THE CASE OF THE

RILED RING LEADER

When a business model evolves, it creates upheaval among the ranks. What’s a store owner to do?


This article originally appeared in the October 2016 edition of INSTORE.


When it came to finding staff, O’Brien’s was a magnet for the most highly educated professionals in the business. Unfortunately, most of those applicants, while great at the science, were not cut out for the sales-focused retail operation that had become the major part of O’Brien’s business.

The store had been a success over the decades, but the year after the recession — during what was supposed to be the turnaround — O’Brien’s saw its first serious drop in sales.

EDITOR'S NOTE

Real Deal scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved. The names of the characters and stores have been changed and should not be confused with real people or places.

She found it rather amusing, though, that at least in her view, the level of eccentricity of her well-heeled clients seemed to grow in direct proportion to the size of their bank accounts.

Fortunately, Nancy had unending patience and keen instincts that helped her deal with the craziness calmly and effectively.

Helen was forced to look critically at her business model and operations. When she did, she realized her customer had evolved — millennials replacing baby boomers — while her business had not. Over the years, she had done little to develop professional salespeople driving business at O’Brien’s. Everyone was paid a comfortable base salary. They’d always worked as a team, with no individual performance goals. Monthly bonuses were paid based on planned annual sales and divided evenly among staff.

Their mandate had always been to do their best. With an expense structure that had grown in proportion to volume and with sales off more than 10 percent, Helen was forced to consider whether their best really was good enough.

After talking with her accountant and several friends in the business, Helen decided that it was time to have her team share some direct responsibility for the store’s productivity.

She began talking about the idea with the O’Brien’s staff several months before implementing the plans. She provided the tools and training to support new expectations for sales performance and client development.

Then, she looked at the company’s budget for the coming year, established monthly sales goals that supported revenue needs and divided the goals among her sales team.

To minimize upheaval and to encourage continued teamwork, she decided to keep bonus distribution as it had been but to add increases based on the total team performance relative to store goals.

It seemed like a good plan: fair to both the business and to her associates.

Everyone seemed a bit uneasy, but generally OK with the idea of team goals. However, Helen grossly underestimated the reaction of her staff when it came to personal goals and accountability.

Several of her most seasoned associates, with 15-year veteran and top-performer Joe Kinsella in the lead, challenged Helen openly, questioning her decisions, claiming she was destroying the O’Brien’s culture and insisting they were insulted by her treating them as “cheap sales clerks.”

In the first two months under the new system, O’Brien’s sales failed to improve, leading Joe to insist that the plan was a failure and leading Helen to believe Joe’s disruptive influence was stronger than his positive impact on sales.

The morning after one particularly contentious team meeting, during which Helen responded to Joe by telling him that he was free to leave at any time, she received an email from Joe announcing his resignation.

Looking past her initial anger with Joe, Helen couldn’t help but think about the longer-term outlook. Despite his proclaimed distaste for sales, Joe was a top producer. More than that, he was respected by the rest of the team and had a good deal of influence with several of her other key people. Letting him go could either be the best or the worst possible decision.


THE BIG QUESTIONS

1. Did Helen make the right decision regarding personal accountability and performance standards in her store?

2. How should Helen handle Joe’s resignation? Should she try to bring him back or should she let him go?

3. How can Helen minimize the potential loss of other associates?


EXPANDED RETAILER RESPONSES

AMY C.

TULSA, OK

Helen is right to evaluate her business model and move it in the new direction. The most important thing to point out to her staff is that there was no drop in base or bonuses to individuals, only an increase based on more sales. It is a clear win-win for employees and the store. Joe must have left for some other reason. Maybe he had a fear of failure?


IRA K.

TALLAHASSEE, FL

Helen is trying to make a living, and her plan seems like a good one. Let Joe go his merry way and hire a millennial to service her new brand of customer.


SUZANNE C.

M cHENRY, IL

Business changes, and employees need to understand that they need to as well. Having accountability and goals for all sales associates is imperative in order to thrive and grow. What Joe and many other staff members don’t understand is that they expect their paycheck no matter what, and if the sales are poor, the company (owner) doesn’t get paid. Salespeople are hired to perform and meet the goals necessary for the company to be profitable. Period!.


BRUCE A.

ALBERTA, CANADA

Helen was correct when she critically identified an issue in her business, and it would be a mistake for her to waffle now with “what ifs.” Who knows, perhaps there are a few yet undiscovered gems already working for Helen and this opportunity will allow them the room to shine.


NIKKI C.

GADSDEN, AL

Bring Joe back


DAVID H.

ROSE BAY, NEW SOUTH WALES, AUSTRALIA

Let him go. You can’t take everyone with you on your journey. Small business is like family, but more so for business owners than staff. We get ourselves into these situations because we don’t plan for them at the outset. It’s unreasonable to expect continuous growth, but we budget and set up contracts and workplace practices without consideration that at times we will need to make changes to survive


DAN H.

ST. LOUIS, MO

Helen should meet with Joe, as well as the rest of the staff, one-on-one and present the facts. Explain why the changes are being made and ask for their feedback. Listen without giving into excuses. Be willing to make amendments to her plan that may help achieve the overall goal, but don’t give in on the big picture and new direction. There may be short-term pain, but long-term her store will be stronger for it


JIM A.

MISSOULA, MT

It’s Helen’s store, not Joe’s. If he was that good, they would be doing more business.


Marcus M.

Midland, TX

Helen made the decision and she needs to stick with it longer to find out if it’s really going to work. There is nothing wrong with holding someone accountable for his work. It seems her staff are a bunch of crybabies that ride on the coattails of the main salesman. They are uneasy because they are being asked to do their job as a sales associate? Get serious.


Stuart T.

Bel Air, MD

One of the most challenging things that store owners have to deal with is staffing. Most of us have had employees that we thought we could not live without, and after they left (for whatever reason) we found it was more of a blessing than a curse. If you’re not part of the cure, your part of the problem.


Billy S.

Franklin, VA

She should accept it and move on! This employee is POISON to the rest of the team. Any other employees who choose to leave with him should be shown the door politely also. Sometimes changing and adapting involve tough decisions, especially where employees are concerned. Clean house and MOVE ON to what YOU know is the right direction!


Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at This email address is being protected from spambots. You need JavaScript enabled to view it..