Blinds to Go
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Executive Summary
“Blinds to go” was established in 1954 by David Schiller in Montreal, Canada. Stephen Schiller, son of David, convinced his father to focus on selling blinds called “Au Bon Marche” during the mid 1970s. They differentiated by bringing in a production system which reduced the delivery time frame from six-eight weeks to only 48 hours. The business became a big time success and developed into a retail fabricator of windows dressings. None of its competitors could replicate the “Blinds To Go model. Now in June 2000 this company had 80 stores in US and 40 stores in Canada and each of these stores generated US $1 million while employing 6 to 20 people. The company was in expansion mode and wanted to start 40 and 10 new retail stores in US and Canada respectively every year.
Organizational structure:
Each store had people for four different roles which are as follows in the ascending order of the hierarchy:
a. The sales associate
b. The selling supervisor
c. Assistant store manager
d. The store manager.
The sales associates job was to help walk in customers to help them buy the blinds. The selling supervisor was in charge of a store when the store manager was not around while the store managers job was to take care of the store operations, motivating and developing staff and taking care of customer service. A very good sales associate got promoted to selling supervisor in six to nine months while it took about six to eighteen months for a selling supervisor to become a store manager. “Blinds To Go emphasized a lot on customer satisfaction and had noble guidelines to deal with the customers.
Old compensation policy and the changes:
Till 1994 it used to pay its employees based on the commissions i.e $3 to $5/hr + 3% of sales for the sales associates. The commission based structure created a work force full of energy and sales hungry people. But in 1995 the vice president of store operation changed this into a purely salary based one i.e $6 to $8/hr OR 6% of Sales for the sales associates (whichever was higher) in order to attract more recruits during the expansion phase. But this change reduced the quality of work force which in turn resulted in decline of sales and high employee turnover of 40 percent. Commissions were perceived to be the key to the sales culture and therefore the 100% Commission based scheme was readopted in 1998. This led to the increase of sales by 30%. But the employee turnover still remained high in the given conditions of low unemployment rate. One major reason was that the US employees were uncomfortable with the 100 percent commission and wanted a straight wage or salary.
Hiring policies:
The job qualities required them recruit people with certain sales-driven qualities. They wanted people who have the gift for the gab, no ego, honest, like sales, opportunity grabbers, and have good leadership and good people skills. The major methods of recruitment were Employee referrals, Internet sourcing, District Sales Managers (DSM), BTG retail recruiters, Newspaper advertising and Store generated leads. The most effective of them was the employee referral s, followed by internet source and then the DSM. It found that during June and July it had a staff turnover of 29 who left in 1 to 4 months, 12 employees left with 5 to 8 months and 13 employees who left after serving more than 8+ months.
The Challenge:
BTG has to recruit 500 sales associates, 50 selling supervisor, 50 assistant store managers and 50 store managers for its expansion plans. We need to create a strategy for BTH to meet the staffing challenge ahead. It also needs 1450 employees for the existing stores, for which it needs to formulate strategies that will help them achieve the target.
Critical Review
The company is planning a public offering in about two years time. For a successful public offering, the company has to show good growth that will entice investors. Since the company is still in the expansion phase and hence profits may not be very high, we assume that the company would want to execute its expansion plans in the first year and then record consistent growth over the second year. This would project a positive image in front of the investors.
To achieve this task, the company requires the following:
1450 employees to fill current positions (per year)
650 employees to fill new positions (per year)
Attrition rate over two months (June-July 2000) is 54.
Extrapolating attrition to a yearly number, attrition = 54 * 6 = 324
Hence overall, even though 147 employees have joined in the rolls of the company, the company