1) What is the cause of the problems described in the case? How serious are these problems? The problem is a law suit that is being filed by the sales associates against Raleigh and Rosse. The sales associates are unimpressed by the amount of hours they are forced to work and that many of these hours are unpaid and their services may be required at any time. The reason that employees are frustrated can be derived from how their performance is measured. Employee productivity at R&R is measured by their sales per hour ratio (revenue-return/hours worked).
The main flaw in this method is that employees are expected to do both on the floor selling work, and additional work. Everyone in the company needs to maintain a standard for SPH or else they will receive worse shifts which will likely lead to their departure from the company. Operating under this model provides incentives for employees not to submit how many off the clock hours they have worked in order to increase their SPH and hopefully make room for promotion and bonuses. However it is ethically and legally wrong to not pay or harm an employee for putting in more time. This issue is very serious as it may cost R&R over 200 million dollars as well as damage their reputation.
2) Are R&R employees pressured inappropriately by the sales-per-hour system? By management? Yes, R&R employees are pressured inappropriately by this sales per hour system. The SPH ratio is vital to an employee’s success with the company and the metric incentivises employees to not account for all of the hours they put in. Employees are forced to donate their time to the company to provide services off of the books. The reason that the company outperforms its competitors is because it asks too much of its employees. This model likely would not be profitable if the firm all of the costs that should be associated with running the company this way and that is why their competition is not doing it. 3) How would you redesign performance management at R&R?
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