Kimbel's Department Store

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CEO read about a quite revolution sweeping department store retailing. At stores such as Bloomingdale's and Bergdorf Goodman, managers put all salespeople on straight commission, Frances decide to give the system a yearlong try in two area stores.Such a plan, she reasoned, would be good for Kimbel's if it lived up to its promise of attracting better salespeople, iproving their motivation, and making them more customer oriented. It could also potentially be good for employees. Salespeople in departments such as electronics, appliances and jewelery, where expertise and highly personalized services paid off, had long worked solely on commission. But the majority of employees earned on hourly wage plus a meager 0.5 percent commission on total sales. Under the new scheme, all employees would earn a 7 percent commission on sales. When she compared the two systems, she saw that a new salesclerk in women's wear would earn $35,000 on $500,000 in sales, as opposed to only $18,000 under the old scheme. 1. What theories about motivation underlie the switch from salary to commission pay? 2. What needs are met under the commission system? Are they the same needs in the shoes and handbag department as they are in lingerie? Explain. 3. If you were Frances Patterson, would you go back to the previous compensation system, implement the straight commission plan in all Kimbel's stores or devise and test some other compensation method? If you decided to test another system what would it look like?
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