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Archive for December, 2005

Sales Oncall

NYC transit union (who run NYC’s subways and buses) decided to go on strike. They are ask for 8% raise every year, retirement age at 55 and declining MTA’s proposal for contributing 6% to their pension fund that will pay out 50% of their last year’s salary starting at 55. Average payout of their pension plan is a little over $1.5 M. What on earth are they smoking? I want some of that too.

Anyhow. Because of the transit strike, I got a ring from my manager at 2:00 in the morning. Guess what? It’s crisis managment all over again. We move up to a suite close to work at 3:00 in the morning, preparing to open the store as usual. We allocate two other workers to come into the city starting at 5:30, arrange two other workers to move out from Brooklyn at a later time to the suite, and open up 10:00am sharp. I think I am still enjoying the managed chaos that my last job trained me for. Perhaps I should aim for a more complex position when I look for a job.

We now have a suite opposite to work for ppl to go crash, and I have my cellphone on 24/7. Sound familiar? My PTS experience does come in handy at sometimes.

Add comment December 21st, 2005

Incentives and behavior

I was supprised at how much incentives influence behavior. Incentives comes in many different form: vacation, christmas party… and money. The other day a coworker was pissed at me about a $3 commission. (She didn’t know I credited it to her to begin with). Which makes me thinking the power of incentive, and how the right incentive can heavily affect your business.

Sales work on commission. Everybody knows that. But what you probably didn’t know is that almost every retailer (i.e. Brookstone, Herman Miller) offer a discretionary discount to help difficult sales. The more the item sell for, the more commission the sales associate gets. That seems to work perfectly as that aligns with the company’s bottom line, at the same time let individual sales associate make the decision on how much discount does he/she needs to give to make the sale. But what’s flawed in this picture is the numbers.

Suppose an item is $1000 and the discretionary discount is 20%. At a standard commission rate of 1%, the maxium commission that an associate can make is $10. But if the item sell for $800, to the sales associate, after tax, is only a $1.5 difference in his commission. When it’s a trade off between spending 20 minutes more to put $200 in the company bottomline or drop the $1.5 at the very begining to speed up the sale, most people will do the later.

What if there is a tiered commission structure that let the sales associate pick between giving the discount to one customer or another? Supposed we put the first 10% discount at 1% commision payout, and the second 10% at 10% payout. Selling the item for $900 now makes the associate $18. Each $10 subsequently will cost the sale associate approximately $0.75. The associate have the incentive to sell the item (cause even at $800 it would be worth $8), and even more incentive to sell the item at close to full price. That empower the associate to make his/her own choice in who to give the discount to.

Add comment December 7th, 2005

Management of generic staff

One thing I notice in my retail sales position is how little decisioning power each of the associate have. Procedure dictates daily operation, even though sometime it may not be the most optimal way to solve a problem. Which, interestingly is similar to what I discovered in my “tech spec” article on my blog.

Yesterday I was at Barney’s getting a new suit. I was fitting a size 36, but notice the suit came with much bigger pant size than it hould have. I explained to the sale associate on the floor that there was another suit of the same style with a jacket size 40 and a much smaller pant size. I told her obviously it was mixed up, and ask if she can swap them. She said there is nothing that she can do. After two phone calls to her manager, disscussing with her peer and having the manager come and check, they switched the pants.

I am surprised something that simple would need so much hassle to resolve. It kinda make sense. At my former job we rely everyone having a similar level of intelligent to understnad the problem and figure out the best solution. So a lot of times the problem is not very well described. But when faced with a work force with less experience and education, many company rely on procedures to run the operation. But when autonomous decisioning is not allowed, responding to dynamic situation become very costly. If a retailer can educate the sales associate to understand the intention of the customer and each decision’s implication to the P&L of the business, it will allow them to act autonomously to handle new situation that arises.

I am not a believer in operation manual, as this often strips away the original intention behind each operation. It will inhabit any suggestion for a better way to achieve the original intention. However, operation manual act as a check and balance for each decision that an associate makes by keeping the impact small. This works to prevent lost to the bottomline, at the expense of the decisioning power of the executioner of the procedure.

What’s eye opening about this retail experience is seeing how to work with labors with different skillset. You can’t always hire the same caliber of people cost effectively. The objective then becomes how you can work with people with different skillsets by putting in check and balances.

Add comment December 1st, 2005

Some old pictures

Some old pictures of my former coworkers

The PTS team (non of us work there anymore)

Last picture with this thing called “the pager”

The rest of the payments team

Add comment December 1st, 2005


December 2005
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