I will touch on various aspects of how the company operates. Beginning with staffing…
First, the company has more staff per square foot that a typical men’s clothing retailer, which means customers get excellent service. Second, 88% of the positions are full time positions. This is in contrast to the industry where most workers are part time. The reason why so many positions are full time, is not just to provide good service, but also to encourage employee retention. Third, the company develops a reserve of people who are interested in joining the company; so that when there is an opening, it is quickly filled up.
Fourth, the company looks for energy, excitement and friendliness when hiring. They care less about experience in clothes. Fifth, the company prefers internal hiring as compared to hiring external consultants; because they believe that if its so important as to require a consultant, its probably important enough to do it internally.These factors collectively help the company to provide excellent customer service.
Next I will cover how the company compensates its employees.Wardrobe consultants, get paid 5 dollars an hour plus commission. The commission is 3% if the wardrobe consultant has produced sales of less than $500; and 7% if sales exceed $500.This commission structure is designed to encourage wardrobe consultants to not just fill the customer’s initial request, but to assess what other clothing needs the person has, and to help him implement a plan to develop his wardrobe! Because of this compensation scheme, wardrobe consultants earn more than the industry standard. Note, that this is a low qualification work force, getting paid more than the industry standard!
Every employee except the manager also receives incentives based on how well they have met the sales target. If they meet good sales target, they get $20 each, and if they meet excellent sales target, they get $40 each. The amount may seem quite small but it turns out that its very important to the day to day life of the recipient. It also has the effect of fostering team spirit.
One particular issue the company faced was, how to ensure team performance when salary was based on individual performance?The company addressed this in 3 ways.First, it recognized in its employees the tendency to reciprocate help. If a colleague helped you in your sales effort, you would want to help him back. Second, the company tracks the number of sales produced by each sales person. If one sales person had a lot more sales than another, he would be counseled for hogging the walk-in traffic. And if the behavior persists, he would be terminated. The third way the company handled this issue is to build a culture where each others’ success are celebrated.
Next, I will cover how the company handles training and career development.First they have a principle of promoting from within. So they have cases like a wardrobe consultant who has worked his way up to be a Senior VP. And a cashier who has worked her way up to become a Director.In fact almost all of the senior executives have been with the company for a long time and have worked their way up. The company can afford to do this due to its rapid growth.Second, seniors train subordinates. They have virtually no outside training or external trainers. Also there is no limit on the training budget. They believe that the employees will reciprocate the company’s investment in them. The training boosts the employees’ seld esteem and self image and in turn, the employees work hard, stay loyal, feel energized and commit to doing a great job.
Men’s WearHouse manages staff performance in two ways. First, it provides an environment that is conducive for the build up of self-esteem; They create this environment by praising someone for a good job, and by providing constructive feedback and criticism. They believe that a staff with a high self-esteem, would perform better at work.Second, the company measures staff performance by grading specific actions or behaviors deemed necessary for success as part of the staff performance review.
These are a few behaviors that are measured for the wardrobe consultant and managers respectively. Each behavior is graded based on whether it is above standard, meets the standard, below standard or unsatisfactory. This produces actionable feedback, which means the performance of the staff can be managed. For example, if a wardrobe consultant is graded below standard for participation in team selling, then the management would know exactly what to train the wardrobe consultant on.
CASE STUDY THE MEN’S WEARHOUSE: GROW TH IN A DECLINING MARKETPRESENTED BY:FRANSISCA KATHERINA RUM AM BIJ. SRIEEDAR
GROUP MEMBERSChew Ann LiangFransisca Katherina RumambiGoh Zhang HaoHo Wei TaJanardhanan JananiJ. SrieedarRitesh KumarWinn Mon SawZhu Zhichao
SCOPE Introduction Background Values and Philosophy How the Company Operates Staffing Compensation Training and career development Performance management Leadership and communications Lesson from Men’s Wearhouse
INTRODUCTION Mystery 1: Men’s Wearhouse achieved amazing results from 1995-1999 in a competitive and stagnant industry characterised by Low pay. Little training. Lots of part time work. Mystery 2: Managed to achieved cultural and workforce competitive advantage through leveraging on low qualification human capital.
BACKGROUND George Zimmer Founder of Men’s Wearhouse (1973) US$7,000 Per October 1999 600 stores 35 States & Canada
STRATEGY Everyday Low Pricing. Promotional Mix Radio and TV. Excellent Customer Service. “Wardrobe Consultants”. Trademark Phrase “I Guarantee It!
VALUES AND PHILOSOPHYMISSION STATEMENT: “ TO MAXIMISE SALES, PROVIDE VALUE TOCUSTOMERS, GIVE QUALIT Y SERVICE WHILE HAVING FUN ANDMAINTAINING OUR VALUES” Company placed emphasis on 360 0 view of business from a humanistic angle. Zimmer said “ we’re in the people business, not the suit business”. Company employee valued at the top and the shareholder value at the bottom of the hierarchy. Cared for employees who will in turn care for customers Loyal employees = Loyal customers
CORE PHILOSOPHY AND VALUES THAT DRIVES BUSINESS Nurturing creativity Growing together Admitting to mistakes Promoting healthy and happy lifestyle Enhancing our sense of community Strive to become self actualized people Helping others Interdependence and teamwork Caring for employees, customers, vendors, communities to maximize long term shareholder value
HOW THE COMPANY OPERATES Staffing Leadership and Compensation Communication Training and Performance Career Management Development
HOW THE COMPANY OPERATES: STAFFING • More staff for better customer service.Part- Job TypeTime12% • More full-time positions. Full- • Better service. Time 88% • Lower turnover. • Fill openings quickly.
HOW THE COMPANY OPERATES: STAFFING• Hire energetic, excited and friendly people.• Hire internally, rather than external consultants.
HOW THE COMPANY OPERATES: COMPENSATIONCommission scheme that encourages staff to go beyond satisfying the customer’s initial request. commission 3% 7% sales < $500 sales > $500Low qualification workforce, paid more than the industry standard!
HOW THE COMPANY OPERATES: COMPENSATIONIncentives for Exceeding Monthly Sales Target $20 Good Sales Target $40 Excellent Sales Target Recipients value it. Fosters team spirit.
HOW THE COMPANY OPERATES: COMPENSATIONEncourage team performance: Recognize employees’ tendency to reciprocate help. Identify employees who hog the walk-in traffic and counsel them; and terminate them if such behavior persists. Build a culture that celebrates each others’ success!
HOW THE COMPANY OPERATES: TRAINING AND CAREER DEVELOPMENT Promote From Within. Wardrobe Consultant > Senior VP of Store Operations. Cashier > Director of Employee Relations. Possible due to company’s rapid growth. Get Seniors to Train Subordinates. Virtually no outside training /external trainers. Set No Limit on Training Budget. Spend as necessary. Believe that employees will reciprocate the company’s investment in them. Training boosts employees’ esteem and image. Employees work hard, stay loyal and commit to the job.
HOW THE COMPANY OPERATES: PERFORMANCE MANAGEMENTProvide environment conducive for building self-esteem: Praise employees for work done right. Provide constructive feedback/criticism.Measure staff performance by: Developing a list of specific behaviors necessary for success. Grading these behaviors as part of performance review.
HOW THE COMPANY OPERATES: PERFORMANCE MANAGEMENT Wardrobe Consultant Manager / Assistant Manager• Participates in team selling. • Engages in quality sales coaching.• Treats customers in a warm and caring manner. • Greets and welcomes customers.• Arrives at work at the appointed • Helps resolve personnel time and is ready to begin problems. immediately. Above Standard Meets Standard Below Standard Unsatisfactory
HOW THE COMPANY OPERATES: LEADERSHIP AND COMMUNICATION Maintain cultural consistency and core values amidst rapid growth and dispersed operations: Communicate formally (e.g via newsletter) company news, selling tips and outstanding sales achievements. Provide educational videos to stores six times a year to teach specific selling behaviors. Emphasize personal contact. Emphasize informal social contact outside work. Seniors expected to practice servant leadership.
LESSONS FROM MEN’S WEARHOUSE Differentiate itself on basis of service and not price. Importance of training staff. Creating career advancement opportunities. Equality among staff members. Emphasis on people development. Creating sincere values and sense of commitment. High level of motivation.