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Real Deal

After an Inexperienced Appraiser Says the (Real) Gemstone He Sold Was Fake, How Can This Store Owner Salvage His Reputation?

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A Caribbean jeweler loses an important gemstone sale
after a local jeweler tells the client it’s a fake.

Jim Selden had been a salesperson at Maxwell & Company Fine Jewelers, a fourth-generation business located in an elite resort town in the Caribbean, for over 10 years. Like many reputable Caribbean stores, Maxwell & Company offered a large selection of merchandise at a wide variety of price points. The owners of Maxwell’s had struggled over the years with the negative shadow cast by so-called “tourist trap” jewelers in the islands. They had worked hard to maintain their distinct identity and an impeccable reputation for quality, service and value, as evidenced by the long list of five-star reviews posted by their clients.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net.

Last month, Jim sold a magnificent necklace featuring a fine, 4.50-carat Columbian emerald to Robert Levine, a visitor from a high-end cruise ship. Jim learned that Mr. Levine and his wife were frequent travelers, and that they had just recently moved from New York to their retirement home in Texas. Mr. and Mrs. Levine had never purchased from Maxwell & Company, but had heard about the store from New York friends some years ago. They had purchased other important jewelry pieces in the Caribbean from time to time and believed they had always gotten good value.

Jim knew that many vacation shoppers take Caribbean purchases to a jeweler back home for an appraisal and he expected nothing less from Mr. Levine. However, he didn’t consider that Mr. Levine might not be as familiar with local resources for reputable appraisals in his new home town as he was in New York. On the recommendation of a neighbor, Mr. Levine took the emerald necklace to Emerson’s, a local downtown jewelry store, for an appraisal. Michael Emerson, the store owner, stated that he’d been in the business for over 30 years and was a qualified appraiser. He offered to do the appraisal on the spot. After examining the necklace under magnification, he told Mr. Levine that while the 18K gold in the mounting and all the diamonds were genuine, the emerald was synthetic. He valued the piece at less than one-quarter of what Mr. Levine had paid.

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Mr. Levine was very upset by the news and decided to return the necklace to Maxwell’s U.S. office, per the company’s “no questions asked” return policy. He included a copy of his appraisal from Emerson’s along with a very direct note to Jim expressing his deep disappointment with Maxwell’s and with his experience.

After crediting Mr. Levine’s American Express account, Jim, knowing that the emerald was genuine and certain that Maxwell’s would never misrepresent anything, let alone the nature of an important gemstone, decided to do a little research on Emerson’s. With a little digging and a few phone calls, he learned that Mike Emerson was not a gemologist and was not an appraiser recognized by any of the known professional organizations. When he called the store to talk with Mike about the appraisal and the emerald, Mike admitted that prior to the Levine’s visit, he had never actually evaluated an emerald over 2 carats. He held to his assessment though, certain that any emerald of that size and quality must be lab-grown, especially if it came from the islands. Otherwise, he said, Mr. Levine would have paid far more than he did for the necklace.

 
THE BIG QUESTIONS

Jim already has the necklace back in his hands and Mr. Levine made it clear he wanted nothing further to do with Maxwell’s. Should Jim make an attempt to salvage the sale? How should he deal with Mr. Levine? What is professional protocol with regard to dealing with other stores’ merchandise? What (if any) action should the owners of Maxwell & Company take regarding Emerson’s?

 

Expanded Retailer Responses

Stacey H.
Lincolnwood, IL

Jim should send the ring to a reputable gem lab, get a real appraisal and quickly forward it to Emerson. Offer Emerson a chance to phone Mr. Levine to confess his appalling error and apologize for having slandered Maxwell & Co. or face a lawsuit. Maxwell & Co. should then send the customer three dozen roses with a letter and a copy of the documentation, explaining that not everyone has the same discerning taste that Mr. Levine showed when he selected that beautiful piece, but that all returns are accepted no matter what, and that when Mr. Levine is back in the islands, to please stop by for a complimentary bottle of fine champagne and an apology that he was not presented with a report for the stone at the time of purchase. 

Laura S.
Indianapolis, IN 

After the fiasco of the Fred Ward emerald case decision in 1997, I would think Maxwell’s would have GIA (or another high-profile lab) paperwork for gemstones as well as diamonds. In the “sue happy” world of today, this is possibly a seller’s only protection. Maxwell’s could sue Michael Emerson for the lost sale and damages. An unqualified appraiser should be accountable for their opinions, especially their “incorrect” opinions. I see Levine as a lost cause either way. Unfortunate!

James D.
Kingston, NH

Since Maxwell’s already offers a GIA report for each diamond they sell, why not offer the same for important colored stones? Doing this would reassure clients that they are getting what they pay for.  Alas, I can understand Emerson’s bias as I have seen too many pieces from “the islands” that were not fully as represented. If a piece came in and I could not certify that a stone was genuine, I would return the piece and tell the client it was outside my area of expertise. The biggest problem is when the piece appraises well below the price paid.

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Jim S.
Kauai, HI

A) Have a report from a proper gem lab.

B) A carefully crafted letter to Mr. Levine apologizing for his troubles … with a copy of the lab report (no attempt to salvage the sale).

C) Another letter to the “appraiser” who harmed him. I’d want to sue for damages, but probably would not.

Bruce A.
Sherwood Park, Alberta

Jim should only respond with this letter:

Dear Mr. and Mrs. Levine,

As a long time sales associate of Maxwell & Company Fine Jewelers, I wanted to provide you with a follow up concerning the magnificent necklace that you purchased from us on your last visit to our island. We pride ourselves on the high quality of all our merchandise and through the years our “No Questions Asked” guarantee has served to reinforce that desire to visitors and discriminating international buyers such as you and your wife. 

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This beautiful item is nestled back into its special place in our showcase as it remains a particularly fine example of natural beryl (emerald). We had GIA certify its origin and that certificate will accompany the neck piece should a future buyer also fall in love with this exquisite emerald necklace.

I can only hope you will consider visiting us again should you find yourself on a future island adventure leading to our door.

Thank you for your trust in Maxwell & Company,

Jim Selden

Theresia O.
Avon Lake, OH

It’s not the sale that matters here, it’s the reputation of Maxwell’s that is critical. I would still write a letter to Mr. Levine thanking him for visiting Maxwell’s and reaffirming the store’s longevity and long-standing reputation and that they stand behind everything they sell. I’d also be inviting Mr. Levine to visit Maxwell’s again as a legitimate luxury jewelry destination.

All that being said, it is interesting that people will buy so differently on vacation than they do in their own community. I’m not standing up for Caribbean jewelry sales necessarily, but it is just wrong what that jeweler in Texas did. Battling Caribbean jewelry sales is like battling online jewelry sales. People always seem to think they are going to get a better “deal” somewhere else.

Candice M.
Schaumburg, IL

Mr. Levine needed a gem report from a reputable lab in his possession when he took the emerald in for appraisal. Emerson’s would have to prove it was fake rather than shoot off his mouth. Maxwell’s policy that diamonds have grading reports is also important for high end colored gemstones, too.

All actions need to be positive. Jim can get the report that will verify natural. He can immediately let Mr. Levine know how he will prove the emerald is genuine. Jim gets a happy, new, long time customer. Emerson’s will be a distant, bad memory.

When prospect came in and said the big chain store across the street threw me under the bus, I smiled, chuckled and told my new client that I felt honored that the big boy feared little ole me. When someone brings in something purchased on vacation, I acknowledge their wonderful memories. They love it, I usually say they got what they paid for and, they now have a good memory of their experience with me.

Charles S.
Cortland NY

Tough situation. Emerson had no business evaluating an emerald he knew little about. Maxwell could write a letter offering the names of qualified appraisers in Texas. This may not get Jim’s business back but it would at worst solidify Maxwell’s reputation.

Glyn J.
Victoria, TX

The “Appraiser” should make an statement in writing not only to the client but also to Maxwell,s stating he was in error when he made the appraisal on a stone that large. Sometime having to eat a slice of “Humble Pie” will not only make you feel better but show your future clients that you are not above making mistakes and you are only human.

Gordon L.
Santa Fe, NM

We would never sell a big gemstone, especially an emerald with out a certificate of some repute. Get one asap and send it to the customer with a note that he was missing a really good deal. Also tell the customer that he was taking the Texas jeweler to court for defamation. Do so and claim punitive damages as well as the lost profit. Faced with the lawsuits and the genuine certificate the Texas jeweler will almost certainly apologize fulsomely and if the sale is not reinstated pay the island jeweler for the loss of sale. The New Yorker will also not be able to impugn the island jeweler/s credibility.

Daniel H.
Tecumseh, MI

I would use the “carrot and the stick” approach with Emerson’s. I’d call Mike and tell him that he made a mistake on his appraisal (he actually made a mistake even taking in the appraisal he was not qualified to do) and that I could easily prove that in court with expert testimony. I would ask Mike to please call Mr. Levine and explain honestly that he “got in over his head” on the appraisal. He should then follow that up in writing with a letter to Mr. Levine, with a CC to my store, explaining that he had misidentified and grossly undervalued the piece.

If Mike didn’t agree to this arrangement, I’d make it clear that he’d face legal action. In this case, Emerson’s would be liable for the lost sale revenue, legal fees, punitive damages, as well as bad publicity. But, of course, there would be no need to take the hard way out of the problem when it could be resolved quietly and inexpensively.

Michael W.
Greensboro, NC

Jim should get an AGL report on the emerald, contact the customer stating that he has spoken with the appraiser and that the appraiser acknowledges he may have been out of his depth on this one. Jim should not attempt to sell the piece but merely state that he is doing this so that the client knows they are a reputable and knowledgeable company. They could also recommend another local appraiser or two with decent credentials to provide the “value judgement” that the customer seems to need if the customer is interested in repurchasing the piece. But how many Caribbean jewelers have a for-any-reason return policy? I thought the plan for those stores was mainly drunk buying.

Susan S.
Bell Gardens, CA

I think if I were Jim, I would send the piece to GIA and get an apprasial from them . I would get in touch with Mr. & Mrs. Levine by letter and explain the situation to them about the local jeweler and of course include a copy of the apprasial. I would also send the same to the local jeweler, to show the man how errant he was.  

Not being educated enough to comment on the stone, the gentleman should not have given his apprasial of the necklace nor should he ever give an apprasial on a colored precious stone. Colored stones are tough to really tell sometimes. Personally if I have a large stone, I’m going to take it to an expert, even our gemologist on-staff agrees with that. It is one thing to know diamonds and gold, it is a whole world away from colored precious stones.

Your reputation is all you have in the jewelry trade and that is what needs to be protected.

Marcus M.
Midland, TX

This is a good one! Personally I have seen a lot of people spend a lot of money on garbage they buy while on cruises or vacation. They think they are getting something really special at a much cheaper price than on the mainland. That should already sound fishy…right? Jim should try to salvage the sale but I would first do some research and find a credible appraiser in Mr. Levine’s town. Then call Mr. Levine and tell him you are paying for the appraisal and shipping of the pendant back to Texas (if he agrees). He can then meet with the new jeweler/appraiser and decide if he wants to keep the Emerald pendant after it is verified as genuine. Not sure what to do about Emerson’s other than report them to the BBB. It would be worth a little face to face meeting if there wasn’t 3000 miles between them.

Dennis P.
Johnstown, PA

I would write a letter to the buyer and explain the history and significance of the GIA. In addition I would tactfully but directly explain that the hometown jeweler, although having good intentions,was “over his head” and request a follow up call to at the least, defend my reputation and at the best re-make the sale.

Kevin C.
Ponte Vedra Beach, FL

With so many different gemstones, synthetics and gem treatments that are common to today’s marketplace, no one should be doing appraisals or offering opinions with out being a G.G. Just being in the business for a long time does NOT qualify you to do appraisals. This is why so many retailers are now bringing in an Independent Appraiser who has the proper qualifications to provide their clients with appraisals. 

Appraisals being used for obtaining insurance, or to settle estates are legal documents. Retailers should ask their legal counsel how they would be able to defend themselves if an appraisal they did landed them in court. Without a degree in gemology and specific appraisal theory training, I doubt it would go well. Having a disclaimer on your appraisal stating this is just your “opinion” may not protect you from being sued!

Retailers should stick to retailing and leave the appraisal side of the business to the professional appraisers who are trained and qualified, and have no conflict of interest.


This article originally appeared in the July 2017 edition of INSTORE.

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Real Deal

When Nature Strikes, Should This Owner Take Care of Her Employees or Her Business?

A longstanding tradition of holiday bonuses and raises is threatened.

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ROBIN SAGER OF GULFSHORE Jewelers had worked with her mother and father for more than 10 years before their 2015 retirement, and she helped to build the business from a small repair shop into a regional powerhouse. Her dad had always talked about “taking care of those who take care of you.” He was proud of his longstanding friendships with a number of sales reps and of his loyal and long-tenured staff. Once she bought the business and took over day-to-day operations, however, Robin quickly saw that what she had always considered her father’s admirable loyalty was really just his way of avoiding difficult situations with vendors, customers and employees — all of which would need to be handled if Gulfshore Jewelers was to be restored to sustainable health. With a firm commitment to the future, Robin laid out her priorities and chose to deal with the issues decisively yet slowly to minimize disruption.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Within the first year of her tenure, Robin took on the problem of shrinking margins and obsolete inventory. In some cases, that required severing vendor relationships that her father had maintained for years and building new ones with suppliers of more current lines at more advantageous prices. She also re-evaluated the store’s pricing strategy, re-tagging existing inventory using consistent markups and eliminating large-scale discounting. As expected, several of Gulfshore’s older customers were unhappy when they could no longer claim their usual 30 percent “friend of Joe’s” discount. When the “regular” sales reps stopped visiting and new product started arriving, a number of employees were openly critical of Robin and of what they saw as a betrayal of the friendships that were so important to her father. Much of the grumbling subsided over time as the new product caught the attention of regular customers who recognized the fair pricing.

In 2017, Robin chose to address the issue of the store’s often inconsistent business practices. She worked with an industry consultant to develop an Employee Manual that clearly defined performance expectations and with her (somewhat reluctant) team to implement a mission statement and service standards based on a forward-thinking “extraordinary customer experience” philosophy. By the end of 2017, despite some lingering staff grumbling about missing Robin’s dad and the way things used to be, Gulfshore’s volume had stabilized a bit, and the bottom line was looking healthier.

Robin knew that the last big issue she had to deal with was the store’s payroll. It was clearly high as a percentage of gross profit and was out of line for the store’s volume. She looked at a list of eight employees who had all been with the company for 10 years or more. Each was paid a salary that had been automatically increased by 3 percent per year regardless of store performance to accommodate cost of living increases. They also got a Christmas bonus each year that ranged between $1,000 and $2,000 per person (based loosely on hours worked) because her father had always believed that honesty and loyalty should be rewarded.

There were no sales goals or productivity standards in place and no commissions attached. It was easy to see that some people worked harder than others. Some were really good at their jobs (jewelers and salespeople with solid relationships in the community) and some simply did a good job of being nice to the people who came into the store. Overall, they all got along well, though — and since it seemed that things were picking up a bit, Robin decided to leave the structure as it was for one more year while she worked on designing a new plan that would be fair to everyone, including the business. Everyone got their 2017 Christmas bonus and a 3 percent raise going into 2018.

Much to Robin’s delight, business continued to improve through the first half of the year. Traffic in the store and in the town overall was up, and everyone’s comfort level with the new product, policies and procedures seemed to be increasing steadily. It all hit a major stall in the fall though, when back-to-back hurricanes blasted through the region, creating major issues for local residents and wreaking havoc on the tourism industry in the area.

By the end of the year, sales had dropped nearly 30 percent, and the bottom line Robin had worked so hard to recover was decimated. Looking at the numbers in December, Robin realized that there was no way she could afford to pay out the usual Christmas bonuses. On one hand, she hoped the staff would understand, since they could easily see the circumstances, but on the other hand, she knew that they were all impacted by the storms as well and that they were likely relying on the money for their own families’ Christmas celebrations. She also knew that without a doubt, there would be no salary increases for the coming year, and that the base plus incentive compensation plan she’d worked to develop would be an absolute necessity.

Though she knew she could stand to reduce staff overall, Robin hated the idea of making life any more difficult for her people and was terrified with the prospect of damaging her reputation.

The Big Questions

  • Are there options that Robin is missing with regard to the holiday bonus?
  • Should she find a way to take care of her people and pay it as usual, even if it means borrowing more money from the bank?
  • Is there a way to change a longstanding (and generally unreasonable) compensation plan without losing long-tenured and community-connected employees?

Expanded Real Deal Responses

Jillian H.
Miami, FL

Are there options? Yes, she can openly address the current financial strain placed on the business due to the inclement weather. Meet with each employee to discuss the impact of receiving a bonus versus receiving a pay increase. From there, the employees should understand the reasons behind a pay change. In my opinion, she has to choose bonus or pay increase; can’t take away both.

Should she find a way? Not as usual, but yes, she should pay. Whether it is a bonus without a pay increase or no bonus with a smaller pay increase, it wouldn’t be too much out of pocket. If all the improvements increased business as stated, the store’s bank account will be healthy again in only a month or two.

Is there a way to change? Possibly. If those same employees were to look for a similar job now, they would see what compensation structures are currently available. If those other available jobs are all commission-based and more demanding, your employees will fuss, but most likely stay.

Carolyn W.
Omaha, NE

Assuming Robin has already cut her own wage, she cannot currently afford the entire bonus payout this year. Recommend to her employees that they receive what she can pay, whether it be 30 percent, 50 percent, or 80 percent, and when the rest of the funds are available, she donate them toward hurricane rehabilitation efforts. This will help build rapport with the community and economic recovery as well, meaning there will be less delay in sales coming back into the store and making Gulfshore Jewelers a household name for consumers.

As far as the 3 percent increase to yearly pay, if Beth had not yet announced the reformatting of her bonus and wage system, now would be the perfect time. While everyone is struggling financially and emotionally due to natural disasters, having this as news would show there’s hope for the future and better times ahead for the town and the company.

Overall, these recommendations should at least pacify her workers, prevent layoffs and greater debt, and in the end, benefit the community to some degree.

Tim S.
Harrisonville, MO

A bonus should be contingent upon performance of the employee and the business — not guaranteed. Explain the challenge of a 30 percent drop in business, ask for buy-in to weather the storm.
US Consumer Price Index for Urban Consumers shows inflation was 0.7 percent in 2015, 2.1 percent in 2016, 2.1 percent in 2017 and 1.9 percent in 2018. The historic 3 percent raises paid have outpaced inflation. Eliminate this expectation.

Manage employees according to performance or lack thereof. Employees who are not in alignment with the “team” and “business” may need to find new homes. Keep good faith, be honest. Lead with optimism and fairness. Evaluate performance, conduct difficult conversations, set goals and motivate the team. Convert to base plus incentive pay in lieu of automatic raises and bonuses going forward. Bonuses can be used privately to reward exceptional individual results.

Focus on employees who are generating the most revenue. Keep their buy-in, ask for more. Reward results. The community cannot run the business. Eliminate entitlement mentality. Complacency cannot persist. Take courageous steps now to be stronger when the whole economy sees recession.

Marc F.
Houston, TX

When the “expert” was making the policy book, a section on “Emergency Preparedness” should have been included. We have had to respond to several natural disasters. Robin should call each employee and let them know the situation. Set a sales goal, and if they meet that goal, they will be rewarded with a bonus. This way, they will feel like they are getting something for hard work. She should not bring up the automatic pay increase; just address it privately if asked.

Valerie N.
Oklahoma City, OK

This is Robin’s opportunity to do three things: inspire her staff, change the automatic bonus structure, and be a local hero. Don’t borrow any money. Share the news of the 30 percent drop in sales with the staff. Explain it‘s not possible to give the bonus; however, a bonus can be paid monthly or quarterly if the following happens: the sales staff calls clients every day about upcoming anniversaries, birthdays, holidays, wish list items and add-on sales, and these result in measurable sales at the expected profit margin. The jewelers need to complete repairs and custom jobs on time so delivery is not delayed. Robin can negotiate new terms for merchandise she can’t pay for. Most vendors will give extended terms with no interest or take product back with a minimal restocking fee. In the end, the staff who prove to be “rainmakers” stay and those who don’t are gone. Now the new bonus system is in place! You produce, you get a bonus! And the company survives.

Jennifer F.
Colorado Springs, CO

This may be the year for Robin to pick one versus the other … and to communicate transparently with her team. People understand numbers when It is laid out in black and white. Share a sales report of year-over-year numbers showing a profit and loss history, and give each team member the option of either a cost-of-living increase or a one-time bonus. If she truly can’t afford to do either, then it is time to make the decision to let go of under-performers or abstain from the wage increase/bonus altogether and let team members leave on their own. If they see and truly appreciate how much the business was impacted, she won’t lose anyone and they will band together to recover together. If the recovery is huge, she needs to be fully prepared to pay it forward to them all in the following year.

Robert C.
Montclair, NJ

Difficult situation; however, her team has been there for years and should know the facts as to the unavoidable downturn in business. It’s not a change of policy implementation without basis.

Her team needs to be introspective. They’re not being “punished.” Unless she makes some changes, the store’s future could be devastating, and that would affect them all, long term.

Her loss is their loss, inevitably.

The “winners” will stick around and fight to put it back in good shape, day by day. Their livelihood depends on their commitment to success.

What’s the Brain Squad?

If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here.

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Real Deal

When a New Competitor Enters the Store and Attempts to Poach Employees, the Owner Reacts

But should he retaliate?

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MIKE CALLAHAN WAS PLEASED with the way things were going. Since taking over Commonwealth Jewelers from his dad more than 20 years ago, his business had grown significantly, and he’d built a profitable in-house shop, employing five highly regarded jewelers who handled Commonwealth’s repair, custom and production work as well as a good number of trade accounts. Mike couldn’t help but think about how much of his time was invested these days in hiring, training and managing his current six-person team.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

There was no doubt that his next hire would need to be a sales manager.

While out on the sales floor one day, Mike was a bit surprised to see a trio of well-dressed executive types walk into the store. When he greeted them, one of the men introduced himself as the regional VP for a major jewelry chain, the woman with him as the district manager for the area and the other man as the newly appointed manager for the freestanding store they were scheduled to open across town in two weeks. The RVP told Mike they were having lunch at the restaurant next door and decided to stop in to say hello to Julie McManus, one of Commonwealth’s top salespeople. Julie had been hired eight months ago by Commonwealth after taking a year off of work to care for her newborn daughter. Prior to her leave, she had worked for the chain for five years.

Mike welcomed the trio to his store and after explaining that Julie was at lunch, offered to show them around. He was polite and informative, telling them about his family’s history in town and about the capabilities of the Commonwealth shop. He let them know that he worked hard to maintain good relationships with his competitors, and he offered his trade shop services should they ever have need.

A short time later, after Julie had returned and joined the conversation, Mike went back into his office to take a phone call. He wasn’t concerned about Julie being vulnerable to their poorly disguised poaching effort, as she had made it very clear when she was hired that she had no interest in returning to the company and had commented on many occasions that she was beyond grateful for the opportunity at Commonwealth. She was making more money while working fewer hours with no nights or Sundays.

Mike expected the trio to be gone by the time he finished his call. Instead, he came back out onto the floor to see Julie with a customer, the RVP and store manager near the front door deep in conversation, and the DM handing her business cards to two of the store’s jewelers who had stepped out of the shop to go to lunch. He promptly interrupted the DM and asked her to leave — but not before letting all three of the chain managers know that he was disappointed and disgusted with their abuse of his hospitality and their blatantly unethical behavior. As soon they were gone, Mike talked with his jewelers and confirmed his suspicion that the DM had waited for them to come out of the shop and then approached them about coming to work at the new store. They assured her that they were not interested and that they were firmly committed to Commonwealth.

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The next morning, Mike drafted a scathing email to the CEO of the chain describing the incident in detail and asking what action the CEO would take to ensure that his company representatives would behave in a more respectful and professional manner. A week later, he had not yet received a reply.

The Big Questions

  • Was it appropriate for Mike to throw the competitors out of his store?
  • Was there a better way to handle the situation?
  • How can an employer ensure that associates are not vulnerable to poaching without bankrupting the business?
  • Should Mike make an effort to fill his new sales manager position by recruiting from the chain’s new store?
  • What (if anything) should the chain’s senior management do about the behavior of their field managers?

Expanded Real Deal Responses

Jennifer F.
Colorado Springs, CO

Honestly, if an employee is unhappy and wants to leave, there is no way to keep them. But if they love everything about the business they work for, then “poaching” is a non-issue. Was it inappropriate? Absolutely. Did he have the right to throw them out? You bet! The best thing they can do as a team is have a meeting and get it out there … have the salesperson who once worked for them talk about why she is so happy now! Joke about it collectively and come to an agreement about how to handle it as a team next time.

Gabi M.
Tewksbury, MA

I’m assuming that the chain’s senior management advised the field managers to do exactly what they did. If not, Mike probably would have received a reply by now. He definitely should’ve thrown them out; they were rude and on his property! I think he should leave it alone and just focus his energy on growing his business and loyalty with his staff.

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Kevin P.
Newak, OH

I would do exactly the same thing. There is never a guarantee your employees will continue to work for you. Employees are on a path, side by side with you as long as that path leads in the same direction and is beneficial to both parties. When that is no longer true, you part company. If an employee is unhappy, they will look elsewhere and find another position. For a competitor to come into your store and solicit them is plain wrong and completely unethical. I had a goldsmith leave a month before Christmas. The competitor would only hire him if he left immediately. They let him go in February. Of course, he wanted a referral from me. All I would say is that I would not rehire him under any circumstances. Treat your employees as you would want to be treated, and employees, treat your employer as you would like to be treated. That is the best you can do.

Joel W.
Tulsa, OK

We had the same thing happen in our store several times over the years. After 15 years of this happening, they have taken two from me and both times it was a blessing. Richard Branson says train an employee so they can leave and treat them so they never will. I believe we have the best place to work in the country, and not everybody is cut out for that kind of environment, or sometimes they don’t deserve it. I am very protective of my staff, but I don’t own them, and when my competition is always after my employees, it lets me know that I am doing something right. You will always have a target on you when you are working to be the best!

Tom N.
Spencer, IA

I would most likely have done the same thing. What they did is unacceptable to do in his store, in my opinion. That being said, it does not surprise me that a) they acted in this way, as I’m sure their “corporate training” was a huge part of it, and b) the CEO never responded. That to me says quite a bit about that chain and that CEO.

It sounds as though he has loyal and pleased employees, though, so he should feel very good about that. I’m sure his employees would be very disappointed if they did leave for a corporate chain job.

Jim G.
Champaign, IL

I think asking people to leave the store was in line, as well as writing the letter to the corporate office. I would also advise my employees that a company that uses such tactics will continue to poach and will likely replace anyone they feel is not up to their expectations. A job with them is not secure and solid. I realize this method of finding employees is common, but it is not ethical, at least not the way I was brought up in the business world.

Marcus M.
Midland, TX

It was not only appropriate but necessary for Mike to throw them out. And he was way more cordial about it than I would have been. I would have told them to leave the moment they walked in. He should have known what they were up to. I don’t know how you actually stop other companies from poaching employees because I feel like that happens a lot. Just build a culture within your store where your employees are happy and satisfied and hopefully won’t leave. Also, if I was Mike, I would not seek out hiring a manager from the chain store. You’re only asking to start a war when it’s not necessary. There are a lot of good businesses to draw a sales manager from that won’t result in a counterattack. As far as the chain’s senior management, I don’t think they would do anything, but if they had any respect and class, then they would condemn the actions of their management and apologize to Mike.

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William C.
Paterson, NJ

A photo of the individuals from the chain store while inside the jeweler’s store should be posted in the jeweler’s store with the caption: “Even our competition shops here while trying to steal our employees.”

Andrea H.
Chicago, IL

I think Mike’s behavior was professional and appropriate. When it became clear that the chain-gang was abusing his hospitality, he was right to ask them to leave.

The only way to reduce employee vulnerability to poaching is to create an exceptional work culture and environment. Pay fairly, offer ample opportunities to learn new things, be direct, professional, and kind to your employees, and praise liberally and often.

Also — run a good business. Employees know when they are working for someone who is running a good business and when they are working for someone who’s just phoning it in — and they like working for winners.

Jim A.
Salt Lake City, UT

You cannot prevent poaching. Businesses are free to recruit and employees are free to shop their services elsewhere. But you are certainly under no obligation to make the job of the poachers easier. I agree that the behavior of the chain execs was unprofessional and unethical. Throw the bums out! Sounds like Mike did it as well as it could be done.

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Real Deal

When an Employee’s Social Media Reveal an Enthusiasm for Marijuana, How Should This Retailer React?

Here’s how Brain Squad members responded.

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Published

on

JANELLE AND TIM O’NEILL LOVED their hometown and took great pride in knowing that O’Neill’s Diamonds was one of few independent jewelers still operating in the area. In his role as marketing manager, the challenge of keeping up with strategies to attract the town’s millennial bridal customers while continuing to appeal to their long-established older customer base fell to Tim. After much conversation with industry colleagues and experts, he and Janelle decided to hire someone to handle the development and growth of O’Neill’s social media presence. Growth in the business had already created the need for additional help on the sales floor, so they chose to look for someone who could handle both jobs.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

They were fortunate enough to attract several qualified applicants for the position, including Grace Matthews, the 21 year-old recent college graduate daughter of a family friend. She was articulate, bright and eager to learn, and most importantly, she was totally familiar with building a presence with Instagram, Facebook and Pinterest. Grace’s references checked out and she was brought on board.

Grace started strong. She was pleasant and personable on the sales floor, and she seemed to be learning quickly about the store’s products and services. She was also creative and enthusiastic working with the store’s social media. Her posts were generating interest within the first few weeks.

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About six weeks into Grace’s employment, Janelle held a store training meeting on the importance of demonstrating O’Neill’s core values — honesty, integrity, responsibility, professionalism and dedication to service — both inside and outside of the store.

She knew they had been fortunate in that they’d never had an issue with an employee creating image problems in town, but she also believed that regular discussion of the topic was part of the reason for that.

The day after the meeting, Linda Weiss, one of the store’s more senior employees, asked to speak to Janelle in private. She said that her son knew Grace casually through friends, and that he’d come to her several weeks ago with concerns about Grace working in the store. He was concerned that her public presence reflected badly on the store, since everyone in town knew she worked there. Linda showed Janelle an Instagram post her son had brought to her attention — Grace’s personal page. From every indication, in her personal social media world, Grace was a stoner, posting regularly about all things marijuana-related, including notes about paraphernalia, varieties, qualities and suggestions for where and how to buy the product. Janelle thanked

Linda for bringing the matter to her attention.

Later that day, Janelle discussed the matter with Tim, and they agreed that neither had noticed any indication that Grace was ever high while at the store. They also looked through her personal pages carefully and were sure that she did not mention being an O’Neill’s employee anywhere. They agreed that despite the fact that times were changing, in their state, marijuana possession and use was still a criminal offense (misdemeanor or felony, depending on quantity), and that they really needed to take some kind of action.

The Big Questions

  • Since Grace’s discussions about marijuana were limited to her personal social media accounts (to which, technically, Janelle and Tim should not have had access), can the O’Neills take action based on the content of those pages?
  • In the bigger picture, does an employer have the right to monitor and/or regulate what an employee posts online if the content has nothing to do with the store and does not violate client or business confidentiality in any way?
  • In a small town where everyone knows everyone else, does the employee have an obligation to restrict public behavior on personal time to conform with the conduct policy of the business?

Expanded Real Deal Responses

Sue F.
New York

From a legal standpoint, this is a tricky situation. State laws vary on employee rights outside of work time, so one answer may not be valid in every state.
Situations like this underscore the need for Employment Practices Liability Insurance (EPLI). A good EPLI insurer provides access to free consultative services with attorneys who can provide practical information about topics such as this. Your insurer also should provide access to a Workplace Risk Solutions Website where you can research your state’s legal requirements, find model workplace policies and forms, tap into a library of workplace-related articles, and access web-based training on topics such as preventing discrimination and harassment, as well as other employment issues.

Deric M.
Oceanside, CA

Janelle and Tim are not in a difficult situation here. What constitutes a PR problem is how it is received and Grace isn’t attaching herself to the store with her pro-marijuana posts. Janelle and Tim never appeared to have even asked themselves if the marijuana consumption is recreational or medicinal — an important distinction — and more information is needed.
Since cannabis appears to be illegal in their state for recreational use, however, Janelle and Tim should have a chat with Grace to tone it down because of how it could become a PR problem. If Grace is otherwise a positive influence on the store’s traffic and bottom line, this is an easy matter to resolve.

Joe K.
Lantzville, BC

First let me say that I am in Canada, and we have just legalized recreational use of marijuana for the entire country. I am also in British Columbia, where it has been said that pot is our largest cash crop. There is a right place and time to use pot and a wrong place and time; the same goes with alcohol consumption. I think monitoring your employee’s recreational behavior and online presence away from the workplace is a breach of her privacy. If she doesn’t come to work high or use pot at work, I don’t think there should be a problem, especially if she’s a competent asset and representative for the business. Having said that, we might be a little more lenient here, and attitudes toward marijuana will be quite different in the US Midwest.

Brenda R.
Honolulu

I would not want to be in that situation. There are risks involved with any kind of drugs, legal or otherwise. Does the company have a formal drug policy? One needs to know the local, state and federal laws and work policy to comply with. Was there a stated probation period to see if the employee “fits” with the requirements of dress, being on time, and client interaction? If there are red flags, the person may have to be let go.
What they do at home is their business and should never impact the requirements and expectations of the job they were hired for. Proceed with caution.

Stuart S.
Egg Harbor City, NJ

The employee needs to be taught how to transition from the fantasy fun land of college to the real world. As long as she is responsible and doing a great job, her personal life is not the store’s concern, but when her actions can potentially alienate any customers, it is. Any controversial posts need to be avoided and eliminated. The posts were obviously on her pages before being hired, so the potential repercussions were never considered. Teaching her about why they are no longer appropriate is more important than just having them eliminated. This is all about grooming her to be a valuable asset to the store, and just as importantly, teaching her to grow as a person!

Gabi M.
Tewksbury, MA

My family and I work in a small town, and I know we all watch what we put on our personal social media accounts (mostly political discussions) because we know that we represent our business 24/7. I think they simply just need to talk to Grace and tell her that her posts aren’t acceptable for someone who works for their business. It should be an easy solution, such as just making her accounts private to the public — and if she has a problem with it, then that’s a whole other underlying problem with having her as an employee.

Marcus M.
Midland, TX

This is a tricky one. Really, an employer should not be able to judge an employee about what they personally post, as long as it doesn’t mention the store, her profession or have violent content. But at the end of the day, she does reflect the store no matter what, and they do live in a small town, so people know where she works. They’ll judge your store as they judge a person’s social media. Maybe have a chat with her and just ask that she consider how her post will look on her career and see if that helps. She’s obviously not very conscious of how her post about pot looks, or maybe she really just doesn’t care, so either way, it’s a bit of a red flag for me. I don’t know … maybe she’s just still young and immature and needs a little guidance, and I think that’s acceptable to give out.

Jane H.
Highland Park, IL

It does reflect upon the credibility and integrity of the business. Unfortunately, it appears that anyone can do anything and it’s their right, blah blah blah. Since Grace was already hired and during the interview there was no discussion of “life outside the store,” it may become a situation they will need to accept until something happens. There are plenty of employers that check out a potential employee’s social media posts (when possible) for any red flags, and in my opinion, this would influence the decision to hire or not. The jewelry business is based on trust and honesty, especially an independent brick and mortar store. One incident would be tough to overcome for the store’s reputation.

Also, unless you know the personality of someone when they’re “high” or not, the only way you might find out is from someone’s observation. If Grace is “selling,” you are giving her a ready-made customer base. Sorry if I sound extreme and tough, but it’s hard work and devotion to stay in the jewelry business. Grace should go.

Jim D.
Kingston, NH

Obviously an employee who engages in criminal activity would quickly become a former employee. While I know there are those who condone drug use, excuse it and work to decriminalize it, it is still illegal. A jeweler’s reputation is a precious thing and needs to be protected. How many repair clients would want to hand over their treasures to a known criminal? If followers of her social media start hanging around, it could lower the tone of the store, possibly bringing in undesirable elements. Worst case would be a front-page newspaper picture of an employee being taken away in handcuffs and your store-front in the background, after she sells some pot to an undercover police officer.

What’s the Brain Squad?

If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here.

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