Just need help answering Questions #1-4
… CASE 12-1 BEST BUY OR BEST SCAM? TRYING TO GET COMMISSION RESULTS ON SO-CALLED NONCOMMISSION PAY One cannot go shopping for a home theater system, big screen are offered predominately through Best Buy stores TV, or computer in person without crossing paths with Best Buy characterized as a ‘store within-a-store forma With more than 1,600 retail stores operating under the names Magnolia Audio Video, Five Star, Pacific Kitchen, Future Shop, and As a category killer, Best Buy has itself come under attack from Home Sales as well as the more well-known Best Buy, Best Buy such warehouse retailers as Walmart and online behemoths as Mobile, and Best Buy Express, this conglomerate offers a pleth- Amazon. In order to address reduced revenues and get the firm ora of consumer electronics including appliances, mobile phones, back on track, Best Buy has had to reshuffle the location of its entertainment (music/movies), and computers. Although the firm stores, rethink in-store space allocation by product category, and has gone multinational, 92% of its total sales in 2016 were domes renegotiate leases.(1) tic and included kitchen appliance installations, mobile phone One way that Best Buy has tried to increase store revenues is by service, sales, and technology support. Those ancillary services focusing on providing customers product knowledge and services 106 PARTI. COMPENSATING over direct customers should be treated The Bes t employee blog reported very clear the feedback. That is not at al how it worked out es being and using the formation from the ing in demotions and promotions one employee bloe customers are at the core of our success and me and with her Every day. On the Response to Business Partner page, we noted how important estBuy’s reputation the long term successo com every employees obligated to: For • Treat customers toy and honestly Communicate with customers in a respectul and helpful – Provide prompt and accurate customers . Our Customer rely on us to price and present our prod- ucts and services fairly and accurately…. We do not condone any behavior that would violate their trustinus Ever.12) Best Buy, unlike other retail electronics stores, has marketed the fact that their employees are salaried, not commissioned Out of the gate their employees are told to tell clients that there are no commissions involved and they are there to assist the cus tomer. The focus was on growing revenue through quality service buttressed by customer confidence (3) We were told to emphasize this fact as to gain the cus tomer’s trust. Tell them that you won’t make a dime from the product you’re recommending Tell them that you’re only recommending this product based on their needs and preferences.(4) According to one self-proclaimed employee veteran, this is not the complete truth. Although many of the personnel at Best Buy are not paid on a commission basis (ie, sales personnel and Geek Squad members), Best Buy for Business employees do receive commission payments. For most others, though, sales are used in the calculation of additional employee income that would appear One of the store managers was demoled recently because his department wasnt meeting the sale bers at the time even though he was the best manan in the store. He would be constantly running around from department to department helping any customer he could Ne the rest of the leaders stand around or sit in the back of geoksquadril and tak usually personal conver sations. The backing system rapidy and irreparably damaged the culture the selling for including their relationship with the customer who was led to believe that they were dealing with and only employ e Fighting over customers and out-throat competition emerged mimicking all of the negative effects one would expect in a con Non vient Is Best Buy getting the best they can from their sales assori ates given their current compensation system? Do the math- working 50 weeks a year, 40 hours a week, sales associates earn between $9.50 and about $14 per hour. Is this a Bot Buy for the employees, their customers, and ultimately their stockholders? Questions 1. What is the definition of an incentive pay system, and given this definition, does Best Buy have a pay for performance system? 2. Why would any firm (including Best Buy) use an incentive pay system? 3. There are two basic choices in incentive pay. Which ones) doles) Best Buye r to utilize in their compensation plans and ‘racking system ? 4 The veteran employee claims that Best Buy has created using their tracking system all of the problems of a commis Sion system. What are the advantages and disadvantages of this system in general and more specifically for Best Buy? 5. The veteran employee’s perception was that Best Buy’s met nie system, which focused on individual employees’ behav lors, decreased their job performance What would be the pros and cons of Best Buy using a group incentive system? 6 Best Buys to use bonuses and commissions as part of their pay system. What are the effective and inetective uses of each wym ? commission driven Large bonuses are awarded to managers who meet and exceed sales/margin objectives, while sales associates can earn what are called “Blue Crew Bucks, which are added to their weekly salaries These compensation practices we certainly legal, but the question becomes whether just because Best Buy doesn’t call these tems “commissions they are not. More important, having employ este customers that so is not a factor in their salaries som both erroneous and unethical. The data flowing from Pavace indicates that sales associates eam bonuses plus commission (5) Sales Associate at Best Buy Salary Rangel) Bonus $199.11-$2,970 Commission $122.82-916,650 Total Pay $19,262-$28,070 In an attempt to increase in store sales due to increased online petition, the firm downloped anewales tracking system commission-driven pay system. Now employees are evalt several performance carorginal al accessory and extended warranty affach percentage hourly sales and ratio od males on Best Buy credit cards Bu got far more or less than what they bargained for the that this system had in pos of backing es so they told the floor supervisors to use the data to 7. What group incentive do you think might work best for Best Buy? 8. In light of Best Buy’s code of ethics and the opinions reported in this case, do you believe that it is ethical for sales cities to tell Oustomers that they are simply paid a flat rate? References (1) Huspeth, C. in.d) Best Buy Co. Inc. Hoovers. Retrieved May 10, 2017 from 10-subscriber hoovers.com.licat bly.edu/Hicompany Mulldescription.html?compa ny10209000000000 121 Anonymous, 2014, March). Code of business ethics: Best Buy Ip. B). Retrieved May 10, 2017 from http://s2.4cdn.