Human Resource Practices at Egan Clothiers

What overall changes could you recommend to the executive team at Egan's about its HR practices?

Although the idea of making pay raises objective, rather than subjective, is a good idea, it clearly has drawbacks. The system is set up know so that employees are only rewarded on the quantity of service they provide and not quality. This has not only increased competition amongst team members, but also has seen a reduction in customer service. By adding in a factor for high quality service, perhaps a customer satisfaction survey, they may be able to counter this effect.

What are the pros and cons of Egan's performance appraisal system?

As mentioned, the pros are that it takes the subjectiveness out of the system. However, in the process, employees are losing the rewards for providing quality service. Certainly, this system may identify top sellers, but these are not necessarily the best employees. The best employees are those who not only sell items, but forge customer relationships. It does not help develop employees to perform the best that they can, it merely motivates them to act as aggressively as they can.

3.

Can increased sales be linked directly and/or indirectly to the appraisal system?

Sales is a good indicator of performance, but is not the full picture on how well an employee is performing. Customer satisfaction as well as the percentage of return customers is a much more important indicator of performance. I would change the system to reward those of mid to high level sales, but with the highest levels of customer satisfaction, the highest.

4.

How do you account for the fact that absenteeism has decreased at Egan's while turnover has increased?

Absenteeism has decreased because the performance system is tied directly to the employee's sales, which is a function of the number of hours he or she spends on the floor. The employee cannot afford to be absent, and as such, absenteeism drops. However, this system is not satisfying to the spirit of the employee. The lack of teamwork, and the increased competition, may have created such a negative atmosphere at Egan's that top level employees, who know they're a valuable asset, thanks to the system, get tired of it and leave.

References

None.