will require integrating human resource management theory and thought (as described in the textbook) while addressing major issues in the field and therefore will require proper referencing and citations. Please make sure that you are well acquainted with proper citation of sources. Please connect the issues describe in the case to HRM issues associated with the assigned readings feel free to use external sources to support your analyses.

Human Resource Management.

1 The Death of a Salesman Revisited: Parts A & B Part A "Hmmm... I really do not know what to tell you Gerry, this is a tough one. Both of my kids are out of the house; one working, the other in College. That puts me in a very different situation than you are in, you with a three year old daughter and all." The silence on the other end of the phone became deafening - maybe his cell phone hit a dead spot? Stephen Hodgetts was talking with his friend Gerald Mahoney about a job offer and Hodgetts, and, at least from Gerry's perspective, was being absolutely no help at all. They had been friends since childhood and now in their early 50's Mahoney and Hodgetts were as close as brothers. "Come on Stephen" Gerald shot back after an interminable long pause. "You always have something to say about everything! How could you not have any advice for me on such an important matter as me switching jobs. Do I take a chance and take a straight commission job with a great potential for making big bucks or do I stay with a job that I can barely afford to keep though it provides a guaranteed base salary plus commission? You know that I'm the sole bread winner for my family of three, so what would you do? Background of Gerald Mahoney When Gerald turned 50 years old in 2005, he started to wonder what had happened to his life. As a bright college kid from New York City, he had thought to take the world by storm, first through his musical and comedic talents, and then by being a super salesman. Neither plan seemed to work out. While he had several gigs as a member of differing musical groups and had worked the comedy clubs on Long Island, New York and Manhattan, he never really made a name for himself. His career in sales was no better. First starting out selling condos, he then shifted from retail sales job to retail sales job, never staying more than a year or two in one place and never becoming more than a store manager. However, his lack of real success never bothered him since he only had to care about himself and his needs were few. In terms of his personal life, he had dated several women unsuccessfully, married one and quickly obtained an annulment, and never found a reason to settle down and to find a good paying job. Then, through an unplanned series of events, he met his "significant other" and became a father to be, with the eminent birth of his daughter dramatically altering his life. He quit his job working as a store manager in a vacuum cleaning store to join his significant other who lived several hundred miles away with her mother and took whatever job he could land, shoe salesman's job in Foley's, a retail department store. After the birth of his daughter, Gerald and his family moved thousands of miles southwest to Texas to be near his significant others' sister. Gerald found it was very easy to transfer his job to another store in the Foley's chain and found himself once again selling shoes, but in a much warmer climate and in a much larger store. After a few months living in Texas it became apparent that his job selling shoes in a department store was no longer adequate since he could barely afford to pay for himself, his daughter and his significant other on his retail commissions. Money from his family and friends had dried up, as well as his significant other's bank account, and he was forced to admit that unless he changed 2 jobs, they were going to have to apply for family assistance. He started applying for jobs on the internet and through the newspapers, started going on interviews, networked through his family, friends, and customers. Yet, for all of his hard work and effort in finding a new job, he could not find a job that would pay him substantially more that what he was currently making. And then one day she walked into his store and his life would never be the same. Setting the Stage for a Job Change In reminiscing about how he came to jump ship and work for Royce Builders, Gerald recalled several events that propelled him towards this new career. Whether it was kismet or just plain dumb luck, Gerald wasn't exactly sure, but he knew that without these events he would still be selling shoes. First off, living in Texas (although certainly cheaper than living in New York City) was not as cheap as when he was living under someone else's roof. Besides now paying rent for a two-bedroom apartment, Gerald had had to dump his old jalopy in New York when he went to Texas and found that he had to buy a good car on credit - he now had car payments where before his car had been paid off. Secondly, raising a child, even with government assisted medical insurance, was no light expense and his significant other had to stay at home, a loss of potential income. She did baby- sit, from time to time, by this income was minimal and unpredictable. Bills outstripped his salary and if it weren't for the charity of family and friends, he and his family would have become destitute. Third, selling in his new store was far more competitive and variable. As the newest salesperson Gerald had one of the worst schedules (he was off at least one Saturday or Sunday a week, the biggest selling days), had to develop a customer base from scratch, felt like an outsider, and was being out hustled by the more seasoned veterans who knew the market and better understood the needs of the customers in that region of the country. The other salespeople were also less than helpful to newcomers and had a very bad habit of stepping on his sales by taking customers way from him while he was servicing other clients. Seasonality was less of an issue in an area that much never got below 50 degrees in the winter, and shoe sales seemed far more sporadic and uncertain. Since his salary was commissioned-based, his unpredictable sales lead to a high variance in his weekly paycheck since there was no minimum salary. After just a few months on the job, Gerald read in the local newspaper that Foley's (a subsidiary of Mays Department stores), was acquired by Macy's West, a subsidiary of Federated Department Stores. "Federated acquired its rival May Department Stores, the operator of the Lord & Taylor and Marshall Field's department store chains, for about $11 billion in August 2005. As a result of the acquisition, Macy's West added 44 Robinsons-May stores in California, Nevada, and Arizona, and 17 Foley's stores in Colorado, New Mexico, and Texas, bringing its store count to nearly 200 locations." He first worried about his job but was told by the department manager that Foley's would merely adopt the Macy's name and logo after a year or so and continue to offer the same products and services and therefore retain all of Foley's employees. He thought nothing of it at the time and went back to work. It was a year later in 2006 that Gerald would finally experience the impact of the changeover from a Foley's to a Macy's on his sales and commission. Foley's product lines of shoes turned 3 out to be far less expensive than Macy's, not only doubling the sticker price on the average shoe but reducing the volume of shoe sales and changing the customer base. In theory then, he could sell less shoes to make the same commission or, even better, sell the same amount of shoes and make far more commission. Yet, this was in fact not the case at all. Historically, customers who shopped at Foley's for shoes wanted discount prices with a retail experience, a "more for less" or value-added philosophy. Gerald was used to dealing with this type of customer from his former job since this customer was not very demanding of service but very price conscious - when shoes came on sale they bought quickly and big and were not very demanding in terms of style and colors. The Macy's customer, however, was far more demanding in terms of service and quality, and therefore Macy's shoe product line was a step up in price and features. These customers wanted to be pampered more and took far more time to make a decision about which shoe to buy-salespeople had to wait on them hand and foot in order to complete a sale. The bottom line is that Gerald sold far less shoes in volume and less shoes in overall revenue with the Macy's line that he did with the Foley's line, and he was not alone. The straw that broke the camel's back came a few months after the store's name and shoe product line switched. A huge meeting was called in the department by the department manager and many salespeople and stock clerks thought that the worst was going to occur- people were going to be fired because sales were down. Rather than firing people, however, management opted to reduce the sales commission on shoes by 50% while ensuring a minimum base salary. They also forbid salespeople from going into the stock room and getting their own inventory - only clerks were allowed to handle inventory and to be in the "back room." This was certainly a major blow to the super salespeople in the department, who realized that they would have to sell twice the volume to make up the commission loss, while having far less control on the timing of that service since they would have to wait for assistance from the clerks in order to service their customers. Waiting time was a critical factor in retail sales and the longer a customer had to wait, the greater the likelihood that a sale would be lost. Since Macy's was offering a higher quality shoe to a more demanding customer, service was a very critical component and needed to be enhanced, not devalued. Although many of the salespeople at the meeting objected to this change, the department manager was insistent and indicated that this was a new working condition associated with the clerk's new union, a union which had a signed a contract with Macy's. Gerald felt that the writing was on the wall for him, given the new commission system and his dependency on clerks to find the shoes that his customers needed. He had finally put some good weeks together to make a decent commission and a living wage and knew that he could not continue this sales pace under the new pay system. And the minimum guaranteed salary was not enough to support his family. He decided then and there he just had to leave the job, but what could he do that would earn him more than what he was earning now? Gerald reached out to several of his friends and family members to see if they had any connections he could use in order to get a job. Most of the referrals immediately lead to dead ends since he had neither the background, education, nor experience in which to even apply for 4 whatever positions were available. The one job he did apply for, a pharmaceutical salesperson, was far more complex than he anticipated and it was clear to Gerald during the interview that he was not the right person for the job. He certainly seemed to be right since no job offer was forthcoming. He felt powerless, hopeless, and accepted his fate in a very disgruntled manner. Selling the Right Pair of Shoes to the Right Person It was a day like any other day for Gerald Mahoney yet Gerald was to look back at this day with both pleasure and regret. He was working in the women's shoe department and doing the best that he could to sell a fairly expensive pair of boots to a young lady who obviously could afford to shop at a much classier store like Nordstrom's or Newman Marcus, yet, for some unfathomable reason, decided to bestow her good graces on Macy's. Gerald must have gone through every boot in her size, based upon the piles of boxes of boots that needed to be repacked in the back room, and yet nothing he could do persuaded her to buy a pair of boots. He had reached his limit with this customer but something inside him would not allow him to give up on this customer. Maybe it was the time he had spent with her (at least an hour), maybe it was the fact that he knew he needed to sell more shoes to make more than his lowly minimum weekly salary of $400/week, or maybe he had not only reached his breaking point but found his second wind - he was determined to sell this customer something and she was not going to leave the shoe department empty handed. He screwed up his courage and decided to take what he thought at the time was a very bold move. "Excuse me miss" he said in his most polite and refined voice "but I couldn't help but notice that I've been assisting you for the past hour and I didn't even ask you your name. Would you be so kind as to share it with me?" She hesitated for a moment and Gerald thought he had blown the sale. He was cursing himself under his breathe when she briefly replied in a very business-like manner "My name is Maggy Monahan and by your name tag I assume your name is Gerald Mahoney. I do appreciate the time you have taken with me in helping me select shoes for work but you must understand that my job requires a very particular look and of course the shoes must be comfortable as well. After a few more minutes of trying on several more pairs of boots, Gerald was able to gently persuade Ms. Monahan to buy one of their most expensive products. He rang up the sale and was complimenting himself on his persistence when out of the blue Ms. Monahan said "Now that I have answered your question, and you have sold me a pair of your finest shoes, would you answer one for me?" Gerald went from happy to apprehensive and thought "what could this woman possibly want to know from me? Is she preparing to make a snide remark about our product line or even about my assistance to her? Perhaps she wants to reverse the sale?" Before Gerald could reflect more and perhaps create even worse scenarios in his head, Ms. Monahan came quickly blurted out her question. "Why is an obviously highly talented man like you, who has just sold me a pair of shoes I probably don't even want or need, working at a place like Macy's? I am the Director of 5 Recruiting and Training at Royce Homes and I can tell from the way that you have handled this sale that you would make a superb homes salesperson. Here's my card. Why not call me tomorrow morning and we can arrange a time for you to come in and chat about the wonderful opportunities at Royce. Your talents are wasting away here at Macy's and you could certainly make far more money selling homes. Our website is also on the card so feel free to check us out and see our job listings." Gerald thanked Ms. Monahan for her kind words and told her he certainly would call her in the morning and arrange for an appointment. "Perhaps this was the one break I needed all my life" considered Gerald. "Perhaps now I can do the right thing for my family and myself by working in a good job with good pay and benefits. Homes are big ticket items and I am sure that I can make a really good commission by selling just one home." Gerald got home that night, told his significant other of his little adventure, and immediately checked out Royce Homes' website. Job Advertisement for Sales Counselor Royce's job advertisement on their web site for a sales counselor, as far as Gerald Mahoney was concerned, seemed very straight forward and exciting. See Exhibit 1 below. Exhibit 1 Careers at Royce Builders At Royce Builders, we have a simple philosophy: Building Homes, Building Community, Building People. It's an attitude that has propelled us to leadership in the homebuilding industry. If you are looking for excellent pay, benefits, and opportunities, you owe it to yourself to explore Royce Builders. Our recruiting mission is to attract talented individuals of the highest integrity, caliber and character. Grow With Us Royce Builders is always interested in talking with individuals who want to grow with us. It takes a team of people with many different talents to comprise Royce Builders. Royce Builders looks for top-notch individuals who enjoy a challenge and can contribute their talents to our team environment. We offer a competitive compensation package including advancement opportunities, comprehensive healthcare, 401K and a positive atmosphere conducive to achieving success. Description: Must possess a high amount of energy and dedication, excellent public relations skills, a high orientation to customer satisfaction, exceptional organizational skills, a strong desire to succeed and achieve goals and the desire for an interesting and financially rewarding career. No real estate experience required. 6 Weekends a must! Requirements: Education: Location: Contact: Previous sales experience preferred. Dallas or Houston, Texas Recruiting and Training Department Email Resume to: Recruiting and Training Dept. Please reference Job Code SCWEB0802 To Apply: Gerald was ecstatic about the prospect of selling homes again, although his previous experience selling condominiums was not necessary (although it would seem to be a plus) in terms of the job requirements. He seemed to have the right background for the job and he had always wanted to work in a job environment where he would feel like an integral member of a team. He perused the firm's website further and did some research on the firm before he called up Ms. Monahan to set up an interview (see Appendix A, Royce Homes LP). Getting the Interview: Persistence and Pain Gerald called Ms. Monahan the next day as he promised and she seemed quite receptive to his call. She asked him to FAX over a resume and that she would get back to him (or her assistant would), in order to set up an appointment for him to interview with her and some of the key salespeople in the firm. Gerald had an old resume which he then typed into his computer to update. Once typed, which took him a fairly long time since he was a slow typist and had rarely used Microsoft Word, he started looking over his resume to see if he could polish things up and make his background more attractive. One thing was clear looking at his resume, that he barely stayed in one job for more than a year or two and that when he did "jump ship" that it was not necessarily for a better job or for a better career opportunity. This career path perplexed him to no end and he wondered how he would explain it if the issue were raised during his job interview. He decided, after a day or two of brooding about it, that honesty was the best policy and that he would explain how his life had changed for the better and that he had found the ambition that he had lacked most of his life. He wasn't necessarily happy with this answer but felt that it was the best way in which to deal with the obvious that he had a mobicentric personality and now was finally settling down. Gerald ended up Faxing his resume three days after he had talked with Ms. Monahan and waited for the inevitable phone call - however, it never came. He wondered if he should call her and verify if she had received his FAX or not and finally did after Adrienne persuaded him that he should at least follow-up and find out what had happened. After several days and unsuccessful attempts to get Ms. Monahan on the phone, her assistant did confirm that his resume was received and that they would be getting back to him about setting up an appointment. In the interim, all was not going well at Macy's. Sales continued to be slow and although Gerald did have some good selling days (as he would say, it didn't take much to have a good day since the shoes were far more expensive than Foley's), his paychecks continued to be quite low and his family's economic situation was worsening. He needed a new job with decent pay and he 7 needed one now! He continued to call Ms. Monahan's office once a day and after a week of calling he finally received an appointment for the following week for an interview. He thanked God for the opportunity to better himself and went into the interview both excited and nervous. The Ordeal Gerald was overwhelmed by the Royce's interview process and felt that he had just gone through a wash wringer. Having changed jobs every year or two, Gerald thought he knew what to expect during an interview since he had been through so many. Usually he met with a store manager or the head of personnel for about an hour and they would ask him questions about his previous employment, why he left his last job, and why he wanted to work for their firm. These were routine questions which inevitably lead to a discussion of salary (if they thought he was qualified to do the job) and a job offer. Yet Royce's interview process was a whole day event and far more complex. It all started at 9 AM. First, before he met with anyone, Gerald took a battery of exams and filled out a set of questionnaires. The exams included everything from basic math questions (which he hadn't done since his college days, nearly 30 years ago), to what seemed to be an IQ test, to questions about self-image, and to his preferences about the type of work he likes to do. For three hours he sat in this little interview room, quite alone, and felt that his mind would eventually turn to mush. They gave him a short lunch break (1/2 an hour in a small lunch room with just food vending machines) and Gerald wondered was the job really worth this heartache and grief. He thought of his daughter every time a negative thought drifted into his head and decided to continue. The afternoon was much better. The fact that he actually received an interview after all of the psychological tests he had received lifted Gerald's spirits - perhaps he had a chance to get this job after all! His first interview seemed to set the tone for the rest of the day. Gerald had a wonderful interview with the Sales Director, Sam Arden, and found Sam's easy going, laid back style a refreshing change of pace from the usual sales people he had dealt with most of his life. Sam, after telling Gerald a little about the firm and about the homes sales market, asked Gerald a little bit about his background and sales history and what made Gerald special enough to become a Royce sales associate. These questions were expected by Gerald and he was quite prepared. The next series of questions, however, were very different than anything Gerald had experienced during an interview and he found this approach very positive and exciting. Sam would tell him a little story, Gerald assumed a hypothetical situation of sorts, and then ask Gerald what he would do or say if he were the manager or sales associate in the situation. No one besides a customer had ever asked Gerald's opinion about anything at his prior jobs and Gerald felt that he had finally found a firm that cared about what he thought and was willing to listen to him. Gerald sailed through these scenarios, he thought, with flying colors and Sam's tone was always very positive throughout the interview. It was 3 PM when Sam finally called an end to this session and Gerald felt invigorated and ready for more. The next sets of interviews were rather strange to Gerald but he was in such good spirits that nothing could deter him. He walked into a small conference room where three people who 8 identified themselves as area managers and one person from personnel asked him a series of questions about his selling approach, work habits, and his ability to work with a sales partner. This session lasted an hour and was repeated in another room with another three area managers and another person from personnel. At 5 PM the session ended and Sales Director, Sam Arden, walked in and told Gerald he would call him in a week to let Gerald know the firm's decision. Gerald at that point was quite tired but elated, thanked Sam for the opportunity to interview for a job with Royce, and said he looked forward to hearing from them. When he got home he took a long bath, crawled into bed, and had the most restful sleep he had had months. Waiting for Godot? The next week seemed like an eternity. Every day Gerald hoped to get a call from Royce telling him the job was his, and every day he was disappointed when the call never came. "I know I aced the interviews" thought Gerald to himself as he was assisting an older woman try on a pair of finely laced shoes "so what is taking them so long to make up their minds?" Gerald became so fixated on the expected call that his attention to his job was waning and his sales numbers dropped precipitously low. His manager actually tried to help him make a sale or two ("was it out of pity or disgust" thought Gerald) and get him out of his slump but Gerald became quite morose and despondent. Gerald felt like a young kid on a car trip asking his parents "are we there yet, are we there yet" - even a "no" would have been better than the waiting and the uncertainty. A week went by and Gerald had not heard anything from Sam's office. Self-doubt was setting in and Gerald was quite on edge. He was debating with himself whether he should play it cool and just wait for the phone call or whether he should take the initiative and call them. He did not want to seem over anxious yet at he same time he did not want them to think that he wasn't interested in the job either - what a conundrum! After two more days of indecision, Gerald's significant other, Adrienne, insisted that Gerald find out what was going on or he'd should be prepared to sleep on the couch until he got an answer. Gerald immediately called and was told that a letter was in the mail to him and he should await its arrival. The Letter Three days later, and with continued impatience at work and at home, Gerald received the destined letter. The first word he read "congratulations" sent Gerald into an ecstatic frenzy. He danced with his three year old daughter, hugged his significant other, and had a grin from ear to ear. He called his best friend in New York to share the good news, called his mom, brother and sister, and was about to call his boss at Macy's to resign when Adrienne called his attention to the terms of the offer. "Hold on a minute" Adrienne exclaimed. "Have you seen the terms and conditions of your employment?" Gerald put down the phone and walked over to Adrienne and then read the letter slowly and carefully. "Hmmm" mumbled Gerald "this was not exactly what I had in mind." Three thousand a month for the first three months is much more than I'm make now but after that the job is commission only, starting at 1.5% and goes as high as 3%. If the average home is about $150k and I sell one home a month I'd make $ 2250/month, about what I'm making now 9 selling shoes. Assuming that medical and dental packages run about the same cost and that coverage is the same, I'd lose paid vacation time but perhaps gain in terms of their contributions to a 401(k) plan. Doesn't sound like that great a deal to me!" "But wait a minute" replied Adrienne "you certainly could sell more than one house a month. If you just sell two homes a month you're making $4500/month, that's $54k a year, more than double than you're making now! You have no chance in hell to make that type of money at Macy's, in fact I bet even the top sales people in your department don't bring home that type of bacon!" "I don't know about that" Gerald responded "but I do know that the new commission system at Macy's makes it all but impossible for me to really make more that $30,000 a year. I just don't seem to have the knack of selling Macy's higher priced shoes because we just don't seem attract customers who want better shoes; they're still shopping for Pay Less prices." Gerald let this all sink in as he took a walk to clear his head. this was an important decision in his life and he needed to think about it. "Adrienne has a point" Gerald was told himself. "I really can make very good money selling homes whereas selling shoes is a dead end job- especially with what Macy's has been doing lately with my commission. However, what if I don't sell any homes after the third month? At least at Macy's I have a guaranteed salary, low as it may be, if I have a bad month; there is no guarantees with Royce. If I were living on my own there would be no doubt in my mind that I would take the Royce offer, but I have a 'wife' and kid to think about and I need to make sure that the money continues to flow." Gerald knew that he would have to decide whether or not to take this job offer since his training program would begin in just two days. He continued his walk and decided to call with his cell phone his family and friends to discuss the matter further Endnotes 1 Retrieved from http://premium.hoovers.com/subscribe/co/overview.xhtml?ID=ffffhyffstxxcftxs#, December 30, 2006. Frey, Christine (September 9, 2003). "Workers Approve Bon-Macy's Contract" Seattle-Post Intelligencer. retrieved from http://seattlepi.nwsource.com/business/138676_bon09.html, January 2, 2007. Retrieved from http://houston.roycebuilders.com/aboutus/careers.asp, December 19, 2006. *Jennings, E.E. (1970). "Mobicentric man." Psychology Today 4(2), 34-36. 5 Retrieved from http://premium.hoovers.com/subscribe/co/factsheet.xhtml?ID=rsssfixtcxtch, December 19, 2006. "Retrieved from http://houston.roycebuilders.com/aboutus/, December 19, 2006. Retrieved from http://houston.roycebuilders.com/aboutus/builders.asp, December 19, 2006. *Retrieved from http://houston.roycebuilders.com/aboutus/services.asp, December 19, 2006. "Retrieved from http://houston.roycebuilders.com/aboutus/design-center.asp, December 19, 2006. 10 Retrieved from http://www.hammersmithfinancial.com/, December 19, 2006. "Retrieved from http://houston.roycebuilders.com/aboutus/homestar.asp, December 19, 2006. 10 Appendix A ROYCE HOMES LP With headquarters in Houston, Texas, Royce Homes LP "builds entry-level and move-up homes in the Dallas, Houston, Phoenix, and Atlanta areas. The company's five divisions build under the names Texas Colonial Homes, Espree Homes, Royce Homes, Enclave Homes, and Michael Thomas Estate Homes. The homes range in size from about 1,030 sq. ft. to 5,700 sq. ft. and in price from the $80,000s to the $400,000s. Royce Homes offers design services through its design center, and it also provides mortgage services through affiliate Hammersmith Financial. The company has built more than 16,000 homes in more than 50 communities since it was founded in 1984.5 The company's website notes that Royce Builders "is one of the most successful home building companies in the nation. Royce Builders ranks among the top 30 privately held builders in the United States and stands firm as one of Houston's most respected. With nearly 20,000 satisfied Houstonians living in Royce Builders homes, our track record speaks volumes. Each division of Royce Builders operates under the principles of success that have been with the company since its inception in 1984. With Royce Builders, you will find 'Your Idea of a Home. This means that your builder will listen to your needs and wants to help you live the life you've been dreaming. You can feel confident in your investment because your home must pass extreme levels of scrutiny before you move in. All Royce Builders homes receive the detailed review of a team of qualified construction personnel, third party inspectors and the final acceptance of the one-of-a-kind HomeStar customer care team. The Five Divisions "Royce Builders accommodates individual buyers' needs, whether they are a first-time home buyer, a growing family moving into a larger home, or empty nesters ready to downsize while keeping their idea of a classic home. There are five divisions of Royce Builders offering new homes from the $90s to the $430s. TEXAS $90s to $170s Texas Colonial Homes builds dreams. For many, the dream of home ownership can seem difficult to accomplish. Texas Colonial Homes makes it easy. Through years of experience, the builder has developed flexible programs for people of all types of financial backgrounds. Texas Colonial Homes can show you how to find your dream home with payments that fit your budget. Texas Colonial Homes. We build dreams. ESPREE Hems$100s to $260s 11 Life is all about choices. Espree Homes helps you make the right ones. Through decades of listening to customers, Espree Homes has learned that every homebuyer is different. That's why the Espree, team takes pride in listening to your dreams, understanding your financial situation and helping you to design the right plan for your future. Espree Homes offers quality homes and provides families with an alternative to renting. As an Espree homebuyer you receive an outstanding value because you pay for only the features that you want. Espree Homes truly cares about you and your dream of homeownership. Life is all about choices. The first choice is easy; start talking about your idea of a home, Espree Homes is listening. Espree Homes. The Best Choice for Good Reason. ROYCE HOMES $120s to $380s Royce Homes has more than 20 years of experience in the Houston area. A Royce Home offers superior construction standards, extensive floor plan selections and a variety of interior and exterior features that allow homebuyers to customize their home to fit their lifestyle. With communities around the city, Royce Homes offers families many opportunities to find their idea of a home. Royce Homes. Your Idea of a Home. ENCLAVE HOMES $110s to $430s Enclave Homes builds homes that allow you to enjoy the elegant lifestyle you've worked to achieve. When you step up to an Enclave Home, you notice the details that you've dreamed about. Award winning designs. The finest materials. Elegant features. Construction detail of the highest standard. At Enclave Homes, we understand that you've earned the best in life and we give you the peace of mind to enjoy it. Enclave Homes. Signature designs in Houston's finest communities. Michael Thomas ESTATE HOMES Impressive floor plans present the finest in custom features and options. By providing an array of options, Michael Thomas Estate Homes ensure that each home reflects the owner's personal taste. Home designs range from 2,800 to over 5,700 square feet."7 Customer Services Royce prides themselves as being a one-stop shop for home buying, providing customer assistance from contract to closing. Their New Home Center allows the customer, from one central location, to review community locations, floor plans, and pricing. The Design Center provides owners the option to add personal touches to their homes by providing the customer 12 decorating experts who help the customer make effective design decisions. The consultants are knowledgeable about styles and modern trends, and they can help homebuyers understand what products and color combinations will compliment their new home this year, and for years to come. In-house financing makes home purchases quick and easy through Hammersmith Financial, a mortgage banking company offering complete financial services and a wide variety of loans. Their convenient loan application is taken to fit your needs; by web, phone, fax, mail, or in person with loan programs designed to meet customers' specific needs, with competitive interest rates and in-house underwriting, appraisals, closing, and marketing.10 Even after a home is purchased, Royce provides distinctive after sales service through its HomeStar program. This program assists homeowners with proper maintenance of their new home by allowing homeowners to conveniently schedule and report maintenance items, including emergencies to a call center that is open 24-hours a day, 7-days a week, including holidays. In addition to warranty services (this program is included for the first year), and for an additional fee, the call center will assign certified professionals to perform and document monthly, semi-annual and annual home checks. 11 13 The Death of a Salesman Revisited Part B Gerald Mahoney was driving home from his first day at his new job and he could not believe his bad luck and his misfortune as 2006 was coming to a close. "Of all the real estate offices in all of Royce Homes operations', I had to end up in this one! I left my stable job in retail selling shoes because I thought that I could make a better living selling homes; you sell one home and you earn thousands of dollars in commissions, what could be easier? Yet what I have here is a disaster in the making, and I've been here just one day! We have no model homes up, we're in a vacant area with no traffic, I'm in a trailer for a showroom, two homes just starting to be constructed that seem far too expensive for the neighborhood, and no access to the internet or to a television in the office. And look at my desk, if you could call it that! It looks like an antique from a world war two machine shop. And the worst of all is that I'm working with the saleswoman from hell, the ice princess. She has the personality of a rock and is as vicious and competitive as a rabid wolverine. How can I possibly sell homes in this competitive market, given these working conditions? (See Appendix B, The Residential Real Estate Market.) Gerald Takes One Job and Leaves Another Gerald must have talked and walked for several hours since his knees were pretty sore by the time he go back home. He had received rather mixed advice from most of his friends but Stephen Hodgetts' comments in particular stood out. "What have you got to lose" Stephen said "by taking this job? You can always go back to Macy's or another low wage job and earn the same lousy pay. You know you're going to kick yourself in the head no matter what you decide to do, you always second guess yourself, and so you might as well take the plunge and try out this new job. Gerald talked about all what he had heard and thought about with Adrienne and they decided that he might as well roll the dice and try out this new job. For the first time in a long time Gerald was excited about working and Adrienne seemed very supportive of his choice. Maybe this was the one break he had been waiting for his whole life and now was his chance to capitalize on it. Gerald went to work for Macy's the next day with a new spring in his step, a smile on his face, and a real glimmer in his eye. He was actually looking forward to telling his manager "I quit" and decided that he would give his manager the minimum time he thought was appropriate, a week's notice. After all, he wanted to start the training program as soon as possible as well as make this new, higher salary. People in his department immediately noticed a change in Gerald as he waltzed into the shoe department and joked with all the other salespeople and the clerks. They wondered what had brought on this strange transformation since Gerald normally seemed under allot of pressure and somewhat stressed out, and he never seemed very chummy with his fellow sales associates. Gerald punched in, helped some clerks to clean up the back office (they were surprised and appreciated the assistance), and then went onto the sales floor when he noticed that the manager 14 was not around. A few hours later, and after a couple of sales ("ironically" Gerald thought to himself "I'm doing better today than I normally do"), the department manager had come back from his storewide meeting. Gerald immediately cornered the manager, asked him if he could talk with him privately, and then, once in his office told the manager that he would be leaving within a week's time. To Gerald's surprise, and even perhaps his dismay, the manager shrugged his shoulders, shook his hand and wished him good luck, then went about his business. No fuss, no argument and not even a counter offer! Gerald had hoped for a better reaction than that! And Now for Something Completely Different The week flew by and Gerald could not wait to get out of Macy's and go to his new job working for Royce. His fellow workers found out the news of his leaving when the following week's schedule came out without his name on it and most commented to each other and to Gerald that leaving was the best thing he could do if he had a better job lined up. However, no one said he would be missed, and no one said that his leaving would leave a huge gap to fill. Facts were facts and Gerald knew that he was merely another cog in the machine and Macy's would quickly replace him with another sap that would be willing to earn a low, guaranteed wage. Gerald began his five-week training program on Saturday and he quickly realized that his weekends would never, ever be his own again. It is not that he never worked weekends for Macy's but weekends were critical in homes sales and he was told immediately when he walked into the door of the training room that he was expected to be on-the-job every weekend. Gerald felt that first day started off with a bang - after a few quick introductions around the room (there were ten trainees and several trainers) the trainers quickly outlined the training program. Saturdays through Mondays he was going to spend with a mentor on-site in one of Royce's home developments (although this first Saturday was at corporate Headquarters) while the rest of the week (Tuesdays off) would be spent at the corporate office going over policies and sales procedures, the process of home construction, using the personal computer to write up a contract, contacting realtors, and use/placement of signage. Much of the training would consist of canned videos dealing with such issues as new home buyer orientation, closing the deal, and the laws dealing with real estate purchases. The rest of the time would be spent focusing on the real estate salesperson exam, a state exam that would qualify the trainees for selling real estate through a real estate broker. The instruction for the exam included a combination of lecture and self-study. Although this credential was not necessary for in-house sales, Royce felt that their sales associates should be well versed in state requirements and should be as qualified as possible. As the days flew by, Gerald was at first quite impressed with the training program, as well as his first paycheck which came at the end of the fourth week. Never in his over thirty years of work had he had experienced such intensive training. Obviously Royce took a particular interest in training their staff and put their money where their mouth was they were investing in knowledge management. Gerald particularly liked the fact that his ideas and opinions were not shot down during these sessions but were not only listened to but positively commented upon; this reinforced his impression during his interview that sales associates would become valuable members of the Royce family. 15 At the end of the fifth week, however, Gerald seemed lost and overwhelmed. "There is just so much to know that I cannot begin to tell you what I know and don't know" Gerald told his good friend Stephen. "I'm still confused over home financing options, how to fill out a contract on the computer, how to contact realtors in order to create a large referral network, and a million other detailed items. Let me tell you that building and selling a home is far more complex that selling shoes ... and rightly so given it's high sticker price. I really could have used another three to four weeks of instruction, as well as more hands-on field work. I would have really liked to have done at least one presentation walk-through with a customer and then had a supervisor critique my work - I understand that they do not want to jeopardize a sale but there is only so much you can learn from observation!" Gerald's Waterloo? The last day of training Gerald, as well as the other trainees, received their assignments. The training manager went out of his way to indicate to the group that Gerald's assignment (along with a fellow trainee named Christa Gayle), was the toughest assignment of all, a real challenge. The area that they were going to work in basically consisted of a working trailer (rather than a show home with an office, which was the norm), two incomplete homes that were the most expensive models in the Royce product line, and nothing around the area for miles around; basically a series of vacant lots in an open area without anyone or anything to see for miles around. Gerald was shocked and dismayed. He needed to sell homes, and needed to sell them quickly if he was going to survive after his three month pay period was up. Yet he did not want to make trouble at the meeting. First, Gerald was expecting to be paired up with a seasoned sales person, not another new recruit, yet everyone seemed paired off with a fellow newbie. This seemed counterproductive - how was Gerald going to learn the Royce way to sell successfully if someone who was not a successful Royce salesperson was working with him? Christa, his partner, seemed nonplused at the idea and chortled when Gerald mentioned it in passing. In fact, she seemed to be beaming with pride! "Obviously we must have done something right during our training session for the firm to have such confidence in our ability to sell homes that they gave us the most challenging location without supervision" Christa remarked to Gerald. "I've been in real estate before, so have you, so they must think that our previous experience is a real asset." "That's one way of looking at it" replied Gerald. He was so shell shocked that the normally loquacious Gerald was brief and curt in his comments. Gerald thought, but did not say that the other way to look at the situation was that they put their losers in the worst situation possible in. order to weed them out - why not put your best people in the best places since you want to maximize your sales and keep the best people around? He again felt as he had experienced in many other job situations, unappreciated, unmotivated, lied to, and taken advantage of. 1 The Death of a Salesman Revisited: Parts A & B Part A "Hmmm... I really do not know what to tell you Gerry, this is a tough one. Both of my kids are out of the house; one working, the other in College. That puts me in a very different situation than you are in, you with a three year old daughter and all." The silence on the other end of the phone became deafening - maybe his cell phone hit a dead spot? Stephen Hodgetts was talking with his friend Gerald Mahoney about a job offer and Hodgetts, and, at least from Gerry's perspective, was being absolutely no help at all. They had been friends since childhood and now in their early 50's Mahoney and Hodgetts were as close as brothers. "Come on Stephen" Gerald shot back after an interminable long pause. "You always have something to say about everything! How could you not have any advice for me on such an important matter as me switching jobs. Do I take a chance and take a straight commission job with a great potential for making big bucks or do I stay with a job that I can barely afford to keep though it provides a guaranteed base salary plus commission? You know that I'm the sole bread winner for my family of three, so what would you do? Background of Gerald Mahoney When Gerald turned 50 years old in 2005, he started to wonder what had happened to his life. As a bright college kid from New York City, he had thought to take the world by storm, first through his musical and comedic talents, and then by being a super salesman. Neither plan seemed to work out. While he had several gigs as a member of differing musical groups and had worked the comedy clubs on Long Island, New York and Manhattan, he never really made a name for himself. His career in sales was no better. First starting out selling condos, he then shifted from retail sales job to retail sales job, never staying more than a year or two in one place and never becoming more than a store manager. However, his lack of real success never bothered him since he only had to care about himself and his needs were few. In terms of his personal life, he had dated several women unsuccessfully, married one and quickly obtained an annulment, and never found a reason to settle down and to find a good paying job. Then, through an unplanned series of events, he met his "significant other" and became a father to be, with the eminent birth of his daughter dramatically altering his life. He quit his job working as a store manager in a vacuum cleaning store to join his significant other who lived several hundred miles away with her mother and took whatever job he could land, shoe salesman's job in Foley's, a retail department store. After the birth of his daughter, Gerald and his family moved thousands of miles southwest to Texas to be near his significant others' sister. Gerald found it was very easy to transfer his job to another store in the Foley's chain and found himself once again selling shoes, but in a much warmer climate and in a much larger store. After a few months living in Texas it became apparent that his job selling shoes in a department store was no longer adequate since he could barely afford to pay for himself, his daughter and his significant other on his retail commissions. Money from his family and friends had dried up, as well as his significant other's bank account, and he was forced to admit that unless he changed 2 jobs, they were going to have to apply for family assistance. He started applying for jobs on the internet and through the newspapers, started going on interviews, networked through his family, friends, and customers. Yet, for all of his hard work and effort in finding a new job, he could not find a job that would pay him substantially more that what he was currently making. And then one day she walked into his store and his life would never be the same. Setting the Stage for a Job Change In reminiscing about how he came to jump ship and work for Royce Builders, Gerald recalled several events that propelled him towards this new career. Whether it was kismet or just plain dumb luck, Gerald wasn't exactly sure, but he knew that without these events he would still be selling shoes. First off, living in Texas (although certainly cheaper than living in New York City) was not as cheap as when he was living under someone else's roof. Besides now paying rent for a two-bedroom apartment, Gerald had had to dump his old jalopy in New York when he went to Texas and found that he had to buy a good car on credit - he now had car payments where before his car had been paid off. Secondly, raising a child, even with government assisted medical insurance, was no light expense and his significant other had to stay at home, a loss of potential income. She did baby- sit, from time to time, by this income was minimal and unpredictable. Bills outstripped his salary and if it weren't for the charity of family and friends, he and his family would have become destitute. Third, selling in his new store was far more competitive and variable. As the newest salesperson Gerald had one of the worst schedules (he was off at least one Saturday or Sunday a week, the biggest selling days), had to develop a customer base from scratch, felt like an outsider, and was being out hustled by the more seasoned veterans who knew the market and better understood the needs of the customers in that region of the country. The other salespeople were also less than helpful to newcomers and had a very bad habit of stepping on his sales by taking customers way from him while he was servicing other clients. Seasonality was less of an issue in an area that much never got below 50 degrees in the winter, and shoe sales seemed far more sporadic and uncertain. Since his salary was commissioned-based, his unpredictable sales lead to a high variance in his weekly paycheck since there was no minimum salary. After just a few months on the job, Gerald read in the local newspaper that Foley's (a subsidiary of Mays Department stores), was acquired by Macy's West, a subsidiary of Federated Department Stores. "Federated acquired its rival May Department Stores, the operator of the Lord & Taylor and Marshall Field's department store chains, for about $11 billion in August 2005. As a result of the acquisition, Macy's West added 44 Robinsons-May stores in California, Nevada, and Arizona, and 17 Foley's stores in Colorado, New Mexico, and Texas, bringing its store count to nearly 200 locations." He first worried about his job but was told by the department manager that Foley's would merely adopt the Macy's name and logo after a year or so and continue to offer the same products and services and therefore retain all of Foley's employees. He thought nothing of it at the time and went back to work. It was a year later in 2006 that Gerald would finally experience the impact of the changeover from a Foley's to a Macy's on his sales and commission. Foley's product lines of shoes turned 3 out to be far less expensive than Macy's, not only doubling the sticker price on the average shoe but reducing the volume of shoe sales and changing the customer base. In theory then, he could sell less shoes to make the same commission or, even better, sell the same amount of shoes and make far more commission. Yet, this was in fact not the case at all. Historically, customers who shopped at Foley's for shoes wanted discount prices with a retail experience, a "more for less" or value-added philosophy. Gerald was used to dealing with this type of customer from his former job since this customer was not very demanding of service but very price conscious - when shoes came on sale they bought quickly and big and were not very demanding in terms of style and colors. The Macy's customer, however, was far more demanding in terms of service and quality, and therefore Macy's shoe product line was a step up in price and features. These customers wanted to be pampered more and took far more time to make a decision about which shoe to buy-salespeople had to wait on them hand and foot in order to complete a sale. The bottom line is that Gerald sold far less shoes in volume and less shoes in overall revenue with the Macy's line that he did with the Foley's line, and he was not alone. The straw that broke the camel's back came a few months after the store's name and shoe product line switched. A huge meeting was called in the department by the department manager and many salespeople and stock clerks thought that the worst was going to occur- people were going to be fired because sales were down. Rather than firing people, however, management opted to reduce the sales commission on shoes by 50% while ensuring a minimum base salary. They also forbid salespeople from going into the stock room and getting their own inventory - only clerks were allowed to handle inventory and to be in the "back room." This was certainly a major blow to the super salespeople in the department, who realized that they would have to sell twice the volume to make up the commission loss, while having far less control on the timing of that service since they would have to wait for assistance from the clerks in order to service their customers. Waiting time was a critical factor in retail sales and the longer a customer had to wait, the greater the likelihood that a sale would be lost. Since Macy's was offering a higher quality shoe to a more demanding customer, service was a very critical component and needed to be enhanced, not devalued. Although many of the salespeople at the meeting objected to this change, the department manager was insistent and indicated that this was a new working condition associated with the clerk's new union, a union which had a signed a contract with Macy's. Gerald felt that the writing was on the wall for him, given the new commission system and his dependency on clerks to find the shoes that his customers needed. He had finally put some good weeks together to make a decent commission and a living wage and knew that he could not continue this sales pace under the new pay system. And the minimum guaranteed salary was not enough to support his family. He decided then and there he just had to leave the job, but what could he do that would earn him more than what he was earning now? Gerald reached out to several of his friends and family members to see if they had any connections he could use in order to get a job. Most of the referrals immediately lead to dead ends since he had neither the background, education, nor experience in which to even apply for 4 whatever positions were available. The one job he did apply for, a pharmaceutical salesperson, was far more complex than he anticipated and it was clear to Gerald during the interview that he was not the right person for the job. He certainly seemed to be right since no job offer was forthcoming. He felt powerless, hopeless, and accepted his fate in a very disgruntled manner. Selling the Right Pair of Shoes to the Right Person It was a day like any other day for Gerald Mahoney yet Gerald was to look back at this day with both pleasure and regret. He was working in the women's shoe department and doing the best that he could to sell a fairly expensive pair of boots to a young lady who obviously could afford to shop at a much classier store like Nordstrom's or Newman Marcus, yet, for some unfathomable reason, decided to bestow her good graces on Macy's. Gerald must have gone through every boot in her size, based upon the piles of boxes of boots that needed to be repacked in the back room, and yet nothing he could do persuaded her to buy a pair of boots. He had reached his limit with this customer but something inside him would not allow him to give up on this customer. Maybe it was the time he had spent with her (at least an hour), maybe it was the fact that he knew he needed to sell more shoes to make more than his lowly minimum weekly salary of $400/week, or maybe he had not only reached his breaking point but found his second wind - he was determined to sell this customer something and she was not going to leave the shoe department empty handed. He screwed up his courage and decided to take what he thought at the time was a very bold move. "Excuse me miss" he said in his most polite and refined voice "but I couldn't help but notice that I've been assisting you for the past hour and I didn't even ask you your name. Would you be so kind as to share it with me?" She hesitated for a moment and Gerald thought he had blown the sale. He was cursing himself under his breathe when she briefly replied in a very business-like manner "My name is Maggy Monahan and by your name tag I assume your name is Gerald Mahoney. I do appreciate the time you have taken with me in helping me select shoes for work but you must understand that my job requires a very particular look and of course the shoes must be comfortable as well. After a few more minutes of trying on several more pairs of boots, Gerald was able to gently persuade Ms. Monahan to buy one of their most expensive products. He rang up the sale and was complimenting himself on his persistence when out of the blue Ms. Monahan said "Now that I have answered your question, and you have sold me a pair of your finest shoes, would you answer one for me?" Gerald went from happy to apprehensive and thought "what could this woman possibly want to know from me? Is she preparing to make a snide remark about our product line or even about my assistance to her? Perhaps she wants to reverse the sale?" Before Gerald could reflect more and perhaps create even worse scenarios in his head, Ms. Monahan came quickly blurted out her question. "Why is an obviously highly talented man like you, who has just sold me a pair of shoes I probably don't even want or need, working at a place like Macy's? I am the Director of 5 Recruiting and Training at Royce Homes and I can tell from the way that you have handled this sale that you would make a superb homes salesperson. Here's my card. Why not call me tomorrow morning and we can arrange a time for you to come in and chat about the wonderful opportunities at Royce. Your talents are wasting away here at Macy's and you could certainly make far more money selling homes. Our website is also on the card so feel free to check us out and see our job listings." Gerald thanked Ms. Monahan for her kind words and told her he certainly would call her in the morning and arrange for an appointment. "Perhaps this was the one break I needed all my life" considered Gerald. "Perhaps now I can do the right thing for my family and myself by working in a good job with good pay and benefits. Homes are big ticket items and I am sure that I can make a really good commission by selling just one home." Gerald got home that night, told his significant other of his little adventure, and immediately checked out Royce Homes' website. Job Advertisement for Sales Counselor Royce's job advertisement on their web site for a sales counselor, as far as Gerald Mahoney was concerned, seemed very straight forward and exciting. See Exhibit 1 below. Exhibit 1 Careers at Royce Builders At Royce Builders, we have a simple philosophy: Building Homes, Building Community, Building People. It's an attitude that has propelled us to leadership in the homebuilding industry. If you are looking for excellent pay, benefits, and opportunities, you owe it to yourself to explore Royce Builders. Our recruiting mission is to attract talented individuals of the highest integrity, caliber and character. Grow With Us Royce Builders is always interested in talking with individuals who want to grow with us. It takes a team of people with many different talents to comprise Royce Builders. Royce Builders looks for top-notch individuals who enjoy a challenge and can contribute their talents to our team environment. We offer a competitive compensation package including advancement opportunities, comprehensive healthcare, 401K and a positive atmosphere conducive to achieving success. Description: Must possess a high amount of energy and dedication, excellent public relations skills, a high orientation to customer satisfaction, exceptional organizational skills, a strong desire to succeed and achieve goals and the desire for an interesting and financially rewarding career. No real estate experience required. 6 Weekends a must! Requirements: Education: Location: Contact: Previous sales experience preferred. Dallas or Houston, Texas Recruiting and Training Department Email Resume to: Recruiting and Training Dept. Please reference Job Code SCWEB0802 To Apply: Gerald was ecstatic about the prospect of selling homes again, although his previous experience selling condominiums was not necessary (although it would seem to be a plus) in terms of the job requirements. He seemed to have the right background for the job and he had always wanted to work in a job environment where he would feel like an integral member of a team. He perused the firm's website further and did some research on the firm before he called up Ms. Monahan to set up an interview (see Appendix A, Royce Homes LP). Getting the Interview: Persistence and Pain Gerald called Ms. Monahan the next day as he promised and she seemed quite receptive to his call. She asked him to FAX over a resume and that she would get back to him (or her assistant would), in order to set up an appointment for him to interview with her and some of the key salespeople in the firm. Gerald had an old resume which he then typed into his computer to update. Once typed, which took him a fairly long time since he was a slow typist and had rarely used Microsoft Word, he started looking over his resume to see if he could polish things up and make his background more attractive. One thing was clear looking at his resume, that he barely stayed in one job for more than a year or