Case Analysis: Kimbels Department Store November 18, 2017

GROUP 3: Jomi Alcon

Abdishakur Muse

Dennis Magtibay

Abigail Laus

PROBLEM STATEMENT:
A) FACTS OF THE CASE
Kimbels Department Store is a regional chain of upscale department stores based in St.
Louis. Currently, it is facing the challenge of losing share of overall retail sales to discount
store chains. A key component of the strategy adopted to counter this long-term trend is the
revival of great customer service on the floor. However, this was not observed in several
stores.
A year ago, Frances Patterson, Kimbels CEO, decided to put all their salespeople in two area
stores on straight commission after reading that this was the revolution sweeping department
store retailing. This plan aimed to attract better salespeople, improving their motivation and
making them more customer-oriented. Unlike salespeople working in the electronics,
appliances and jewelry departments, a majority of the other salespeople earned hourly wages
plus 0.5% commission on total sales. Under the new scheme, all employees would earn a 7%
commission on sales and could therefore have an opportunity to earn more
With the trial period about to end, Frances noted modest increases in the sales of the two trial
stores. The effect on employees differed. Some were thriving like Juan Santore in womens
designer shoes while others like Gladys Weinholtz in the lingerie department became
demoralized as others in her department who quit because they couldnt increase sales despite
their best efforts. Furthermore, lingerie salespeople neglected their duties in handling
complaints or returns.
ACTORS

Frances Patterson: Kimbels CEO

Gladys Weinholtz : The lingerie department

Juan Santore : Designer in womens department

B) KEY PROBLEM TO BE ADDRESSED

1. How can Frances Patterson improve customer service in Kimbels Department Store to
increase retail sales?
2. What strategy can be implemented to motivate employees to deliver great customer
service and increased share of retail sales?

KEY OBJECTIVES
1. To increase market share of overall retail sales
2. To deliver great customer service
3. To motivate salespeople to become more customer-oriented

ANALYSIS OF CAUSES
To face the challenge of a decreasing share of retail sales, Kimbels Department Store CEO,
Frances Patterson experimentally implemented a strategy to enhance customer service by putting
all salespeople on 7% straight commission in two stores for a year.
Instead of the regular hourly wages given to salespeople in the past, straight commissions at a
higher percentage is one of the recent innovative ideas for motivating employees. This incentive
compensation is one way of stimulating employees to higher levels of performance. However,
unless this commission strategy is carefully designed and monitored, this could lead to overly
aggressive and unethical behavior. In fact, as observed in the lingerie departments, salespeople
concentrated on pushing for sales so that they neglected their other duties which included the
handling of complaints or returns of sold items.
The result of the trial on straight commissions was not the same for all employees. Juan Santore, a
salesperson in the womens designer shoes section thrived with the motivation to make more
money. His personality of being outgoing helped him develop a network of clients and his
entrepreneurial streak made it easier for him to take risks to achieve a higher monetary reward.
This shows that he also has a high E P expectancy, believing that increased selling effort will
result in higher personal sales plus a high P O, believing that high personal sales would lead to
higher commissions. His self-reinforcement is also high because he could motivate himself by
setting higher goals and ways of reaching them and a high self-efficacy, because he believed he
had the ability to accomplish the task he set for himself.
On the other hand, the lingerie department under Gladys Weinholtz was very demoralized by the
change in type of compensation offered to the salespeople. Many quit because they had a low E
P expectancy, believing that increased selling effort will not result in higher personal sales plus
a lower P O, believing that low personal sales would lead to low commissions and lower
earnings. They missed the security of a salary and their anxiety over the loss of income led them
to harass their clients to get the sales. It was also mentioned that the employees in their
department resented the sales superstars in the other departments. They felt that there was
inequity in the ratio between their outcomes to inputs compared to the outcome to input ratios of
the other departments.
Incentive programs can be effective if they are combined with motivational ideas that also provide
people with intrinsic rewards, not just the money or other external rewards. Higher level needs
must also be met. Employee engagement to the new strategy was not developed before it was
implemented. As a result, many employees felt disengaged and were not motivated to participate
actively.

DEVELOPING ALTERNATIVES FOR FRANCES PATTERSON:

1. Consider the modest increase in sales significant enough to implement the system of
straight commission in all stores. The increased turnover rate can be justified as a means
of natural selection so that only the best salespeople remain.
2. Consider that the modest increase in sales as the effect of just one strategy to motivate the
salespeople. Other means of motivation can be implemented. Recognition and cash
rewards can also awarded for non-sales activities like the efficient and effective handling
of complaints or returns of sold items. Before the full implementation of straight
commission to all stores, engagement of all salespeople should be ensured through goal
setting with team building. This would include determining goal specificity for each
 department team to achieve goal acceptance so that employees will buy into the goals
and be committed to them. This will enable the salespeople to focus their energies in the
right direction.
3. Recognize that straight sales commissions may not be right for everyone. Specific
departments may thrive on that strategy and can continue to do so. However, for other
departments with modestly priced items like lingerie, hourly wages may be more
appropriate and other rewards besides straight commissions can be tried to boost customer
services. As mentioned above, cash rewards can be given for consistent non-sales
customer care services that eventually can lead to more sales. Increased empowerment of
salespeople for example in having greater control of work schedules can also help in
motivating the employees.

SELECTION OF ALTERNATIVES FOR FRANCES PATTERSON:

Alternative 2 can be tried in all stores so that straight commission may be able to work with
proper psychosocial preparation of all salespeople. A trial run of 6 months to 1 year can be done
with regular monthly monitoring and feedback from the salespeople to see how well it is working.
If it doesnt work well in increasing retail share, then alternative 3 can be implemented, also with
more consistent monthly monitoring and feedback so that further adjustments can be made as
needed.

CONCLUSION AND RECOMANDATION

In order to increase employee accountability, Kimbels should still provide all of its employees a
basic hourly pay but at the same time establish a rewards scheme for employees who perform
well. Performance based rewards in the form of an extra payment on top of the regular salary may
encourage employees to work harder. Rewards could be given to an employee who has exceeded
the goals that were set in his/her department. Likewise, an employee who emerges as the most
accommodating and helpful employee in the customer surveys should be rewarded as well. The
rewards, in the form of a bonus, are meant to motivate the employees and to help them understand
exactly what the organizational goals are and tie these up with their own personal goals. This
way, the company will be rewarding effective and profitable employees and at the same time still
be able to provide a basic pay for everyone. This ensures that employees who do not emerge on
top do not become discouraged or jealous of others who do. And more importantly, the
employees personal needs are met and to motivate them, to perform well, they are given the
opportunity for achievement and recognition.

WORKPLACE APPLICATION:
Since everyone in our group is not fully involved in sales, we can just apply the principles of
motivating employees in the work places where we are leading. We will keep in mind that people
do not just work for extrinsic rewards like large salaries or bonuses but they can also be highly
motivated by intrinsic rewards like opportunities to grow, be creative, and acquire training for
challenging assignments and advancement. We can help maintain good relationships and
encourage work group participation within our organizations. This can address the intrinsic needs
of everyone for belongingness and improve motivation.