Evaluating Non-traditional Incentive System
Case study of Howe 2 Ski Sores
Mr. Sardar Ali
Lecturer: Mr. Baber Jamil
Institute of Management Sciences Phase 7 Hayatabad Pehsawar, Pakistan Evaluating Non-Traditional Incentive Systems
Case Study: Howe 2 Ski Stores
In this case study, the main focus of our interest is to evaluate the non traditional incentive system. But before going into the detail of Non-traditional incentive system, let us summarize the case study first. Case Study:
Maria Howe, a ski enthusiast and business school major, opened a store 10 years ago after her graduation with financial backing from her family and several friends. This store from its inception was intended to provide state of the art equipments and clothing for skiers at all skill levels, from beginners to champions. All the employees were themselves advanced skiers and could provide expert advice on the choice of clothing and equipment, and it was intended to have a quick response time. Howe originally drew from a pool of skiing friends and fellow students to staff the stores and still prefers to hire part-time employees with skiing expertise who might leave in a year over more stable, full time employees with less expertise and interest in the sport. Whether administrative staff, cashiers, clerks, or molders (employees who fit bindings to skis) were encouraged to keep up on the latest skiing equipment and trends, attend the ski vendor shows, try out demo equipment, and give feedback on the store’s inventory in order to help provide the highest quality state of the art equipment and advice for the customer. Suggestion boxes were placed in the store and Howe herself regularly collected, read, and acted upon the suggestions made by the clerks and customers. She developed special advertising campaigns to build an image for the nearby slopes in order to increase the market. As the business grew, Howe even added a line of rental equipment in order to lower the costs and encourage people to try the sport. Although Profits were irregular due to, Weather effects and Faddish nature of the sport, Howe’s efforts paid off in the long term, and within four years business had grown sufficiently to permit the opening of a second Howe 2 Ski Stores in another part about 10 miles from the first. In order to reduce the irregularity in sales across the year, Howe took a chance on the growing windsurfing market about six years ago, and at the East coast location she added a line of equipment for this sport. The move turned out to be very good one. The windsurfing market increased by more than 300 percent in four years and continuous to experience a slower but stable pattern of growth as families and older adults attempt the sport. This market has enabled her to smooth out the number of sales occurring throughout the year. Three years ago, Howe was able to open a third store, located within a 15-mile radius from the other two. Although managers have been hired to run each of the stores and the total number of employees has grown to 65, Howe’s basic strategy has remained the same—high quality, state of the art products, a knowledgeable staff, and a quick responce time. Profites from the stores have continued to grow, although at a slower rate. Competition from other ski stores has also increased noticeably within the last two years. The threat of increased competition has been exacerbated by signs that employee productivity has begun to decrease. Last year, there were eight occasions where expensive ski orders were not delivered in time for the customer’s ski vacation. Although Howe used a variety of manoeuvres to retain the customers’ patronage, (for example paying for the customers to rent equipment of equivalent quality, expressing the equipment to the customer as soon as it was delivered, and lowering the price of the equipment), the costs of these...