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Early in 2010, Raleigh and Rosse, a U. S. luxury goods retailer, was facing a class-action lawsuit filed by its employees. This arose through the use of a performance measurement system which was thought to be the factor of the retailer's success. However, such a system is said to encourage "off the clock" hours as it uses a sales-per-hour model. The sales employees feel they are inclined to spend more time attending to their clients' needs. This case study discusses the growth of the company, how it is being managed and the system it employs which led to the filing of a lawsuit.
Robert L. Simons; Michael Mahoney
Harvard Business Review (4353-PDF-ENG)
October 10, 2011
Case questions answered:
- Please describe the strategy of Raleigh and Rosse.
- Please describe the prerequisites for the success of the SPH program at the company and briefly justify your answer.
- Is the SPH program an appropriate measurement system to motivate the desired behaviors at the company? Please discuss the strengths and weaknesses of the SPH program.
- From a strategy execution perspective, what recommendations would you make to Linda Watkins, the CEO of the company, and why?
- What is the cause of the problems described in the case? How serious are these problems? How would you quantify the potential financial risk to Raleigh & Rosse (R&R)?
- Are the R&R employees pressured inappropriately by the sales-per-hour system? By management?
- How effective is the memo reproduced as Case Exhibit 4 in clarifying the distinction between "sell" and "non-sell" time?
- How would you redesign compensation and performance appraisal systems at R&R? Is SPH an effective measure of customer satisfaction? Are R&R's HR policies and practices fully aligned with its business strategy?
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Case answers for Raleigh and Rosse - Measures to motivate exceptional service
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Question 1: Please describe the strategy of Raleigh and Rosse.
The strategy employed by Raleigh and Rosse (R&R) can be described with the OAS framework: The objective (O) is the stretch target, in this case, sales growth, profitability growth, becoming the leading luxury retailer, and improving customer loyalty.
The advantage (A) is the source of sustainable competitive advantage. Raleigh and Rosse offers exceptional service by sales associates and store managers, hence profits from high customer satisfaction by providing a great customer experience. This allows for long term customer relationships and tailored services.
Lastly, the scope (S) of Raleigh and Rosse describes where the company competes with its advantage. This must be the luxury goods segment by targeting the richest customers who can afford the high quality tailored services.
Question 2: Describe prerequisites for the success of the SPH program at R&R and briefly justify your answer.
Raleigh and Rosse has a college-trained, ambitious workforce. They are promoting primarily from within the company. They have decentralized systems, allowing great flexibility. The management bonus is strongly linked to SPH. The company has a good reputation and applies an…
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