Sunshine Case Study
Sunshine Fashion: Fraud, Theft and Misbehaviour among Employees (OCB and CPWB)
What are the root causes – individual and contextual -- for the employee misbehaviour at Sunshine?
At Sunshine Fashion, the main manifestations of employees’ misbehaviour are fraud and theft by branch managers at the local Chinese market. The root causes of these misbehaviours are both individual and contextual:
Individual:
- Weak sense of belonging and loyalty to Sunshine (high yearly turnover of branch managers of 20%): Branch managers use Sunshine stores to build personal relationships with department stores and to promote their own brands.
- Need to get be better rewarded: theft is a symptom that managers are not well remunerated. Pocketing the difference between price tag, ongoing promotion and cash sales.
- Involuntary rotation might not be good for the moral of the employees, lowering their loyalty and increasing their turnover
Contextual:
- Recruitment policies: o Managers are hired mostly on “relationships of mutual favour”, and not based on managerial ability or integrity. o Long term personal goals for these people are mainly to flourish their relationships, because that increases their personal value in that market. The goals of the company do not fit managers’ personal goals.
- Organizational justice (OB, p. 256) was taken to extremes : o Uniform reward for branch managers did not take into account location and the standard of living of the particular branch/region. o Bonuses were determined to sole discretion of the general manager. The process and criteria were not transparent to branch managers.
- Lack of vertical control: o Decentralization of local promotions, discounts and stock. o Inconsistent data entered manually into ERP system. o Nonexistent auditing structure to unravel fraudulent practices: the president of Sunshine has to personally visit department stores to ensure personal relationship. This should not be his main job occupation.
What are the root causes – individual and contextual -- for the employee misbehaviour at Sunshine?
At Sunshine Fashion, the main manifestations of employees’ misbehaviour are fraud and theft by branch managers at the local Chinese market. The root causes of these misbehaviours are both individual and contextual:
Individual:
- Weak sense of belonging and loyalty to Sunshine (high yearly turnover of branch managers of 20%): Branch managers use Sunshine stores to build personal relationships with department stores and to promote their own brands.
- Need to get be better rewarded: theft is a symptom that managers are not well remunerated. Pocketing the difference between price tag, ongoing promotion and cash sales.
- Involuntary rotation might not be good for the moral of the employees, lowering their loyalty and increasing their turnover
Contextual:
- Recruitment policies: o Managers are hired mostly on “relationships of mutual favour”, and not based on managerial ability or integrity. o Long term personal goals for these people are mainly to flourish their relationships, because that increases their personal value in that market. The goals of the company do not fit managers’ personal goals.
- Organizational justice (OB, p. 256) was taken to extremes : o Uniform reward for branch managers did not take into account location and the standard of living of the particular branch/region. o Bonuses were determined to sole discretion of the general manager. The process and criteria were not transparent to branch managers.
- Lack of vertical control: o Decentralization of local promotions, discounts and stock. o Inconsistent data entered manually into ERP system. o Nonexistent auditing structure to unravel fraudulent practices: the president of Sunshine has to personally visit department stores to ensure personal relationship. This should not be his main job occupation.