Overview of Case
The case study from the Stanford Graduate School of Business that is subtitled: Success in A Declining Industry is a detailed description of the events that led to Men’s Wearhouse success. Men’s Wearhouse is a specialty retailer for clothing tailored for the businessman of the past and present. Since its first store in 1978, it had developed rapidly into over 1,175 stores nationwide (Hoover, 2012). Men’s Wearhouse developed its own culture, management theories, and practices. In the case study the external environment of this industry was fiercely aggressive with many companies closing due to financial strains.
Founder and CEO of Men’s Wearhouse, George Zimmer saw the “untapped human potential” of his employees as the key asset rather than property, plant, and equipment. According to Zimmer, the company’s five stakeholder groups in order are: Employees, Customers, Vendors, Communities, and Shareholders. He believes that if you take care of your employees first, they will in turn take care of your customers, who will then in turn take care of your top-line growth (Nishimura, 1993). Men’s Wearhouse implemented management systems for compensation and staffing, promotion and career development, and communication with employees at all levels. It has been said, “They instituted unusual and groundbreaking workforce management strategies that worked” (Ifante, 2001). This paper will discuss some major issues and solutions needing attention and some things that the firm could do to improve.
Concepts From the Text
Pay level explains how employees are compensated and is the average amount an organization pays for a particular job (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 327). At Men’s Wearhouse pay level was equal for employees in equal positions.
Hourly wage is the rate of pay for each hour worked (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 340). Men’s Wearhouse paid their consultants an hourly wage.
Incentive pay and commission are linked to an employees performance as an individual, group member, or organization member (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 356). Commission is based off of sales production. This is an excellent idea as far as compensation goes. It provides a small amount of guaranteed pay for the employee while also motivating him or her by the idea of getting compensated for working harder. In addition to this it puts the company in a position where they are not obligated to pay such a large amount in overtime pay.
Benchmarking is a procedure in which a company compares its own practices against those of successful competitors (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 335). Men’s Wearhouse did a comparison of their compensation method compared to other competitors. In doing this they found that their salary costs were higher than others by about 2-3%. Some companies might look at this and start thinking about cutting back on employees pay, however it seemed to be a good strategy that is working and keeping employees happy. The more motivated the employees are the more successful the stores will operate.
Employee development is the combination of formal education, job experiences, relationships, and assessment pf personality and abilities to help employees prepare for future careers (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 258). Men’s Wearhouse also takes its employees on nice and luxurious vacations for the purpose of employee development. The trips are geared towards training and developing the employees but they are taken very good care of while they are away.
Job satisfaction is a pleasant feeling resulting from the perception that one’s job fulfills job values (Noe, Hollenbeck, Gerhart, & Wright, 2011 pg 308). With the combination of high compensation and vacations, it is possible that it is for these two reasons that employees have