企管故事之BLOOMINGDALE’S (Motivation)

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Bloomingdale’s is at the forefront of a quiet revolution sweeping department store retailing. Thousands of hourly sales employees are being converted to commission pay. Bloomingdale’s hopes to use commissions to motivate employees to work harder, to attract better salespeople, and to enable them to earn more money. For example, under the old plan, a Bloomingdale’s salesclerk in women’s wear would earn about $16,000 a year, based on $7 per hour and 0.5 percent commission on $500,000 sales. Under the new plan, the annual pay would be $25,000 based on 5 percent commission on $500,000 sales.

John Palmerio, who works in the men’s shoe salon, is enthusiastic about the changeover. His pay has increased an average of $175 per week. But in women’s lingerie, employees are less enthusiastic. A target of $1,600in sales per week is difficult to achieve but is necessary for salespeople to earn their previous salary and even to keep their jobs. In previous years, the practice of commission pay was limited to big-ticket items such as furniture, appliances, and men’s suits, where extra sales skill pays off. The move into small-item purchases may not work as well, but Bloomingdale’s and other stores are trying anyway.

One question is whether Bloomingdale’s can create more customer-oriented salespeople when they work on commissions. They may be reluctant to handle complaints, make returns, and clean shelves, preferring instead to chase customers. Moreover, it cost Bloomingdale’s about $1 million per store to install the commission system because of training programs, computer changes, and increased pay in many departments. If the overall impact on service is negative, the increased efficiency may not seem worthwhile.

QUESTIONS

1 What theories about motivation underlie the switch from salary to commission pay?

2 Are high-level needs met under the commission system?

3 As a customer, would you prefer to shop where employees are motivated to make commissions?

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