Connect with us

Real Deal

When An Unhappy Support Staffer Releases Confidential Pay Rates, A Retailer Is Dumbfounded. What Would You Do?

An unhappy support staffer takes aim at an owner by releasing confidential information.

mm

Published

on

As an office manager, Carrie Hannah was competent. As an employee, she was difficult and inflexible. As a team player, she was … well, she wasn’t.

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

Carrie had been with Jack Marcus Designs for almost ten years. Carrie started as a part-time salesperson, but was moved to the bookkeeping position in her second year when it became clear that Jack could no longer handle the day-to-day office operation along with the design part of the business. It was also clear early on that Carrie’s detail focus was greater than her sales ability.

Jack appreciated Carrie’s loyalty and her ability to keep the store’s paperwork in order. Over time, he trusted her with more and more of the details of the business as he focused on growth and expansion. She always managed to get the job done, but her general attitude had been an ongoing problem. At the root was a simple premise: Carrie hated — and, Jack thought, feared — change in any form. When a new person was hired, Carrie was the first to be critical and challenging. When Jack chose to install a new POS system, Carrie resisted every step of the way. When they moved into their much larger, very cool new location, all she did was complain about things that didn’t work properly and the additional 10 minutes she had to drive to work every morning. He knew that in most cases, she would eventually come around if he just gave her time to adjust, but he also recognized that as the years went on and Carrie got closer to retirement, age wasn’t making the adjustments any easier — and their “spirited discussions” seemed to be getting louder and more frequent.

Things came to a head several months ago when Jack decided to shift to an incentive-based compensation system that would allow all of the company’s employees to benefit from the continued growth at Jack Marcus. Under the new system, salespeople would be paid a base hourly rate plus a percentage of their individual gross profit production, and support staff (including Carrie) would be paid an hourly rate and would earn incentives based on the total company’s productivity vs. goal each month. Support staff incentive percentages were set so that overall, everyone would earn the same as last year if the store produced the same gross profit dollars. Going forward, increases in income would be tied directly to increases in business. 

Jack knew that Carrie already thought she was worth more than she was being paid (she had been grumbling about it for several months in advance of her annual review), but he underestimated the vehemence of her reaction. She was furious over not getting the substantial base pay increase she had expected and was even more annoyed with the fact that part of her income would now be incentive-based. 

Advertisement

During their conversation, Carrie complained about being undervalued and underappreciated, and she made it clear that she was expecting a lot more. The conversation ended with Jack holding firm but asking her to consider the numbers (as the company was still on a strong growth trajectory) before deciding that the new system wouldn’t work for her. He committed to meeting with her again the next morning to answer any additional questions she might have.

Carrie spent the rest of the day angry and sullen, working at her desk and avoiding any interaction with Jack or anyone else. At 6 p.m., she took care of her usual closing duties and left without a word. When she and Jack met the next morning, she very calmly told him that the new structure would not work for her and said that unless he was prepared to offer her a base increase of 20 percent, she would have to resign. Jack felt he had no choice but to accept her resignation. He told her he would see that her last paycheck was mailed to her home, escorted her back to her desk, let her pack up all of her personal items and walked her to the door. 

That evening, Jack picked up an email from Dennis Healey, his top (and highest paid) salesperson. Dennis forwarded a message that had been sent to all 16 of the company’s employees by Carrie. It said, “As of today, I am no longer a part of the Jack Marcus team. Since you are all having to deal with the impending changes to your pay, I thought I might offer this one last favor before I go. Here’s how you stack up relative to your peers.” She then provided a list of every employee and his or her current hourly pay rate.

Jack was mortified. He had never made any rule about keeping compensation confidential, but he couldn’t believe that anyone thought it was OK to actually discuss pay rates. He didn’t have a fixed standard for hiring, and over the years, he most often just paid what it took to get the people he wanted. That philosophy had worked pretty well for him, as most everyone typically delivered to his expectations — but he couldn’t deny that there was a wide range represented in that list, and he was certain that a number of his people would be more than a little upset.

The Big Questions

  • How should Jack respond?
  • Should he send an email to all of his employees, or should he wait until morning to face them?
  • What is his best course of action with regard to his team going forward?
  • Does Jack have any legal recourse with regard to Carrie’s actions — and if so, is it worth the expense and effort?

Expanded Real Deal Responses

Denise B. Waynesboro, PA

Sorry Jack, but you should have seen it coming. You should have nipped this attitude issue in the bud years ago. A certain amount of flexibility is required from any employee, and that needs to be made clear from the get-go. Coddling this woman for years on end just allowed her to think she had every right to dictate her terms as an employee. I’m not a lawyer, so I won’t comment on the “legal” recourse. Having said that, the “emotional” ramifications are huge. Why should two people doing the same job (at the same level of quality) be paid differently? Eventually, they will find out and somebody is going to be resentful. Give them all the chance to earn well and be up front about their worth as an employee. If the company does well, reward the people who made that happen. If the company tanks, so does their job. People understand that.

Valerie W. Kingston, NY

I would call a staff meeting with all the employees. One, to inform them that you are looking for her replacement, and two, that she left angry and you understand she compared salaries and compensation to each of you. You may also explain that salaries are based on time, individual skills and performance.

Advertisement

Also, I would set an individual meeting with each employee to hear their personal response and if they have questions as to how they can increase their pay scale. I always value the team working as a team and removing any sore feelings they may have towards each other and you as their leaders.

Bruce A. Sherwood Park, Alberta, Canada

Last question first: Do not initiate legal action. Middle question: Talk directly to his team! This is not an email situation and it deserves his complete and personal response.

Jack should have dealt with Carrie years ago. One team member acting like a petulant child could have been far more destructive to other team players. Jack got off lightly for his resistance to not deal with the issue years ago!

Marcus M. Midland, TX

Oh boy! Carrie was a cancer that Jack knew about years before this happened and he allowed it to grow. And he gave a lot of access to a person that he knew from day one wasn’t a team player? No bueno. If I was Jack, I would wait until the morning and take on any issues and questions then, but I would be prepared for a war. I don’t know exactly what I would do because you don’t really expect things like this to happen. As for legal action, I would definitely look into it. If you have some ground to stand on, then I would pursue it. Carrie sounds like a conniving human being and she did you a horrible injustice. I would make her pay (literally) if there’s some merit behind it.

Ralph H. Richmond, IN

The “boss” needs to be the boss. It appears that Carrie’s attitude has been a problem for a long time. It and she should have been dealt with years ago. Call a store meeting, soon, but not tomorrow. Call your lawyer to cover all bases (follow his suggestions, maybe have him at the meeting). Get an employee manual prepared; everybody signs, including the boss. Deal with discussions of “equality” of pay and that pay level is not discussed. Bring employees into the pay discussion, but decide and live by the choices. Carrie violated informal policies, but likely no liability (an old farmer’s joke about “kicking the cow pie” applies). This is an example of “success” from larger operations bringing larger complications along with larger revenue. If you want the “big store,” be professional about the complications; if not, go back to small! Treat everybody fairly. Do not confuse friendship and employment; they are disparate concepts. As an aside, this applies to customers as well. Don’t be unfriendly, but don’t forget the difference.

Stacey H. Lincolnwood, IL

Jack should have offered her the opportunity to stay at the same pay scale OR choose to opt into the new “package” within the next 2-3 months based on her observations about how it would affect her pay. That said, she quit and violated his trust, and she undermined his position with 15 people he employs, so now he has to fear that the rest of the staff may mutiny. He needs to call a meeting to explain that he will be discussing the situation with a lawyer and let the staff know that if they are unhappy about their pay, he will speak to each person individually about their concerns. He should be prepared to lose the five lowest-paid employees and replace them; they’re sure to leave in the aftermath. The employees who stay should be asked to keep peace by keeping quiet when new hires start. The next bookkeeper should be told that the books are not hers to discuss with anyone else, and that confidentiality is vital.

Advertisement
Dennis P. Johnstown, PA

What a can of worms. I would approach the bookkeeper with the same attitude as I would someone accusing me of “switching” a diamond. Have an attorney review the issue and determine if any financial damages resulting from the malicious breach of information could be attributed to the bookkeeper. If there is cause, I would litigate for any untimely compensation increases that had to be given for the continuity of the store. Definitely put safeguards of written confidentially agreements in place.

Marc F. Houston, TX

The damage is done for Jack. He should first change all employee emails to prevent further damage. Second, call each team member to understand their mindset, then have a company meeting as soon as possible. In the meeting, he and his accountant should show and demonstrate how this plan was designed with their best interest and the income projections for the company as a whole. The team will either be on board or not and there could be a shake-up; that’s what happens when you just go and flow with key employees like Carrie. Now the learning part: what have you done to maintain control of company communications? What fail-safes do you have to block unwanted transmissions from internal/external actors? Do you have an employee contract addressing confidential company information? Sounds like a good New Year’s resolution!

Cammie M. Ocala, FL

Wow, I’m always amazed as a business owner how you can be so good to your employees and how quickly they can turn on you. I’m glad she was let go; bookkeepers tend to be so controlling because we trust them with everything.

I definitely would meet with the entire staff face to face ASAP, and you’re probably going to have to make adjustments to hourly pay because of her. I’m not an attorney, but I would try legal action for sure, even if it cost you! I would be curious how it was handled and to know Jack’s plan of action to replace her.

Ira K. Tallahassee, FL

Jack’s biggest mistake was not letting Carrie loose a long time ago. Too bad we can’t go back in time. That said, he probably can’t do anything legally, but he could check with his attorney. As to the staff, have a group meeting tomorrow explaining that by working as a team, everyone will make more money. Follow that up with a one-on-one with every member of the crew. Let them vent as they will and explain your old hiring policy. The new way WILL WORK to everyone’s benefit.

Glyn J. Victoria, TX

Jack should send an email to each of his employees and hold a general round table discussion with all present. He should explain why this incident took place and get feedback. Jack should tell his employees that if they were dissatisfied with the way the operation was being handled, they are free to turn in their resignations. They should all remember it is his operation and he makes the rules. He can’t make everyone happy, but he should allow feedback without any repercussion.

Jonathan L.Draper, UT

I would send an email to all the employees and let them know my vision for the future and the fact that they should all make more than they were before based on growth. I would have a follow-up meeting as a group and then individually as needed. You may lose a few employees, but those that see your vision will stay. Anytime you change things, people will not see it your way. That is OK because you need to have unity on the team, and real team players catch the vision of the future. You will find people who fit and will thrive. Change is hard, but if you have a good plan, you can win in the end.

Mark R. Ottawa, Canada

Carry on like nothing happened. Call all employees for a meeting with coffee and donuts. Thank all for being associated with you. Ask each employee in the presence of others if they are happy with their present employment and pay rate.

Listen carefully, and if needed, adjust pay/conditions to the rate of performance. Thank all again and carry on like nothing happened. Make sure the TEAM is happy.


Kate Peterson Tells the Rest of the Story

As many of our Brain Squad members were quick to point out, this whole situation could have been avoided if Jack had dealt with Carrie’s behavior issues early on.  Like most business owners, though, Jack came to rely on the “good side” of a problem employee, and waiting out her bouts of resistance seemed to be much easier than finding, training and trusting someone new.

Jack’s first move was to talk with his attorney.  He learned that it’s a violation of free speech to restrict employees from talking about their own compensation.  Carrie’s distribution of confidential company information might have been actionable, but since she was not under any sort of contract, attempting legal action would likely have been a costly and ultimately unproductive adventure.

Jack’s approach with his employees was an effective one.  In an attempt to avoid escalating emotions, he sent a brief note to everyone that night apologizing for Carrie’s disruptive actions and asking them to reserve judgment till they could all meet the next morning.  Once he had everyone together, he explained, as Valerie Whitworth suggested, that individual pay rates are based on a variety of factors, but that he has always, in good conscience, tried to be fair to everyone.  He also explained that the new system was specifically designed to allow each one of them to share in the success of the business, giving them all essentially unlimited earning potential.  Further, he offered to meet privately with anyone who wanted to discuss the matter or their individual circumstances in greater detail.

What he learned in the meeting surprised him.  He found that despite a few rough spots, the people who were upset were upset with Carrie for her betrayal – not with him.  As a group, they made it clear that they felt that he – and they – had put up with her childish behavior for too long and that they were glad to see her go.

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.

Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

He Thought It Was a Great Time to Retire — So He Called Wilkerson!

As David Kiselstein, owner of J. Albert Johnson Jewelers in Fairfield, CT says, it was a perfect time to close the store he’d owned for 45 years. “I’m 72-years old, the lease came due and I thought it would be a great time to retire.” A savvy businessman and one of the founders of the Continental Buying Group, Kiselstein urges others who want to conduct a retirement sale to pick up the phone and call Rick Hayes at Wilkerson. “He’ll talk you through it. He’ll help you understand it. He’ll give you the confidence you need to go through such a big experience.”

Promoted Headlines

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.

mm

Published

on

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

Advertisement

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.

Advertisement
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.

Advertisement
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.

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

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

He lied to her about two huge sales.

mm

Published

on

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.

Advertisement

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.

Advertisement

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.

Advertisement
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!

Continue Reading

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.

mm

Published

on

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.

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

Most Popular