Raleigh & Rosse Measures to Motivate Exceptional Service Case Solution

1. What is the primary problem in the case?

Raleigh and Rosse, because of its primary focus on being a customer-relationship focused organization, mistreated its employees. To support customer focus attitude, R&R developed HR practices and evaluation criteria that were soreness to employees. This Forced employees and organizations to display some immoral behaviors. At the same time, it resulted in the organization to breach state wage and hours laws. Such instigating problems caused R&R to become the centre of attention, giving birth to investigations and lawsuits. Because of that, R&R’s negative publicity flamed up resulting in decreasing demand and damage to brand image. Significant effect of these problems can be seen on revenue, which is decreasing, and is projected to further decrease, despite the industry is recovering after being hit by recession. In addition to this, it’s charged by New York State Department (est. 50 million), and a lawsuit filed under federal labor standard act posed a risk of $200 million judgment against R&R.

2. What are the major factors affecting the problem?

The problem seems to initiate when Brain Rosse identified growth potential. Part of the plan, he hired Linda Watkins, first non- family member to lead R&R. In such situation, concerned about delivery of R&R’s values, he felt a need to develop more formal HR policies. So, he came up with ownership culture, part of it was Sales per Hour Program (SPH) that played a crucial part in problem creation.

SPH put its employees at “Client all stars” race kindling undesirable behavior referred as “sharking”. This means that sales associates steal credit for sales made by others. Also, as a result of that, R&R was put into court causing monetary and nonmonetary (brand image) losses.

Using SPH associates were compensated on the basis of sales floor selling activities. On the other hand, to abide by its value of customer relationship, associates were supposed to be available to serve clients off the floor, reducing their SPH, decreasing compensation and termination in some cases. Adding more, the systems were always down causing an error in recording of working hours.

Because of such intense competition, the behavior among both employees and managers is also not very friendly. Managers and associates started manipulating system. In trying to fulfill, the customer relationship value associates are forced to work “off hours”. New York State Department took against R&R and found it guilty of violating state wage and hour law. It also got sued by a former associate, claiming R&R forces employees to work off the clock. This added onto the severity of the problem faced by R&R.

The overall culture of R&R got disturbed with SPH boosting bad attitude and managers being bossy.  In addition to this, employees were scared of complaining because managers schedule them for bad hours resulting in reducing SPH and eventual termination. Also, whenever employees complain it was barely forwarded to top management and when done confidentially the managers were prepared with misleading answers.

3. How are you approaching the problem?

The problem flamed up with the introduction of SPH program; it caused the employees to get in race of being a “Client all stars”, earn more bonuses and fame. In trying to become a star, employees and managers started to exhibit bad attitude and unethical behavior. As, everyone can’t be star same time, other employees started to raise questions and concerns about the practices. Centre of criticism was the strict adherence to value of building customer relationship and criteria for evaluation and compensation. Also, for SPH on the floor selling activities were criteria of evaluation, but it was widely confused with non selling time. As, in trying to comply with R&R value associates were forced to work off time without being compensated for that. Within R&R, these concerns were not raised either due to the fear of manager putting associates in bad hours or if raised they were concealed by managers. Because of such criteria and practices employees got fired and R&R put on trial by its former employees. As a result, R&R activities got media attention. So, investigations were launched and R&R was found guilty of breaching labor wage and hour laws. Mass media covered these charges and that resulted in flaming of the company and brand name. As a result of that, revenues of the company started to decline and are further forecasted to decline.

4. What is your solution and/or recommendation?

This case exemplifies the problems faced by family owned businesses, where everything is run in accordance with the wish of family members and outsiders are supposed to prevent sacred cows. The company extensively focused on building relationship with customers forgoing the employees’ needs and satisfaction. Monetary incentives don’t always motivate employees; it strongly includes work culture, environment, and ethics. So, environment should be provided that support employees. Thus, culprit of exploiting employees and bringing R&R bad reputation is SPH program. So this needs to be revisited, and balance scorecard approach need to be considered as suggested by Schwartz.

Balanced scorecard takes in different perceptive of the organization that includes (Marr, n.d.):

• Financial perceptive

• Customer perceptive

• Learning and growth perceptive

• Internal process perceptive

Financial perceptive refers to the financial objectives and helps tracking financial success. Customer perceptive related to customer satisfaction. Learning and growth reflects the intangible factors necessary for success. While internal process covers internal goals and steps to fulfill those objectives.

So, balance score card takes in a 360* account of the different perceptive and analyze the performance accordingly. SPH was focused more on customer and financial perceptive. Negating the need for internal process perceptive i.e. the transfer of knowledge to managers about how well business is doing, and learning and growth of employees. Because of this important area were left out by R&R, it was put into so many troubles. To implement balance scorecard, company needs to take strict actions, and this will allow management to communicate with employees and measurement of their performance. Balance scorecard makes sure that, all of these are aligned together to achieve the company’s goal. It not only helps with current actions, but also anticipates the future challenges and helps in making out strategies to deal with them. Management after implementation needs to have meetings with employees and managers in order to make sure that implemented practices are followed. Management by wandering around concept should be ingrained to be aware of needs of employees and to get and give suggestions.