Alin NIRAMORN Case Study Methods Lori Ostlund 09/019/2012 Case Write-Up Summary of Case Situation In the case, Raleigh & Rosse, Simons and Mahoney (2011) report that in the beginning of year 2010, R&R is being sued by its sales associates. The Federal Fair Labor Standards Act (FLSA) states that R&R has continued breaking the state law by encouraging employee to work “off the clock”. R&R is a U. S. luxury good retailer run by family member.
The company mission is to serve their costumers with outstanding service. R&R Sale associates are expected to serve their costumer ”off the floor” as a part of “Ownership Culture”. Linda Watkins, a CEO of R&R who was recruited by Brian Rosse, has admitted that at first Bill Schwartz, a Senior Vice President for Human Resource had been questioning in some aspects of the Ownership Culture and particularly Sales Per Hours (SPH) program. He also suggests Linda to apply different approach instance.
However, Rosse believes that Ownership Culture and SPH is the core of the company to success. Moreover, the economic downturn in years 2008 and 2009 has affected to luxury goods industry. R&R were also impacted by the economic crisis; the revenue continue dropped down rapidly. Central Issue How Raleigh & Rosse need to handle with sales associates who sued the company. Recommended Course of Action Linda should make a decision how to respond to the lawsuit by paying back damages to all employees. Basis for Recommendation
R&R should set up an amount for one-time payment system because it can help the company safe money and it is fair for every employee. The case R&R (Simons and Mahoney, 2011) states that the employee who is the plaintiff in the lawsuit is asking the company to pay back twin amount of “non selling” hourly wages. The count judgment the company to pay in total of $200 million; consequently, this amount will affect the company financial. Therefore, R&R should offer an amount for pay back the claims, and make an agreement with all employees.
For example, in the case of Nightmare at Nordstrom (Solmon, 1990), Nordstrom had set up ranged of amount for each claims; and sent out the claim sheet to all employees. The employee has to fill-in the detailed to verify the amount of “non-selling” hours they worked. As a result, Nordstrom paid less than $3 millions for the claims. In other word, there is high possibility for R&R to lose $200 million for the judgments, thus settlement for payment would be cheaper for the company.
Moreover, an Ownership Culture program was introduced in 1992, which means there were a current employee and the old employee. Thus, retroactive compensation is considered as a big factor for the company. Indeed, the amount for pay back claims should be different between the old and new employee. For example, according to Solmon (1990) states that Nordstrom has sent out a letter to sales associates by offering to pay back the damage from $250 up to $1,000, depending on how long their worked for the company.
To put that differently, it is fair for all employees, which is the current sales associates who is seeking for damage, and the old employee who should be paid for their royalties. In conclusion, the huge amount that R&R need to pay for the court it might affect the company financial statues. Thus, by offering the amount for pay back the claims would help the company safe the money. In additional, the ranged of amount that arranged for pay back the current and claims is reasonable for all employees.