Sears retail history and business operations

Sears, Roebuck, and Company is an American chain of Department stores founded in 1886. For decades it was the iconic general Department store for American life, and the Sears Catalog was something many families looked forward to with anticipation. The first Sears retail store opened in 1925, and then after the Depression, began to diversity. In the 1990s the company began divesting itself of some of the non-retail burdens, but as the shopping patterns of America changed, and more competition entered, Sears was considered an outdated and outmoded chain. By 1993 Sears stopped its general merchandise catalog, and in 2003 sold its credit card business. In 2004 Sears and Kmart merged forming the Sears Holding Corporation. (Sears Archives).

Sears struggled for years with employee relations and retention. In 1992 the company shifted from an hourly wage based on years of service to a base wage and commission structure. This new base wage, often with up to 40% cut in pay, was done, according to management, "to be successful in this highly competitive environment."

Analysis

How do the Sears changes reflect a total rewards approach?

A true, "total rewards" package allows an employer to utilize all the tools available to attract, motivate, and especially retain employees. The package, then, includes salary, discounts, and other motivational tools designed for the employee to perceive great value. The new Sears compensation package reflects this standard in several ways:

Career banks reward career paths and link compensation to all jobs, as employees grow with the company, not just in terms of years, but in acumen, so does their reward.

Greater communication with management and employees results in greater job satisfaction.

Structured commission sales allow a motivated employee to make more than they would on just a straight wage.

Employee discounts and perks also contribute to job satisfaction.

Discuss why Sears' shift to a more performance-oriented compensation system had to be linked to market pricing.

Unfortunately, Sears was way behind the times in compensation. An employee who had been with the company for decades would be at the top of the scale, yet perhaps not perform up to the current market needs. Market pricing is typically competitive in nature -- and, at least with the niche of Sears, must reflect the margin necessary to maintain control over inventory, price to market, and establish a fair compensation system. Thus, even if there is a lower margin on some goods, linking the compensation structure by percentage to unique items allows the company to retain earnings while also encouraging sales growth. If, for example, an employee is working in a high volume, low margin Department, they still have a similar chance at performance goals as someone working in a low volume, high margin (appliances, for instance) area of the store. Linking compensation to market pricing evens the playing field for employees.

Does using a job evaluation system for jobs that do not have market pricing data affect the relationship of these jobs to jobs that do have market pricing data? If so, explain how.

Certainly. Components of all job tasks surround performance, but if Sears is going to avoid compression in the workforce and maintain a rewards system, they must find a way to even out compensation structures. For jobs that do not have market pricing, the company must either guess or estimate compensation data, which is likely to be more qualitative than quantitative. Second, it is more difficult for the employee to understand value-based sales volume without a way to price goods to market.

What should Sears do if the market pricing data for a specific job goes down from the previous year? Explain your answer.