McGregor and Company

THE SITUATION

The department store, McGregor's Ltd., was founded in 1871. It still maintains its old-world charm and offers personalized services to customers. The store has registered a 7.5% increase in revenue during the current year which is above the average for retail stores (4.9%), but over-reliance on middle-aged and elderly clientele is the main area of concern. Although the store keeps up-to-date merchandise and one of its boutiques caters to teenage fashion, many young people still associate the store with older people. This is detrimental to the image of the store in some respects. It is aiming to change this old-fashioned label and trying to attract young customers by inducting young and dynamic sales and managerial staff. The store sometimes faces trouble in recruiting young sales-people inspite of offering competitive wages.

Therefore, in order to prevent future troubles and to maintain long-term financial performance, an urgent need is being felt to update the personnel policies of the store. The first step in this direction is to update the prevailing discount scheme. Discounts offered under the existing scheme are eating into the profits, though they are small and symbolic in nature. It is considered to be discriminatory and more of a cadre-based discount scheme, with the managerial staff getting the most benefit.

A new discount program (Exhibit-1) is proposed where discounts would vary according to the goods purchased and not on the basis of the cadre of the employee. However, it may face an unfavourable reaction from the managerial staff as they will lose the generous discounts available under the prevailing scheme. The store needs the support of its managerial staff for implementation of the program.

THE CHALLENGE

The challenge is to communicate to all the managerial staff about the new discount program and gain their support for implementation.

THE OPTIONS

1. Writing a memo to all the managerial staff.

2. Calling the managerial staff in small groups and explaining the new program.

3. Inviting suggestions from the managerial staff and then sending an office-memo after due consideration of responses.

CRITERIA FOR EVALUATION

a) Time-lag in implementation and utility of the option in obtaining agreement of the managerial staff

b) Morale of employees

c) Impact on brand image and profitability

EVALUATION OF PROPOSED OPTIONS

Option - 1: Writing memo to all the managerial staff

a) Time-lag and utility of the option: The communication will be speedy and can be done at one go. Thus the scheme can be implemented without delay, but the option does not involve the managerial staff in the decision-making process and therefore may become the bone of contention among the people who are important for the store and will implement the changes. Therefore, getting the desired support from them may prove difficult.

b) Morale of employees: This will boost the morale of the staff who are currently either in the lower range of the existing scheme or are not eligible for discount. Simultaneously, it may also hurt the managerial staff as they may consider it as a cut in their perks.

Option - 2: Calling the managerial staff