling of Sales Associates

Automated employee scheduling system to limit managers discretion

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Thank You