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Real Deal

When a Client Asked to Swap Her Diamond for a CZ, Did This Retailer Do The Right Thing?

When a jeweler acts according to her conscience, she is sued for breach of confidentiality.

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Tina Keller opened her studio more than 20 years ago. Over a relatively short period of time, the right combination of innovative marketing, great product instincts, a commitment to creating an extraordinary service experience and a superior talent for custom design made TK Creations the “go to” place for engagement rings and contemporary fashion jewelry in her town. Tina joked that she’d lost count of the number of engagement rings she’d personally sold over the years — and she thought she’d probably seen it all with the couples coming through her door.

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

Several months ago, Tina took a call from the son of an old high school friend who had recently transferred back to the area to take a job with a growing tech firm. Derrick told Tina that he had met his soon-to-be fiancée Nicole while they were both in graduate school back east and that he was delighted she agreed to move back with him. He wanted an appointment to look at diamonds and to talk about designing a ring. He said that Nicole had some ideas about what she wanted, and that he needed to stay in the $20,000 range for the ring. The appointment was set for the next day.

The conversation began well enough, with Nicole showing Tina some pictures of rings she liked, and Tina showing a few models and sketching some concepts. When it came time to look at diamonds, keeping in mind the general type of setting Nicole liked and Derrick’s budget, Tina started with a mid-quality 1.50-carat. Nicole very quickly made it clear that the diamond was not at all what she had in mind, and insisted on looking at a minimum 2.50-carat. Tina could sense that Derrick was getting more and more uncomfortable as Nicole continued to make choices that raised the price of the ring well out of range. He made several references to expenses, budget and practicality, but Nicole went on with increasing her demands until she had settled on a diamond she could “live with” — right at 3 carats.

Tina agreed to hold the diamond for a week while she worked on finalizing design concepts for the couple to review. She prepared the designs with flexibility for diamond size, in the hope that Derrick might take the time to explain his budget concerns to Nicole and get her to make things a bit more reasonable for him.

When they came back in the following week, Nicole selected one of Tina’s designs and Derrick asked if they could see one of the diamonds they had looked at previously — just under 2 carats — to put into the ring. By the time Tina brought the diamond out, it was clear that Nicole was in full “persuasion mode,” explaining why she really did deserve the 3-carat. She looked at the smaller diamond, but after a lengthy (and miserably uncomfortable) discussion that included begging, pleading, smiles, thinly veiled innuendo and a commitment to contribute $5,000 toward the ring, Nicole talked Derrick into the 3-carat — and a $30,260 total tab.

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Tina felt less than great about having witnessed the whole process, but she also recognized that her job was to deliver what her client asked for. The dynamic of the relationship — and the depth of Derrick’s savings account – were none of her business. She wrote up the sale (in Derrick’s name), putting a $5,000 deposit on Nicole’s credit card. When the ring was finished several weeks later, Derrick picked it up and left her a cashier’s check for the balance. He loved the ring and told Tina all about how he planned to present it to Nicole at dinner that night.

About a month after the engagement dinner, Nicole came to Tina’s studio alone and asked Tina if she could remove the center diamond and replace it with a CZ. Tina said it could be done, but suggested that if travel or security were issues, Nicole might consider having her make a high-quality silver and CZ replica of the ring and not compromise the integrity of the original. Nicole politely disregarded the suggestion, saying that she just wanted the diamond loose and the ring with a CZ in it at that point. She offered no other explanation.

Tina agreed to take the ring in and do the job, giving Nicole a due date of a week. As soon as Nicole was gone, however, she took it upon herself to call Derrick. After a minute or two of chatting (which gave Tina the impression that Derrick was still very happy), she asked if he was aware of Nicole’s request to take the diamond out of the ring. He was unaware and totally shocked. He asked that Tina not do anything with the ring till he could find out what was going on. Derrick called back the next day to tell Tina that Nicole came clean — that she was planning to break off the engagement, give him back the ring, keep the diamond and move back east. He was obviously devastated and asked Tina if he could get a refund on the ring.

Tina decided to make an exception to her “no refunds” policy. She refunded Nicole’s credit card and Derrick’s check and assumed it would be the end of the story … until 3 weeks later when she got notice that she was being sued by Nicole for damages related to breach of client confidentiality.

The Big Questions

  • Does Nicole have a case?
  • Who owns the engagement ring when both parties have some stake in paying for it?
  • Did Tina do the right thing by contacting Derrick?
  • Is it ever OK to follow your gut and NOT make a sale when you know it’s just not right?

Expanded Real Deal Responses

Robert L. New York, NY

Derrick gave Nicole the ring as “consideration” for her agreeing to marrying him. If she broke off the engagement she would have to return the ring to Derrick in any case and probably he would need to refund to her the $5000 she paid and take full ownership. If she had gone ahead and married him she would then own the ring.

Nicole has no case for client confidentiality. A jeweler is not a professional who has a personal responsibility toward clients to maintain other than ethically and honestly representing the products she sells. The fact that Nicole was going to perpetrate a fraud relieves Tina of any cause for concern for telling Derrick. In fact if she didn’t tell him she would be complicit in the fraud as it had to be obvious to a professional that she was up to no good. 

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Sandra R. West Chester, PA

I would have done the same thing! In some states the ring belongs to the person who gave it and must be returned if the engagement is broken. If it went to court I would want to believe a judge would see that this women had intentionally tried to deceive everyone.

But who wants to have to defend themselves for doing the morally correct thing, the guy is lucky he didn’t marry her a divorce would have cost him even more. 

Marcus M. Midland, TX

Nicole does not have a case. In fact the police should have a case against her for conspiracy to commit fraud. Nicole is shady and her actions are down right criminal. She got her 5k back and needs to walk away from this situation before she finds herself in hot water. Tina definitely did the right thing by contacting Derrick. Can you image what would happen if Nicole got away with this and Derrick found out that Tina knew what was happening? That’s a whole new can of worms! Tina did everything right here. Even though she was uneasy about the situation to begin with she still couldn’t reject the sale. At the end of the day she really didn’t know the dynamics of the relationship until Nicole revealed her true conniving self. 

Daniel R. Nashville, TN

Nicole does not have a case. There is no breach of confidentiality between the parties. Their relationship was that of consumer and business, no confidentiality exists at law. I would not have called, like Tina did. Nicole’s motivations were not of Tina’s concern. Nicole will not win. We don’t know what financial agreement the parties have as it relates to ownership. Looking at it on its face both parties have an interest in the ring. 

Bruce A. Sherwood Park, Alberta, Canada

Tina handled this brilliantly and is a credit to our industry. She went miles beyond what was required when she refunded the full purchase to each of the two clients. No law has been broken unless Tina’s repair tag on the HOLD, tied her to a specified confidentiality agreement. I would never casually suggest a retailer use a court room to settle a dispute with a client but in this case, Tina needs to complete the journey under the umbrella of high professional standards by which she governs herself and her business. Tina should have her lawyer respond with an acknowledgment that TK Creations will defend this action by their client. 

Steve F. New York, NY

When doing the right thing becomes the wrong thing to do, the problems of our industry and our nation are far worse than i ever imagined. 

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Joseph C.Huntington, NY

First off we would not change out the Diamond with out both parties being aware & we would of told Nicole to please have Derrick call us & to let us know he was ok with this first, store owner should of put Nicole’s back to the wall & she most likely would not be in a position to be sued or liable for her actions. I believe Derrick still has some owner ship & doesn’t fraud on Nicole’s part stand for anything, she convinced the store owner to be deceitful as Nicole was. Good lesson for the store owner, two parties came in to purchase so two parties should be on board. 

Michael B. Graham, NC

Yes, I believe Tina would be a participant in a case of fraud. Derrick was the majority owner, and since Nicole was going to break the engagement, she would be the one to return the ring for not completing the marriage contract. If Derrick had found out and had the courage to file a fraud case Nicole would have a felony conviction for fraud. 

Pam S. Boston, MA

Good job Tina..I think she did the right thing and after Derrick heard the real story from the slimy ex that she was planning on scamming him I do not see her case! Derrick you are a lucky guy to have gotten away from this horror. 

Adrienne R. Los Angeles, CA

Nicole has no case. In most states, if not all, there is no legal concept of breach of confidentiality between a customer and a retailer. Unfortunately Tina will have the cost of defending the lawsuit, even though she will probably prevail. (By doing so, she can gain Derrick’s lifetime loyalty and that of his friends and family.) Nicole no longer has a stake in paying for the ring, since her deposit was refunded in full. She is a fraudster, and in all likelihood will be treated as one in court. Tina did the right thing by contacting Derrick before compromising the ring, as she needed to be sure that he, her primary customer and the son of a long time friend, was authorizing this request.

The question remains if the ring was a completed gift, or if accepting it was a promise to wed.

In my opinion it is always OK not to make a sale when you know it’s just not right. 

Ira K. Tallahassee, FL

1st—-If the sales slip has Derrick’s name on it, the ring belongs to him.

2nd—-Yes, Derrick is the buyer of record and; of course, the son of a friend.

3rd—-Always correct to believe in your gut feelings. It might cost you a sale or two, but you’ll feel better by doing the right thing. 

Aubrey M. Norfolk, VA

I would tell her no way unless both parties come into the store to have this done. Never go against your policy even for one person. Happy shopping days. 

Jake J. West Des Moines, IA

Tina was in the right to alert Derrick as this transaction smelled of fraud. It’s very suspect when the blushing bride comes in wanting to swap out the center for a fake. Nicole should be arrested for attempted fraud. I would fire back a letter stating the store policy in this situation that both parties must be contacted to make sure one isn’t trying to commit fraud against the other, which would make the store party to an illegal transaction. While it is technically her ring, depending on state laws, the intention of returning the ring with a fake center without Derricks knowledge is where the illegal action takes place. In the future, Tina should alert Nicole to the policy that she needs to contact Derrick to make sure he has knowledge and is agreeable to it.

Chuck K. West Des Moines, IA

First, I’m not an attorney but I have been in the business of selling engagement and wedding jewelry exclusively for over 25 years. The correct answer to your questions varies from state to state. In some states, the engagement ring is the consideration in the contract to marry. If the man breaks the engagement, the woman gets to keep the ring because he broke the contract. If she breaks the engagement, he gets the ring back. In other states, the ring is considered a gift so the woman gets to keep it either way. But If the ring was sold to him and she was trying to pull a fast one by taking the diamond out without telling him, then she might actually be breaking the law. It’s called “Fraud In The Inducement” I believe. Again, I’m not a lawyer, but my gut tells me she doesn’t have a leg to stand on. It’s an interesting case study though and I plan to ask our company attorney about it. 

James L. D. Kingston, NH

Tina followed due process and protected the rights of Derrick, the owner of the ring. An engagement ring is not the bride’s property until after she says “I do”. Had Tina done as Nichole requested it would have been business suicide… Tina could lose her sterling reputation as word spread that she sold a CZ as a diamond and the ensuing legal suit for fraud. If I were Tina I would be advising Derrick to have Nicole arrested for her actions. 

Sid S. Albany, OR

She has not a leg to stand on! The ring belonged to both of them. 

Herman G. Cedar Rapids, IA

If she paid 5-figures for an item she wasn’t budgeted for and for nothing she needs for stock, max she should do is give in-store credit for amount paid. 

Gabi M. Tewksbury, MA

Tina had no right to call Derrick, even if it was the “right” thing to do. Although he had more stake in the initial purchase, Nicole is now Tina’s sole customer in this new job take-in. That being said, there was probably no “customer confidentiality”, so Nicole probably doesn’t have a case. She should have gone to another jeweler! 

Mark B. Wausau, WI

First it is my understanding that the ring is a commitment to marry, and if she brakes up with him she has to give the ring back. She is only entitled to the 5,000.00 dollars she put down on the ring if the store takes the ring back. I would never remove one stone for a CZ with out both people knowing what is going on. I feel Nicole has no case, and I would have let Derrick know what is going on. 

Etienne P. Camden, ME

It seems pretty simple to me in that the ring was originally sold to Derrick any work done to alter the original ring that was sold would void the warranty. For this reason, Derrick had to be notified.

I doubt that the lawsuit will be taken seriously in the courts. 

Everardo C. Santa Barbara, CA

Tina absolutely did the right thing, Sales are great but we have to also have morals and trust our instincts. In my opinion, the engagement ring ownership would come down to majority owner like a tradable company, whoever holds the higher “stock” will be able to make the majority decision in favor of Derrick. So I feel that it was definitely his call on what to do. Nicole was basically going for a money grab and basically was going to finess her way back home and pocket cash. Moral of the story- Think with your brain not your heart. I hope that Derrick will make better selective decisions in the future. 

Daniel S. Cambridge, MA

My understanding is that engagement rings go back to the purchasers if the engagement is broken off. Admittedly the woman paid a small percentage of the cost but the bulk of it was paid for by the gentleman. The ring should have been returned to him by his fiancee and he should have given her the $5000 she put in for it . However I don’t think that’s what is going on here. I think she was taking him for a ride from the beginning. She obviously planned to screw him out of the diamond so he couldn’t get back the $25,000 and she figured she could go sell it and make a profit on his misery. She was a gold digger and what she was doing was stealing from him which is illegal. He should be bringing a suit against her for attempted theft of property, The jeweler should have an attorney tell hers this is what was going on and she has no role in it except to prevent a theft from happening. 

Kent C. St. Simon’s Island, GA

It’s Derrick’s property. The store was not involved with the gift to the gold digger.

A judge will rule, I don’t know how the store could do anything different.

It’s unfortunate the store will have to defend itself and unlikely recover court and attorney expense. 

Jay F. Apple Valley, MN

There is no confidentiality here. Instead it is solid good business and etiquette to be confidential until a crime is involved. Nicole was about to fraud Derrick, he could have called the police upon finding out she did not return the ring whole. He could also sue her.

There is implied confidentiality but it is not a legal one. I would counter sue Nicole for distress and her intent to involve Tina in a crime. 

Amy C. Grove, OK

Tina shouldn’t worry about this. Get a lawyer to fight first, then relax. The confidentiality seems to cover all three people in the situation together. I can’t picture a judge allowing her a privacy cover for what is essentially a deception. She did the right thing for all, especially that poor man who nearly married the wrong woman. He should be a customer forever! 

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.

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

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Real Deal

This Client Asked the Owner to Lie for Him … But Should the Owner Have Said Yes?

He didn’t want his wife to know how expensive the ring was.

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A FTER ALL THE YEARS she had spent working at a chain store in the mall, Maria Sanchez was more appreciative of her current environment than most. She had very much enjoyed the six years she’d spent as the sales manager of Kerrigan Jewelers, and she looked forward to many more. She felt as though she had a very solid relationship with the Kerrigan family, and she knew that they were pleased with her performance.

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

Maria loved the Kerrigan store location. She loved the building’s original architecture and lovingly restored interior. She loved the brick sidewalks and benches that made up the downtown pedestrian mall. Mostly, though, she loved the customers. This was a different type of shopper than she knew in the mall. Maria was especially pleased with the number of other downtown merchants and shop owners who entrusted their special occasion purchases to Kerrigan — and to her. Many had started as business associates — colleagues on the downtown council or on the organizing boards of various charity events — before becoming customers and ultimately friends.

Such was the case with Philip and Grace Jerome, owners of the contemporary fine art gallery in the next block. The Jeromes were pillars of the downtown community, much like the Kerrigans, and members of their family had been customers of the store since the days of the previous generation. Grace Jerome had taken a liking to Maria with their first interaction, and both she and Philip had quickly become regular, personal trade clients.

Maria knew that the Jeromes were very well off, and that the gallery was a successful enterprise for them. It came as no surprise then when Philip came to the store one day and asked Maria to find a special piece for Grace. He explained that they had seen a stunning ring in a shop window during their last trip to Brussels — a large, fancy yellow diamond with white diamonds on each side. It was soon to be their 20th anniversary, and he thought it would be the perfect surprise gift. He knew that he wanted at least 2 carats in the center, and it had to be a bright, dazzling yellow — not one of those ‘mousy ones’, as he described it — and definitely no imperfections that she could see — even with one of those little eyepiece things. After bringing in several different diamonds for Philip to see, Maria finally found one that was, in her opinion, a real show stopper. It was a 2.05-carat, fancy intense yellow cushion cut with a VS2 clarity. Philip loved the diamond and Maria had no trouble matching 1-carat G color cushions for the sides. Philip chose a simple platinum mounting for the ring — one that would be custom made to fit the diamonds. Maria brought John Kerrigan, the store owner, in on the negotiation and John agreed to sell the diamonds and the mounting to his friend for a total of $45,800. The diamonds were handed over to Kerrigan’s in-house craftsman and after three weeks, Grace’s magnificent new ring was ready for delivery.

Needless to say, Philip came in to see the ring as soon as Maria called to let him know it was ready. He loved it, and told Maria that he would like to surprise Grace by having the ring placed in the store’s front window — just like the one they saw in Brussels — the following Saturday, when he planned to bring Grace by on their way to an anniversary lunch at the restaurant next door.

Saturday morning, Philip called Maria with an unusual request. He was certain that Grace would want to know the price of the ring, and wanted Maria to agree to tell her it was a “steal at $25,000.” He insisted she would not know the difference, but that with things tighter than usual at the gallery lately, she would have an absolute fit if she knew that he had spent over $45,000 on a piece of jewelry. He promised to hand Maria a separate check (discreetly, of course) for the difference before they left the store with the ring.

Maria was uncomfortable with the request and went to John Kerrigan for advice. John was no happier with the situation than Maria, and after thinking it over, decided that it was not his place — or Maria’s — to lie to Grace about the price of the ring. John called Philip back himself and told him that he would do his best not to discuss money in front of Grace and could easily demonstrate the value of the ring, but that he would not tell a direct lie about the price — and neither would Maria.

Philip was very upset. He tried every persuasive tactic he knew, but John wouldn’t budge from his position. Finally, in a fit of anger over what he called his “high-minded inflexibility,” Philip told John that the deal was off — and that he’d never see him or Grace as customers again.

The following Monday, as John and Maria revisited the situation in their weekly management team meeting, they wondered what they might have done differently. Word of mouth was a powerful tool in a small town, and John wondered how much collateral damage he would suffer as a result of his decision.

The Big Questions

  • Could Maria or John have handled the situation differently?
  • Is there any hope for Maria or John to save the sale, the customer or the valuable word of mouth advertising they’d enjoyed from the Jeromes without compromising their own values?
James L.New York

I would have suggested that Philip come in earlier with the additional amount and pay for that portion of the ring, leaving a $ 25,000 balance that he could pay in front of his wife. If he chose to tell her the truth after the purchase, that would be his business and the store would not be involved. When asked what he owed, the store could truthfully say $25,000. This happens frequently and we as sellers need to know how to handle it without losing a customer — good or otherwise.

Donna P.Dunn, NC

I would have honored the customer’s wishes. He just didn’t want his wife to know the full price. I’ve done this several times, but it’s the women who ask me not to tell their husbands the regular price.

Wynn F.Joliet, IL

My response to this fictional story is that any jeweler with any common sense would have received at least half down for the ring before even setting the stones, regardless of the fact that they might have been “friends,” and contracted to receive the balance upon completion and delivery of the ring. Otherwise, the deal would be null and void from the beginning. Nobody does “handshakes”; that is just plain dumb.

Dennis P.Johnstown, PA

We have had identical scenarios several times over the years. We refer to them as “conspiracies of happiness.” We have never had an issue result from the creativity. We do note the “irregularity” in appropriate documents.

We have a similar situation always around the holidays that has resulted in various degrees of temporary headaches, but always ends on a high note: a boyfriend comes in with his girlfriend and chooses a ring the girlfriend “loves.” We are asked to put it on “hold.” Later, the boyfriend comes in alone and purchases the ring to be given as a surprise. He asked us to “fib” to his girlfriend if she happens to come in to see it again or show the ring to a girlfriend and to say it was accidentally sold. We’re the “bad guys” until she actually receives the gift, but then we become heroes when everything works out. It helps create a special bond with the customer.

Ernie C.Lawrence, KS

Only the truth, always the truth. It’s the customer’s responsibility to deal with personal matters like the price. I think it’s pretty simple. Maybe he should have bought a $25,000 ring instead. Wouldn’t worry about the bad review, because the cause of the review will be worse for the customer in the long run. Management was spot on. Pretty simple.

Andrea R.El Dorado Hills, CA

Though we hate not telling people the truth, we’ve had dozens of customers do this. We’ve also seen a trend of brides-to-be coming in and paying a fairly large deposit on the ring they want and then asking us to tell the other party in the couple that the ring costs less.

A woman, good customer, nice person, came into my store, and chose a ring from the window. A $25,000 ring. I reduced the price by 25 percent and quoted the price of $15,000 plus tax. She wrote a check to my store for $10,000 plus tax. The deal was to be that we tell the groom-to-be that the ring price was $5,000 plus tax. We did it and I still can’t look the guy in the eye. But I’m glad we got the business instead of our competitor down the street. And they are both still good customers. Their finances are none of our business as long as they pay their bills to us. In the end, the other party ends up knowing.

Michael J.Port Charlotte, FL

Two options for me could be: simply take $20,000 plus tax as a deposit today and the balance due ($25,000 plus tax) when they pick it up. The verbiage would be something along the lines of, “The balance on this piece is $25,000.” I am unsure Grace would even catch on to the phrase because she’d be so enamored with the ring. The second option would be for John to excuse himself along with Philip to take care of the payment while Grace shows off her new ring to everyone in the store. Chances are that Grace will find out in the end anyway, unless she and her husband don’t have joint accounts!

Laura C.Woodbridge, VA

I would take her hand and smile at her, saying, “This is a gift; I’m not supposed to share those details.”

James D.Kingston, NH

Really, you want me to underprice the ring so you can forget to “slip Maria a check for the balance” and then claim the sticker price was as the final price? Talk about a scam artist! Trust me, that could very well happen. Imagine a 50 percent-plus price reduction on a custom piece; I’ll take two please. The nerve of some people, especially knowing their gallery was going through lean times … the whole thing smell like last week’s fish. Sure, they were good clients in the good times, but now it appears they want the flash without the cash. I say it is time to weed their client list and be grateful if they only have to eat the mounting (though they could replace the diamonds with colored stones and market it, maybe nice yellow and white sapphires). A reason I take a non-refundable deposit with any custom order. Honesty is always the best policy.

Corrina H.Houston, TX

They did the right thing. I would ask the customer to pay for the difference first and give him a receipt as layaway. When his wife comes in to buy it, then tell her the price that he requested.

Marcus M.Midland, TX

Are you kidding me?!? Do what your customer is requesting and sell that biscuit! It’s a little white lie that would only get Philip in the doghouse (a small one at that) with his wife. And who knows if she’d even ask about the price. He was willing to spend the money and all they had to do was throw a little shade on the price. Big deal! What he spends is between him and his wife, not you. Now Kerrigan’s is out a nice sale. I get it, you want to stay true to your values, but they made an issue out of non-issue with this one. Not only did they lose the sale, but who knows how the repercussions will play out through word of mouth. Philip wants to spend some money on a special occasion and you wouldn’t play ball because you felt wrong about a simple request. All you had to do was not put a price tag on it, let her see/love it and then let him quietly pay.

Marc F.Houston, TX

Give the customer what he wants. If he wants to split a transaction in two payments, so be it. I never discuss price with a client receiving a gift — that’s a big no-no! How about the guy that wants you to tell the fiancée it’s a diamond, not a CZ?? You just don’t have conversations with gift receivers; it’s their “real deal,” not ours!

Alexis K.Kennett Square, PA

Why not have the customer pay the full amount prior to “window shopping” so the financials aren’t an issue. You don’t want the transaction to ruin the moment!

Mike B.Kennesaw, GA

The store handled the request exactly as they should have. If the condition of making the sale was to be complicit in a lie to the customer, then walking away is the best thing. No business is better than bad business.

As far as the customer bad-mouthing the jeweler, then so be it. If the jeweler has been in the community that long and has a strong reputation in the community, then they should feel secure that one client’s bad-mouthing will not have much of an impact. If anything, other customers will understand the professionalism that the jeweler has and how they will not bend their beliefs just to make a sale.

Al H.Livingston, MT

Would have told the buyer that we would not misrepresent the price to his wife if she asked — but if she did ask about price, we would tell her that that was between her and her husband.

Glyn J.Victoria, TX

I fully agree with John and Maria about not lying for Philip. Let him know that the salespeople and the owner were Christians and do not and would not lie to save a sale. Let him know if he wanted to lie to Grace about the price of the ring, that would be up to him. If it caused the loss of a sale, then so be it, and your honesty would be upheld. Let Philip know if word gets out about what he wanted to do, let Philip know the truth would be made known to your clients about the situation.

Mary A.Peoria, IL

He should have gotten a deposit, and then when finished, asked him to pay the balance. Then they can place it in the window for her to see and pick up as a “surprise” already purchased. That way her husband could tell her whatever he likes about the price.

Christine P.Green Bay, WI

I would have suggested he come in and pay for it beforehand, then there is no sneaking around. Leave the price off the tag and show her the ring. Say it hasn’t been priced out yet, such a special custom piece, etc.

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.

Continue Reading

Real Deal

When a University Foundation Director Calls Him on the Carpet, How Should This Store Owner React?

An appraiser undervalued a client’s jewelry donation to the university.

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GORDON THOMAS WAS the third-generation owner of Thomas Family Jewelers, a highly regarded store in a Southern college town. Gordon’s rather forward manner was far different from that of his humble and reserved father. Bumps in the road had been regular occurrences over his four-year tenure, but despite the challenges, the store, with its strong, professional team, continued to thrive.

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

Elinore Billington, a well-known mover in the town’s social circles, had been an important client of Thomas Family Jewelers since the days of Gordon’s grandfather. When Elinore passed away late last summer at 93, her final charitable act turned into a nightmare for Gordon and his team.

As specified in her will, Elinore elected to donate one of the more impressive pieces she’d purchased from Thomas Family Jewelers to the charitable foundation attached to her alma mater, the state university at the heart of everything in the town.

The piece was a platinum ring set with a 4.22-carat, intense blue, unheated oval sapphire surrounded by 1.5 carats of high-quality diamonds that had been specially made for her by a designer featured by the store. Elinore paid $22,400 for the ring when she bought it in 2014.

Several months after her death, when Marc Chou, the newly appointed director of the university foundation, received the ring, he processed it in the same manner as other material gifts (jewelry, art, collections, etc.). He reviewed the accompanying insurance evaluation and began looking for options for converting the donation to cash. Having moved to town recently, he was not familiar with Thomas Family Jewelers, or with other local resources. Relying on his past experience in another part of the country, he chose to start by taking the ring (without original documentation) to a jeweler in a neighboring town who listed appraisal service on his website to get an independent opinion of the value. When Marc picked up the ring and the appraisal several days after leaving it at the store, he was shocked to see that the ring was only valued at $8,500. He also saw that there were discrepancies between the jeweler’s one-page appraisal and the original sale document in diamond weights and quality and in the weight and description of the sapphire. He noted that the appraisal said “weights estimated by measurement” and that the descriptions were vague, but he was nonetheless very concerned.

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Since his ultimate objective was to convert the ring into cash for the foundation, he then took it to a local store that was known for buying estate jewelry. The estate buyer looked the ring over, weighed it, measured the sapphire and diamonds, and made Marc a cash offer of $4,200. With the huge gaps between the original insurance documentation provided by Thomas Family Jewelers, the value stated by the local appraiser and offer made by the estate buyer, Marc was convinced that Mrs. Billington had been ripped off.

The next day, he called the Thomas store and asked to speak with Gordon. The conversation started calmly enough, with Marc explaining the situation he and the university were in with the ring, and Gordon trying to lay out the differences between retail pricing and resale value. Marc became more assertive when Gordon challenged the credentials of the appraiser, and things went downhill quickly. Gordon suggested that perhaps Marc needed to learn more about the business before making unfounded assumptions. Marc accused Gordon of being a charlatan who takes advantage of the elderly and promised to make sure everyone at the university, within the Billington family and in the community was made aware of his price-gouging practices. The call ended with both men hanging up in anger.

Lora Goldberg, Thomas’ store manager of 10 years (who had sold the ring to Elinore originally), was a lifetime resident of the town and the chair of the university’s alumni association. She heard about the situation between Gordon and Marc the next morning when she arrived for an alumni association meeting on campus. Marc cornered her within earshot of a number of other members and repeated his accusations about the store’s lack of integrity, including her in the mix. He also said that the store owner had been very rude and belligerent in their conversation, and that he and the university would have nothing to do with anyone representing the store going forward. Extremely upset, Lora turned the meeting over to her vice-chair and left. She went to the store and confronted Gordon, accusing him of mishandling the entire situation and ruining both the store’s and her personal reputation.

The next day, Gordon called the foundation office and left a message for Marc, offering a sincere apology for the direction of the conversation and asking for an opportunity to meet in an effort to resolve the situation. Three days later, he had still not gotten a reply.

The Big Questions

  • What can Gordon can do at this point to make things right with his manager, with Marc and with the foundation?
  • Is there any action he can take to deal with the unqualified “appraiser” who seriously mischaracterized and undervalued the ring?
  • What do business owners need to know about real value and charitable donations?
  • What can Lora do now that she is caught up in what appears to be Gordon’s diminishing ability to sustain important relationships his father and grandfather built in the community?

Expanded Real Deal Responses

Karen M.Oneonta, NY

The discrepancies in value here are easily understood, in light of the unheated sapphire and designer credentials of the piece. An outside appraiser without this information could easily miscalculate these factors. Had Gordon kept his head and reviewed the record of the transaction, he would have understood this enough to explain. But by reacting first, he did inflame the situation. His hot temper is probably also why his longtime manager was so quick to lose confidence, even though Thomas Jewelers did nothing wrong. Gordon should take a deep breath and offer to look into the matter before jumping off the deep end.

But the real shocker here is the behavior of the foundation director! In the course of handling one transaction, he managed to insult an important member of the alumni association, discredit a longtime member of the business community and completely sour the climate for estate giving! By offending everyone involved, he has seriously damaged the school’s relationship with multiple future funding streams. This might be the biggest miscalculation of all!

Patrick D.Little Rock, AR

Gordon and the store manager should offer to send the ring to GIA for evaluation and cite the origin of the sapphire. Second, after the lab report is complete, they should offer Marc copies of the GIA report once all is completed, and the ring should be evaluated for an insurance appraisal by a GIA-trained appraiser. Gordon should present Marc with copies of both, and next should offer to purchase the ring from the university at the store’s list of original costs and expenses involved in purchasing stones and making the ring. If the other store appraisal was faulty, it will automatically be exposed, and hopefully, with forgiveness in order on both sides, Gordon’s family store reputation will be restored. Gordon had best move quickly.

Ursula P.Naples, FL

There are so many missteps in this story.

– Marc was wrong in not taking the ring personally to Thomas Jewelers to discuss his desire to convert it into cash. Thomas Jewelers deserved the courtesy of the first consultation.

– Gordon was wrong in engaging in this spirited conversation, rather than requesting a face-to-face meeting.

– Marc was wrong in divulging the details of his findings and disparaging the good name of Thomas Jewelers.

– Marc violated the first principle of development: that fundraising is friend-raising. He alienated just about everyone involved in this situation.

– Lora was right in leaving the alumni meeting when told of the situation. As the original sales contact to the late buyer, she should have been the first one to be consulted.

Marc placed the university in a very awkward position. Future donors of valuable items will think twice if they learn of how he handled the Billington bequest.

To conclude: brashness almost never leads to a good outcome.

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Neil M.Modesto, CA

I would call Marc and ask him if he is having an auction of some sort coming up and say that I can get the $20,000 for the ring at the charitable auction. I would put together 100 CZs with one being laser inscribed “winner,” charge $200 for a 1 in 100 chance of winning a $20,000 diamond (have an independent appraiser re-appraise it). Announce it all through the night (you will usually sell about 65-70 through the first three-quarters of the night). If you HAVE found the “winner” CZ, you announce that there are 30 left and say you really want to sell out of the CZs and will give anyone who purchases one now a $200 gift card to your store with every purchase of the CZs. If the winner has NOT been found, you offer to anyone who wants to buy the rest of the CZs to raise their hands and have them come up and draw a card. Highest card gets to buy the ring for the amount of the remaining CZs.

William C.Paterson, NJ

Ths store owner should have offered to purchase the item during the phone conversation. Given he did not, that still would be the best thing to do now. Explain that it was a terrible misunderstanding. All the appraisals in the world won’t set things straight. If you want to prove it’s worth that to everybody, then buy it back. Write a check for $20,000. Done.

Lance G.Victoria, BC

Wow! First off, the manager needs to understand the value of the jewelry she’s representing, and how appraisals are done. According to the AGS, “If an item is trademarked, the client should be advised to procure an appraisal from the designer.” If Lora sold the original ring, she would know that it was an untreated sapphire, and one of that size would retail for a considerable sum. She should have set Marc straight right then.

So often, other jewelers are willing to low-ball a value without having ANY qualifications, or any understanding how fine jewelry is made. For Marc to then take the piece to “a place that specializes in estate jewelry” — a pawn shop no doubt — and expect to get the highest value makes me think he’s an idiot.

Legal action could be taken against the “appraiser,” but step one would be researching their credentials. We had a similar situation, and the appraisal was rescinded before we went to court. I’m on Gordon’s side on this one.

Michael J.Port Charlotte, FL

It’s quite apparent that Marc doesn’t realize the difference between a retail selling price and a liquidation value, which seems like what he was offered by the estate buyer. He should’ve obtained multiple quotes, not taken the word of ONE buyer. Gordon questioning the appraiser Marc used is definitely not out of line; a lot of “appraisers” aren’t even remotely qualified. As for Marc threatening to disparage the name of the store, that needs to be addressed immediately. Gordon took the high road and apologized as he should have; now it’s up to Marc to be a professional and sit down and have a civil discussion with Gordon and Lora since she knows both sides and sold the ring initially.

Rex S.Houston, TX

There are a number of issues presented, such as tortious interference by the retailer who issued an “appraisal.” It is unethical in the business of buying OR selling a product to appraise that product. It is just that type of thing that created the last financial crisis. Secondly, the “appraiser” did not properly disclose the valuation method or the purpose of the appraisal. A qualified personal property appraiser would have informed their client which valuation method was being used after asking the client for what purpose the appraisal was intended. The university needed a value to liquidate the item; it was the appraiser’s duty to inform the client of the appropriate values and methods of calculation. The defamed store has a cause of action against the unethical and unqualified appraiser.

Gary Y.Ames, IA

While I understand Marc felt he did his due diligence regarding assessing the value of the ring, it is clear he dealt with individuals who were not intimately aware of valuing one-of-a-kind pieces such as this ring.

From where I sit, Marc owes Gordon and everyone else involved a sincere apology. Gordon and others were slandered by Marc’s accusations, and from where I sit, they have every right to sue for the damage to their reputation.

Marc F.Houston, TX

Just because everybody else is going crazy doesn’t mean that you have to, too. Gordon should have accepted the questions from Marc and then, ask to examine the ring, (it could have been switched) with his gemologist, salesperson, and lawyer present. All original documents relating to the ring should be presented to Marc (copy form, notarized). Then examine the appraisal with the team to verify it is or is not the same. At that point, the other appraiser may be challenged. The estate buyer will need to be interviewed by the team as well, as all this is “he said, she said.” The insurance policy bears witness to the replacement, not sale/liquidation value. The State Board of Insurance will be of help establishing benchmarks for values/melt/purchase prices. This is tedious but necessary to preserve the company’s good and longstanding reputation.

Melvin W.San Francisco, CA

In order to keep good faith with the community, I suggest that Gordon’s offer to buy back the ring at their original cost.

Jim C.Fayetteville, AR

If I can’t handle a client or someone upset on the phone, I always invite them in for a face-to-face to work things out. In this situation, I may even go directly to the person. People tend to keep their calm in person better than over the phone, text, email, etc. At this point, though, I would offer to either buy the ring at $12,000-15,000 or match any donation that the ring brings.

Marcus M.Midland, TX

This Marc guy sounds like a pretty unreasonable dude who is not willing to find the best solution to this misunderstanding. First, it seems like Gordon did what he needed to by calling and leaving his sincere message. He apologized and reached out for a civilized meeting, which is about all he can do at this point. Now the ball is in Marc’s court. I would side with Gordon here. Knowing his family’s business reputation, I would bet they sold Ms. Billington exactly what they said it was. Did anyone even check the accreditation of the other appraiser? He could be inexperienced. I would leave another message with Marc suggesting the ring be sent to a gem lab and get the full report. Once that is done, then give Gordon the chance to make the right move from there. Is this a scrape on Gordon’s family business? Sure. But with the right treatment … the wound will heal.

James D.Kingston, NH

Marc has quite a headache, and Lora needs to decide where her loyalties lie. It is odd that she would go after her boss instead of automatically defending him until she had heard both sides of things. Moreover, since she sold the ring, she should have explained the costs of a custom ring, its certified sapphire and quality diamonds. Obviously she is infatuated with her status in academia and her associations in it. Dr. Chou is a self-aggrandizing buffoon who thinks he knows everything and poor Gordon is the victim who is only going to be minced by his pomposity. Gordon could sue for slander, but it is difficult to prove. Instead, he should have Lora call and explain retail versus resale and replacement value versus quick-sale value. If she won’t, I would look for a new store manager. Luckily these days, college foundation presidents change often.

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Dennis F.Poughkeepsie, NY

Gordon should make another attempt to contact Marc, even if it means making a visit to his office. He should also immediately pen a letter of apology and state his side of the issue in a concise, forthright manner. This is not the time to be reticent or stubborn when dealing with such a high-profile community institution. He should offer to have the piece independently appraised for replacement (retail) value, at his expense by a certified appraiser from another area. Hopefully the ring will appraise at close to or above the selling price. At this point, Gordon must stress the relationship between retail, estate and wholesale values. If the store is able to, perhaps Gordon should offer to purchase the ring back at a price taking into consideration wear and condition. Clearing this up is critical not only to the reputation of his store but also in how it could potentially impact his manager, Lora. Her role in the alumni association could be severely compromised and he could lose a valued employee.

Steve W.Poplar Bluff, MO

At the store’s expense, have the sapphire graded by GIA and have them determine that it is indeed untreated. Explain that jewelers that are buying off the street to re-sell without a buyer lined up for a custom ring will naturally pay well below retail because their working capital is tied up for no telling how long. An untreated sapphire is far more valuable than a treated one. Without provenance, the buying jeweler cannot pay that difference. With all of these considerations, the discrepancy in offer and evaluation is understandable. The original jeweler should have been able to explain that. The college representative should be able to understand that. The same holds true of the discrepancy in the weight of the diamonds. To measure mounted is an estimate. If you’re off a little times several, that adds up to a lot. But if he truly misrepresented his product, let him hang.

Michael W.Lancaster, PA

This is a real situation that has been brewing ever since the Internet has shed light on past darkness in our industry. “Donations” of unique, unsellable “dogs” should be included in this shameful discussion. Here’s the thing: jewelry (or any other item/service) is worth the fair trading price at the time of trading. Stray from this truth at your own (deserved) peril.

Bruce A.Sherwood Park, AB

Gordon has made the classic mistake of mounting an instant defense rather than listening to Marc’s concerns. Excluding the amount offered by a jeweler that purchases estate pieces, something has definitely gone wrong between the Thomas Family Jewelers appraisal and the one received by Marc. Appraisals vary, of course, but this is a $13,900 difference! It may well be too late, but Gordon should enlist Lora to help him arrange a face-to-face meeting with Marc. He should start with a sincere apology for being unreasonable with their first telephone interaction and acknowledge Elinore’s incredible memoriam. Although the university eventually received $4,200, Gordon should offer to split the $13,900 difference between the two appraisals and write a check in Elinore’s memory for $6,950. This will not necessarily alter the bad reputation that Thomas Family Jewelers may have incurred by Gordon’s ham-fisted handling of this issue, but it acknowledges his place in the community as someone attempting to make right a wrong.

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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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