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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.

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

When A Bride-To-Be Threatens To Pull The Couple’s Business, How Should The Owner React?

The husband-to-be has been a loyal and good client.

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SHIRLEY JONES WAS born and raised in Abingdon, a small New England town. She loved the town and couldn’t remember a time when she’d regretted her decision to leave the world of corporate finance and buy Pruet Jewelers from her retiring great uncle. As she sat at her desk one bright, sunny January day, she remembered the three admonitions her uncle left with her the day she took the keys:

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

1. Always let your passion drive your business.
2. Protect your name and fine reputation at all cost.
3. If you look hard enough, you’ll always find a way to make even the most difficult, most obnoxious customer happy.

Then, she looked again at the letter that had just come in the day’s mail:

Dear owner,

I am writing to request you remove my fiancé, Devin Hines, from your mailing list. I have requested he no longer purchase jewelry from your store, and instead do business with Moeller Jewelers in Westgate.

I am satisfied with the quality of your jewelry and with the selections he has made. I am extremely dissatisfied, however, with your customer service. Recently, one of my channel diamond earrings fell out of my ear and was lost. Rather than have me go without it, Devin insisted on replacing it so I would once again have a matching pair. I insisted he have it replaced “at cost,” considering how much business he does with Pruet’s. Otherwise, it wasn’t worth it to me to replace it. Unfortunately, he was given a mere $50 discount on a $500 earring (he paid $1,000 for the original pair). I find it disconcerting to know that your establishment benefited from our misfortune.

I have inquired about the practices of other local jewelers who all indicated they would have treated Devin with more respect and provided him a much better deal to encourage his future patronage. Because he wasn’t treated with this level of consideration, I insist he no longer shop at your store. He realizes how strongly I feel on this matter and has agreed to honor my wishes.
Hopefully, our circumstances will encourage you to reconsider your policy.

Sincerely,
Jenna M. Sheely

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After getting past her initial anger at the arrogant and manipulative tone of the letter, Shirley pulled up Devin Hines’s file and found that he had indeed purchased a number of items over the past six years, including a strand of pearls, diamond stud earrings, the diamond hoops in question and an engagement ring. All told, he’d spent over $15,000 with the store. She also noted that, per store policy, Devin had been given an insurance valuation document with every item on which he spent $500 or more. She clearly remembered taking care of Devin when he came in for the earring replacement as well. While he asked if there might be some sort of a “break” on the price, he did not object to the 10 percent discount. She believed that he appreciated the $50 “break” and recalled that he even commented on her willingness to sell him just half of a pair.

As angry as she was with Jenna’s letter, Shirley hated the thought of losing even one customer. She picked up the phone to call Devin, but put it back down as she realized that she had no clue what she would tell him. Her first instinct was to apologize for putting him in so difficult a spot and to offer to refund part of the earring price. Good sense told her, though, that doing so would bring the value of everything else Devin had purchased into question, and would also demonstrate that Jenna’s brand of extortion was a viable strategy.

The Big Questions

  • Should Shirley even acknowledge the letter at all? If so, should she deal with Devin, or with Jenna?
  • Short of questioning Devin’s good sense in even considering a lifetime with a woman so demanding, what should Shirley do?
  • Is there any strategy that might help save Devin as a customer and repair the situation?

Expanded Real Deal Responses

Ilah C.
Sudbury, MA

Sorry not sorry. It sucks to lose a good customer, but she already lost him to his nutterbutter fiancée. That is a fight that cannot be won with any amount of good customer service. Leave it alone and be glad that she is not your problem moving forward.

Davy D.
Williston, ND

I would reach out to the customer as soon as possible, apologize for the situation and ask the customer if there was anything I could do to fix it. If they said no, then at least the effort was there and maybe they won’t complain to everyone and blow you up on social media. If they say yes, then I’d probably do what they wanted this one time and then I would suggest homeowner’s or renter’s insurance for future issues of that nature. Sure, the store would lose money on fixing that for cost or a little above. Chalk it up to advertising budget to keep bad word-of-mouth from spreading. I think any reasonable person would allow you the chance to take care of the problem. Some of our best customers have had major customer service issues, and how you handle that can make or break your business. Take the ego out of it. Try not to fire the customer; let them quit, if that makes sense.

Mary-Beth T.
Alliston, ON

I find this statement incredibly sexist: “Short of questioning Devin’s good sense in even considering a lifetime with a woman so demanding, what should Shirley do?”

Although I don’t believe that many jewelers would offer the earring at cost, for the client to request a substantial discount is not a “brand of extortion.” Although purchased by the fiancée, if they have a joint household income, she has every right to question the money spent in the store.

I think for the owner to invite the engaged couple into the store together, she could demonstrate that she values both equally as clients. I would offer a gift card for the cost value of the single earring for future shopping.

I’m very disappointed to see how the woman is vilified in this story. An assertive female client shouldn’t be immediately marked as a problem.

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Ursula P.
Naples, FL

Dear Ms. Sheely:

Thank you for writing. I regret the loss of your earring and appreciate your frank description of the stress you felt about the replacement circumstances.

Jewelry is meant to bring joy, especially if it is a thoughtful gift from a loved one. We always want to do whatever we can to add to and sustain this joy.

So, in order to find a solution, may I invite you to visit me at the store?

Perhaps, over a cup of coffee and honestly-shared information, we can find a mutually agreeable solution?

Please, call my mobile number if we may have this opportunity.

Respectfully,

Shirley

Ralph H.
Connersville, IN

You are a one-price store or you aren’t. The earrings were likely not defective, and the customer would likely have had insurance (you provided an appraisal). No matter how low you go, you would never make a dollar’s profit again with her, they’ll never respect you, and you can bet she’ll tell all of her buddies (your customers?) how she “got one over on you.” Don’t tell her your cost (then she’ll “know” your mark-up is too high). You might have given a “nice” gift certificate on a future purchase? Keep being nice and honest, and remember the customers who really trust you.

Ernie C.
Lawrence, KS

Our store’s policy is to charge approximately half the margin on the original sale. This seems to work for both sides: lower price for customer, and enough margin to help with the fixed cost of being open.

If she wants to change store policy for this situation, she may be able to keep the customer and still retain a good relationship. This problem comes up occasionally, in my case. We treat some situations as political. If we incur a cost to retain good relations, we think of it as an advertising expense. Try to put yourself in their shoes.

If Shirley wants to keep her policy, that’s her approach to business.

These are difficult situations. We believe helping with a lost situation is usually successful. We also ask if it is insured and if that could be a solution.

Gabi M.
Tewksbury, MA

Dear Jenna,

I’m so sorry that you lost your earring. Being in the jewelry industry for so long, my heart goes out to all the lonely earrings out there that have been lost over the years! Our jewelry is priced competitively and fairly, along with the value of each piece being honest and accurate. We do not price our pieces high enough to give any large discounts. I appreciate the bond Devin and I have created over the years, and I would hate for both of us to lose that. I would like to help you further if it interests you — I could turn the earrings into locking posts and backs, at no cost to you. That should protect you from another future situation that would otherwise cause them to fall out again. I hope to hear from you soon so we can resolve this.

Thank you,

Shirley

Walter B.
West Orange, NJ

Shirley needs to deal with Jenna as Jenna has shown herself to be the decision-maker. Shirley should let Jenna know that she has thought about the situation and appreciated the letter. Shirley can offer a gift certificate to Jenna to get her in the door and win her over. She has nothing to lose.

When couples get engaged and/or move, the decision-making dynamics change. Jenna is letting Shirley know that she is now in charge of the jewelry buying decisions.

David H.
Rose Bay, New South Wales

For the client to be motivated enough to write a letter, she must have been pretty worked up. When an earring is lost, there’s often a sense in the client’s mind that the jeweler is at least partly responsible; after all, they made the earrings.

The client is waiting for a response, so I would call the client, thank her for reaching out to me and ask what would they like us to do?

Any partial refund I would consider would be in the form of a credit note.

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Marcus M.
Midland, TX

Jenna sounds like an entitled brat! We have had to replace several half earrings for people and have never had someone demand it at our cost. People who are civil and have common sense can accept that it is their fault for a loss like this and own up for their mishap. Shirley does not need to bow to Jenna’s request and should steer clear of dealing with her. Maybe Shirley can send Devin a $200 gift card to her store or to a nice local restaurant. She should include a note saying she appreciates all of his business, and since she couldn’t do much about the price of the replacement earring, please accept this gift. If he is loyal and trusts Shirley, then he’ll stay on as her customer. I can’t see this being a deal-breaker unless Devin has no backbone and won’t stand up to his fiancée.

Bruce A.
Sherwood Park, AB

Dear Ms. Sheely,

I wanted to thank you for taking the time to write your thoughts on our handling of Devin’s diamond hoop purchase. I have always felt a passion for each and every one of my clients, and it easy to tell that you are driven by passion as well. The world could use more of us, don’t you agree?

I was happy to look after Devin personally when he told me about your lost earring. I pride myself in sourcing and pricing our fine jewelry so that Pruet’s can offer the best jewelry value to all of our clients. The 10 percent discount was offered because of the unfortunate circumstances.

I am very sorry to lose your business. I value each and every one of my customers. Moeler Jewelers in Westgate are excellent competitors and I know they will welcome your support.

Please find enclosed a copy of a $200 donation that I have made in your name to Soldiers’ Agents. I hope we can meet someday.

Shirley Jones

President

Noreen M.
Rochester Hills, MI

It was certainly not the store’s fault that she lost the earring. The woman was totally out of line and should have filed an insurance claim. Probably not the first time she has used this tactic. Chalk it up to an irrational person and move on. It’s not in your best interest to contact him either.

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Real Deal

A Salesperson Discovers Her Store Owner Is Cheating Her Out of Commissions. How Should She Respond?

He lied to her about two huge sales.

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ELIZABETH KRISTOF WAS A sales professional at Elegance Fine Jewelry, a successful family-owned store in a high-end resort town in Florida. Elizabeth had worked at the store for 12 years, ever since James Turner, the current owner, took the store over from his mother. Like all Elegance sales professionals, she was paid a base salary plus a commission equal to 5 percent of her personal gross profit production.

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

In mid-January, Brad Fitzgerald came in looking for a special gift for his 20th anniversary. After Elizabeth had spent a considerable amount of time with him over several days, Brad selected a natural fancy yellow diamond ring that had been brought in on memo for him, and negotiated a price of $27,500. He asked Elizabeth for some time since he still had a few weeks until the anniversary, and he wasn’t prepared to take it with him that day. The ring was put into the showcase and quickly became a conversation piece with women who visited the store.

The following week, Elizabeth returned to the store after a day off and noticed that the ring was no longer in the showcase. She asked James about it, and he told her that the vendor had requested that the ring be returned. She reminded him that Brad was interested in the ring, but James told her that he’d checked with Brad, who had decided against the purchase, opting instead to take his wife to Paris for their anniversary.

In early February, James brought in two matched pairs of four-carat total weight round diamonds for Henry Askew, another local businessman and longtime friend who was looking to buy a pair of diamond earrings for his wife’s birthday. The diamonds arrived while James was away on a family vacation, so he asked Elizabeth to contact Henry and to arrange a time to show him the diamonds. He told her not to worry about the price — that he would work the details out with Henry when he returned. The next day, Henry came in, selected one of the diamond pairs and worked with Elizabeth to choose suitable mountings. He thanked Elizabeth for her time and said he would follow up with James in the coming week. When James returned, he told Elizabeth he’d contact Henry personally and take over from there. Elizabeth wasn’t concerned; she felt that the sale was solid, and store policy indicated that she would be entitled to at least half of the commission on the sale for her effort. A week later, when she asked James about Henry’s decision, he told her that Henry had learned that his wife did not want large diamond earrings and was thinking about other options. Elizabeth thought it odd that Henry would back out, as he’d seemed so committed.

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With the fast pace and the high volume of in-season business at the store, it wasn’t long before Elizabeth forgot about both Brad and Henry’s transactions. Neither man’s change of heart had kept the store — or Elizabeth — from achieving monthly goals.

The following month, Elizabeth’s husband Joe, a well-known local artist, surprised her with tickets to the Children’s Hospital Spring Charity Gala. Elegance and the Turner family had traditionally been sponsors of the event, and over the years they had donated several spectacular pieces to the evening’s live auction. James had made it clear to his mother even before he took over the store, though, that he was not a “black-tie kind of guy” — so Elegance hadn’t had a representative at the Gala since 2005. Elizabeth was more than excited to attend the event for the first time.

At one point during the cocktail hour, Elizabeth spotted Brad Fitzgerald, Henry Askew, and their wives. As she and Joe approached, she was shocked to see that both women were wearing the pieces she had shown their husbands — the ones James told her had not been purchased. She managed to engage in the usual social small talk, keeping it very brief and making no mention of the women’s new bling. While Mrs. Askew’s diamond studs could well have been purchased anywhere, Mrs. Fitzgerald’s yellow diamond ring was very distinctive and was obviously the same one that had been in the store.

Elizabeth kept her suspicions to herself but decided to investigate. At the next opportunity, she looked up a few other important pieces that had been brought into the store over the previous year and had supposedly been sent back to vendors after customers lost interest. Along with the Fitzgerald ring and the Askew diamonds, several additional pieces had been noted in the inventory system as purchased from vendors. Some were later marked as “broken up” or “sold.” One was marked as “lost” and a few still showed as in inventory, though they were nowhere to be found. It didn’t take long for Elizabeth to conclude that James was selling merchandise “off the record,” altering the company’s books and denying her and other sales professionals commissions they had legitimately earned.

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Although Elizabeth recognized that as a business owner, James could do whatever he wanted with his inventory, she felt disappointed and betrayed. In her view, he was undermining the integrity of the business while being horribly unfair to her and to her associates.

The Big Questions

  • Should Elizabeth confront James with her suspicions?
  • Since other sales associates were involved, do they have a right to know about the off-the-books sales?
  • Elizabeth have a moral obligation to report her concerns to local tax authorities?

Expanded Real Deal Responses

Bernie S.
Ephrata, PA

If she was hired as a commissioned salesperson, he OWES her. With interest. Stealing the sale is, in my opinion, illegal in that instance. And she should quit, because she’s working for a dishonest man.

Newton S.
Flowood, MS

Yes indeed! Confront him in a private, professional way. Stand firm if the policies described are really in effect. Always remember this warning I was given early in life: if someone will lie to you, they will steal from you.

Daniel S.
Cambridge, MA

Well I’d be pissed if this was me it was happening to. And she has good reason to be. As a store owner who used to have employees who were paid on commission, I can’t imagine anything more sleazy and disgusting than screwing the people you depend on in this way. Even if the guy is selling them off the books, the employees should still get their cut. How the guy declares or doesn’t declare sales isn’t their problem, but they should get paid. If I were her, I’d confront him publicly in front of the other employees with it. I’d tell him that if he didn’t pay up for all the missed commissions, I’d walk and go to the closest competitor and let all my regular customers know just what was going on. These days, the labor market is so tight, she wouldn’t have any problem finding another job. I’m on the fence about talking to the tax people as she doesn’t really know whether or not he’s truly hiding the income.

Bruce A.
Sherwood Park, AB

Yes, Elizabeth needs to talk with James. Her important discussion is a search for the truth and not rumors or suspicions. Clarification is the issue, and if it appears that James is moving items in order to bypass his requirement of paying commission, then Elizabeth is working at the wrong jewelry store. Without concrete paperwork, reporting this to the local tax authorities would not only be inappropriate, but could potentially leave Elizabeth open to legal action from Elegance Fine Jewelry.

Fred F.
Hyattsville, MD

As a second-generation owner/partner in our store, this totally disgusts me. Your staff is what makes you, and if you are going to use them like that and not share what is owed to them, then I have no problem with her giving her two weeks’ notice and finding another job in town. She has enough of a following to make her desirable to another store, and if she has proof of anything, she should contact the IRS and suggest that they audit him. If he is indeed cheating, then he deserves to be made an example of. It is owners like that that give our industry a bad name. I have no problem having a cheater exposed and punished. If she wants to confront him before progressing that is her decision, but the proof seems to be there, and why should she continue to be used and not compensated for her work? Hopefully this would be an example to others to stay on the right side of the law.

Bill C.
Ridgefield, CT

If I was Elizabeth, I would sit down with James. Explain to him what I saw at the Gala, then after some investigation, I noticed the earrings and ring were sold under the table, plus other inventory items over a period of time! Either pay me and the staff what is owed to us for commissions, or, I report you!

James, you own the business, we don’t, so you will be the one in trouble with agencies. Once he pays them, quit and take all of their customer book with them!

Jennifer T.
Oconomowoc, WI

She should ask him about these items. Not to confront him, but to find out why she was lied to and it was kept a secret from her. Maybe it wasn’t intentional on his part, maybe it was. Either way, piece of mind goes a long way.

Marc M.
Midland, TX

What an unethical POS James is! I mean I don’t know how you can go down for embezzling from your own company, but it seems like he certainly is. It’s very clear what has happened and Elizabeth has every right to confront him. Call him out! What’s he going to do? Fire you? You’re better off not working for a dirtbag like that anyway. Maybe give him one chance to explain it and tell the truth, but I don’t see how there is any other possible play out here. If he comes clean, then I would point-blank tell him that he HAS to pay everyone who helped with sales that he burned them on. If he doesn’t, then take it to the local tax collector. This guy is a bad character and needs to taken care of. There are no excuses for his actions and he can’t walk from this without repercussions.

Jim D.
Kingston, NH

Elizabeth is in a bit of a pickle, should she say something and possibly lose her job, notify the IRS and possibly lose her job but get the reward, or stay silent and hope the stuff hitting the fan doesn’t cost her, too? If James is cooking the books, it could lead to tax issues and potential store closure. Whistle-blower laws will shield her from certain retaliation.

I would suggest she should mention to James that she attended the gala and saw the yellow diamond ring … then see how James reacts. Hopefully he will come clean and do the right thing, but there are no guarantees in life and she needs to make sure she is protected. Elizabeth may also want to clue in her fellow employees to the situation, remembering that she needs to be ready to seek a new employer. From the sounds of it, Elegance may not be around much longer.

Taner A.
Istanbul, Turkey

Elizabeth should confront James about her suspicions. In my opinion, there were no other possibilities other than what she saw. James officially stole Elizabeth’s sales commissions. Because of this, others also have the right to know what is going on. She also should request from James her past commissions. If Elizabeth is convinced that everything will be recorded after she warned James, and if she still wants to continue working in the same place, she doesn’t need to report it to the tax authorities. However, she should inform the local tax authorities if she encounters a different attitude after the warning.

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Gabi M.
Tewksbury, MA

Elizabeth should absolutely confront James. Although he is the owner, he agreed to her salary plus commission, so now he is simply stealing from her. I think Elizabeth should approach James “nicely,” simply letting him know that she is completely aware of his thievery. From there, I would hope that he would apologize and give her and the other employees the money they deserve. Then, I would expect Elizabeth to pay closer attention to any future sales so it doesn’t happen again. If James doesn’t apologize and compensate everyone for their losses, I would look towards legal action.

Michael J.
Port Charlotte, FL

Definitely sit down and have a meeting with James saying how much of a “coincidence” it is that she saw not one, but TWO wives wearing the pieces she showed. If James in fact sold them, she is being stolen from. To do that to loyal, hard-working employees to save a few bucks is bound to backfire, especially when the records are as telling as the ones she found! It’s one thing to sell it off the books, but at least pay the commission and explain why. If he admits to the back-door deals, I would tell him that the tax issue is between him and the IRS, but the commission issue will be discussed with other employees AND with his family (if they still have any stake in the company) unless proper compensation is made.

Marc F.
Houston, TX

Provided Elizabeth can absolutely prove that James did in fact do what is alleged, then she should arrange a meeting with James, his mother, and the company attorney to provide the evidence of what James was doing. She should also have her attorney present with a demand for the commissions that she was cheated out of, as well as a generous separation check with a letter of agreement of resignation. Elizabeth should not contact other employees about the matter, as it’s none of her business.

Shevvy B.
Louisville, KY

I think she should confront the owner about the irregularities. If he doesn’t face up to the fact, she should report him to the other employees first, and if it’s not corrected, commissions paid, and promised to stop, he should be reported to the authorities. What he did was wrong, illegal, and should not be tolerated.

Edward S.
Garwood, NJ

If she doesn’t mind losing her job. Of course, James may not want to lose her either, so this may be a bargaining chip for her. If she is brave, confront him with a figure for her estimated commission, and give notice, as working for a thief is an impossible situation. If he really wants to keep her, ask for a higher base salary to make up for his thievery.

Ernie C.
Lawrence, KS

First, I hope that James is really fictional. There is no happy ending to this story if he is truly this dishonest. Having said that, there are two sides to every story. My advice is for the salespeople who contribute the most, meet outside the store. They can discuss the situation and develop a strategy to meet with James. There must be a confrontation.

Very tough situation, salespeople could lose their jobs and their livelihood. James could lose his reputation and his income producers. Let’s face it, great salespeople are worth their weight in gold and they don’t grow on trees. They need total respect. What’s going to happen at the meeting? Not good. If James doesn’t have a reasonable explanation, he has to make some tough choices.

My idea would be to get some sort of mediator. I would suggest someone in the jewelry business. Meet with all parties, develop a plan to continue the business with a method to verify all practices. James must either come up with some sort of settlement or lose his people. He will need to sacrifice power to someone else. He will have to win back their trust; his family should be part of disclosure. This situation is messy and tough …good luck to all!

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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?

Expanded Real Deal Responses

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.

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