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Real Deal: The Case of the Unholy Alliance

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There are no friends or enemies in business, only profits. Christine O’Malley didn’t want to believe that when she bought her jewelry store. Ten years later, experience seems to be teaching her otherwise.

[span class=alert]To be eligible for publication in INSTORE, responses must include your name, store name, and the city and state in which your store is located. [/span]

[dropcap cap=C]hristine O’Malley could hardly believe that she had made it through 10 years as the owner of her own business — 10 years of steady growth with no major disasters or disappointments — that is until now. She thought back to the very beginning, when her business advisor and mentor told her that the biggest challenges she would face would be in dealing with the people she would need to support her growth. He was firm in his belief that while she was a generally good judge of character, her propensity to trust and her willingness to share ideas and information could end up hurting her if she wasn’t extra careful. Christine remembered listening, but she also believed in her heart that the more open and trusting she was with the people around her, the more committed they would be — to her business and to her.[/dropcap]

Christine had invested nearly 20 years in her career at Eliot’s, beginning as a part time salesperson during her first year in college. Carl Eliot, the second-generation owner of the business, was an outstanding teacher who believed in cultivating young talent. With no children of his own in the business, he took Christine under his wing from the beginning, nurturing her natural ability and passion, and providing support for her educational goals. After her college graduation, Carl convinced her to stay on as a full-time associate and management trainee with Eliot’s. She took over the position of store manager two short years later, and worked at Carl’s side as they grew the business to nearly $3 million in annual sales, while building their reputation as one of the finest stores in their Northeastern city.

In 1999, when Carl and his wife decided it was time to retire, they offered Christine first option to buy Eliot’s, honoring an agreement they had made several years before. Backed by money she had set aside from her father’s estate, Christine felt confident that she could make it all work. She felt even better when Carl set up a meeting for her with Alan Vincent, a prominent business consultant and close friend of the Eliot family. Christine had known Alan for years and knew that Carl considered him a trusted advisor. Alan agreed to help Christine through the transition, and to serve as her guide in the development of her own business plan and structure. Acting on Alan’s first recommendation, Christine hired Justin Alexander, a young man she recruited from a high-end furniture store, to take over in the store manager position. Though his fine jewelry knowledge was limited, Christine was impressed with Justin’s experience in luxury retail management and could easily see that his passion for excellence and understanding of the customer were well aligned with her own. It was clear that with the right industry education (which she would certainly pay for as Carl had paid for hers), and the right guidance, Justin would become a stellar manager.

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Through her first five years as the owner of Eliot’s, Christine followed Carl’s example, working with Alan on a retainer basis and talking with him at least weekly. Alan’s guidance proved invaluable to her as she built both the volume and the profitability of the store. In mid-2004 however, it seemed that the tone and dynamic of their relationship began to change, as Christine grew more confident and independent, and Alan was more focused on the changes happening within his own organization. Christine decided that while she still valued Alan as a mentor and advisor, and still wanted to maintain a business relationship, she would be better served by a less structured, less “formal” association. Alan was not pleased, but he assured her that he understood, and that he would remain available to her as she needed.

The first seven years of employment at Eliot’s saw significant changes for Justin as well. At the beginning of 2002, he and his long-time girlfriend married, and his first son was born in 2003.

Christine was very supportive, ensuring that Justin had the time he needed to take care of his family while continuing to create a business environment that allowed for increases in both responsibility and income. Shortly after his daughter was born in 2005, however, Justin began to show increasing signs of stress, and it appeared to Christine that he was having a hard time balancing the demands of the job with the demands of his family. Christine tried to work through the issues with Justin, offering as much flexibility as the business would allow, but his performance and his attitude continued to deteriorate. She was not terribly surprised when, in June of 2006, Justin accepted a position with a local bank. At his request, she agreed to keep him on in a limited capacity as a part-time salesperson (primarily so he could continue taking care of his well-developed personal trade), and promoted his former assistant to the store manager’s position.

Over the next year, though he tried adjusting to his new position, Justin realized that the better hours were little compensation for the lack of real passion he felt for the job. He shared his feelings with Christine, and let her know that what he really wanted was to come back to Eliot’s full time — but that he would have to be on a 9-5 schedule working only Monday through Friday.  He thought it couldn’t hurt to ask, even knowing that since the store was open 6 days a week till 8PM, there was no way Christine could accommodate his request without alienating the rest of her team – something she would never do.

Looking back over the past two years, Christine recognized that Justin had become increasingly distant and distracted after that conversation, working fewer and fewer hours and becoming less and less productive when he was in the store. Still, she was totally unprepared for the resignation e-mail she got from him last week. In it, he told her that he had also resigned from the bank and was in the process of buying a competitor’s store about three miles away. He thanked her for her years of support and guidance, and for making him a part of her wide-ranging professional network. He went on to say that he particularly appreciated her introducing him to Alan Vincent, who helped him assemble financing and was serving as his business advisor.

As she re-read Justin’s e-mail yet again, Christine couldn’t help but remember the philosophy that Carl always put forth in difficult situations: “There is nothing in business or in life more valuable than integrity.” Ironic, she thought, that it was her misplaced faith in the integrity of others that had gotten her into this awful position, paralyzed by anger, hurt and betrayal.

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[h3][b]BIG QUESTIONS:[/b] Is her real issue with Justin or with Alan? Is she wrong to assume that Alan’s actions, while not illegal, were highly unethical? Is there anything she can do to ensure that Justin’s “personal trade” clients remain Eliot’s customers?  Should she continue to encourage her people to develop their personal clientele knowing that something like this could happen again? How should she handle the inevitable questions from customers and suppliers?[/h3]

Editor’s Note: Real Deal Scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved. The characters should not be confused with real people.

[span class=note]This story is from the May 2010 edition of INSTORE[/span]

[span class=alert]To be eligible for publication in INSTORE, responses must include your name, store name, and the city and state in which your store is located. [/span]

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