Abramson\'s Jewelers has established a strong niche market in the upscale jewelr
ID: 431569 • Letter: A
Question
Abramson's Jewelers has established a strong niche market in the upscale jewelry store segment. Abramson's was founded in 1871, and its current single-store location is owned and operated by John Wickersham, who bought the firm from its namesake founders in 1985. Over the last 15 years, Mr. Wickersham has narrowed the company's product offering considerably to focus only on high-end watches like Rolex and Piaget, custom jewelry, and estate jewelry. Mr. Wickersham stresses that this is an appropriate focus for his business since each of the products lends itself to relationship selling, and price rarely comes into the discussion. Despite the narrower offering, Abramson's floor space has doubled, and clients are intensely loyal to the good taste, design skills, and personal service level provided by Mr. Wickersham. After evaluating several expansion options, Mr. Wickersham has decided to open another store in a neighboring city. While it is likely that some of his existing customers may begin doing business at the other location, thus lowering sales volume at the original store, Mr. Wickersham sees this as a desirable increase in the level of service and convenience he can provide his existing clientele. At the same time, he believes that he will be able to grow the overall business faster with two locations. He has identified another reputable gemologist, Jill Diamond, to run the other store and is now considering how to compensate her.
What are the advantages and disadvantages of paying the new manager primarily cash pay?
What are the advantages and disadvantages of paying the new manager primarily on new store sales growth? And, what compensation structure would you recommend? Why?
Explanation / Answer
Answer;
1) advantages and disadvantages of paying new manager with cash pay:
Advantages: it's simple pay system and easy to calculate, it is a steady regular and minimum income to the manager, creating sense of assurance in the mind of the new employee. This pay structure helps to keep control of management on the new employee by means of withholding the pay increment. It avoids the jealosy among employees by equal pay of remuneration and promote team spirit.
Disadvantages: it doesn't provide employee with extra incentives, reward are not proportional to the efforts made by employee, nor this pay structure help to differentiate efficient and inefficient employees. Sales revenue and sales cost have no relationship under this pay system. This system brings burden on firm because sales volume dosntdo impact the remuneration pay.
2) advantages and disadvantages of new store sales growth:
Advantages: it's is suitable for new businesses and builds loyalty of the employees towards firm with pay system based on the stores revenue.
Disadvantages: long term incentives have to be incorporated to retain the employees which can put the company into a trouble.
Conclusion: straight lay compensation structure is recommended to the new manager, it can help her to work with the team with equitable pay system and boost her morale, motivate her to work effectively. Straight pay/ cash pay will be simple and gives sense of security to the newly appointed manager.