CASE STUDY 5-1:158 VETEMENTS LTEE
Case Synopsis
Vêtements Ltée is a chain of men's retail clothing stores located throughout the province of Quebec, Canada. Two years ago, the company introduced new incentive systems for both store managers and sales employees. However, the sales employees began to engage in activities that had an adverse effect on inventory management, employee cooperation, and customer relations. The store managers have tried, with limited success, to correct these problems.

Discussion Questions with Suggested Answers
1. What symptom(s) exist in this case to suggest that something has gone wrong? • Employees stand near the store entrance, creating customer service problems, • Occasional conflict among employees over ‘ownership’ of customers • Some parts of store are left unattended, • Employees are unwilling to restock and reorder inventory • Employee morale has fallen, particularly in terms of poorer relations with the store manager 2. What are the underlying problems that have led to these symptoms? In other words, what theories explain what went wrong in this case? Expectancy theory Expectancy theory can be applied to this case to explain employee motivation to hoard customers at the store entrance rather than (a) attend to lower traffic parts of the store and (b) complete inventory duties. The E‐to‐P expectancy is likely least important because it is almost certain that any employee can stand near the front of the store to hoard customers. However, some might point out that the E‐to‐P expectancy drops when every employee tries to hoard customers (i.e. competition for customers reduces the change that effort will result in having more customers and therefor more sales.). P‐to‐O expectancy is the critical variable here. Students should map out the relevant outcomes, such as (a) higher pay, (b) conflicts with other staff, (c) getting fired for leaving assigned post, and (d) feelings of fair pay. The “performance” variable would be grabbing customers at the front of the store or performing the allotted share of inventory work and remaining in the assigned location. A calculation of these factors, including the valence of each outcome, will reveal that grabbing customers at the front of the store easily has the highest perceived payoff. Equity theory Equity theory also applies to this case because it refers to staff “resentment” that some staff get more customers and that they are motivated to get “more of their share.” To analyze this case, you need to first identify the equity elements, including inputs (effort, time, ability), outcomes (pay, achievement), and comparison other (other employees). Then apply the equity model. Specifically, employees who stock inventory and serve low traffic parts of store have same inputs but lower outcomes than the “hoarders.” These staff feel inequity and thereby adjust their behaviour to minimize tension of inequity OB Mod (Chapter 3) This case can also be explained by behaviour modification, although OB Mod offers less detail than does expectancy theory. The facts in this case clearly show that the reward system reinforces the inappropriate behaviours. The OB Mod model, suggests that sales employees are motivated through positive reinforcement to maximize sales assigned to them. This means not only helping customers make purchases, but also ensuring that customers are assigned to them. This accounts for the tendency of employees to stand near the store entrance and possibly fight over who owns the customer. The more customers a sales employee has, the more sales will be rung up in that employee's name. The OB Mod concept of extinction explains why sales employees do not perform inventory control duties as much as under the previous compensation arrangement. By leaving the sales floor to restock merchandise and complete reorder forms, employees are losing the opportunity to increase sales assigned to their name.

Potential rewards (higher commissions) are withheld or lost while employees are doing inventory work. Store managers made ineffective use of punishment. Punishment is applied when store managers reprimand and threaten to dismiss employees for failing to perform inventory duties. Notice that this tactic is effective only when the store manager is in the store. This is because punishment tends to be effective only when the punishing agent (the manager) is present. Punishment also results in negative attitudes of those being punished towards the punisher. What actions should the organisation take to correct these problems? An important prerequisite to recommending a solution to the problems in this case is to understand the organisation's goals with respect to sales employee performance. It appears that the performance criteria assigned to store managers ‐‐ sales volume, inventory management, store appearance, etc. ‐‐ should be applied to all of these employees. Based on both expectancy theory and behaviour modification, the organisation should redesign its incentive system for sales employees so that they also receive financial compensation for these organisational goals. For example, in addition to a sales commission, sales employees could share a quarterly reward for the store with the best appearance. Thus, this goal would receive more positive valence (or be positively reinforced) for employees in the winning store. A similar arrangement could be implemented to reward inventory management duties. By redesigning the commission system to motivate group rather than individual performance, the problems of customer ownership and intimidation would be reduced. The redesigned incentive would motivate team performance (i.e., performance of employees together at a particular time) by dividing the work team’s reward equally among its members. Team incentives tend to have somewhat lower motivation effect because some employees could slack off and still receive the reward, but group pressures tend to correct some of this problem and the trade off may be worth the slightly lower motivational effect. The use of punishment in organisations is difficult, but sometimes necessary. In this case, punishment dealt mainly with the symptoms rather than the underlying root causes of the inappropriate behaviour. With the new reward system, punishment should not be required very often, therefore reducing its negative consequences in this case. In the future, punishment should be used sparingly and should follow other managerial actions, including extinction and clarifying role requirements. Managers should be advised to follow the features of applying punishment effectively.