This Makes Scent

Ashton couldn’t believe it. Did Jessie really send him such a mean text? Ashton was thrilled being the co-owner of a successful business and didn’t understand why Jessie would be unhappy. Where was this hostility coming from, and if she was upset, why wouldn’t she come and talk to him? They had been friends for over 6 years and had gone through the ups and downs of university life together. They both shared a passion for business and were entrepreneurs. They both believed in providing high-quality products at reasonable prices. They were the best of friends! But maybe not anymore.

Background

Jessie Singh and Ashton Chan met during new student orientation day at Parkville University. They had been seated at the same table and became fast friends. The light banter quickly gave way to a deeper conversation about their hopes and dreams, including why they had each decided to attend Parkville University. As it turned out, both Jessie and Ashton were enrolled in the bachelor of business undergraduate degree program. Neither of them had decided on a major, but both expressed a keen interest in learning more about accounting and finance.

Throughout the next 5 years, Jessie and Ashton were in many of the same classes and therefore had numerous opportunities to work on group projects together. As they did, they discovered that they had a lot of personal interests in common. They liked the same grunge bands, they liked the same type of food, and they both listed Las Vegas as their favourite vacation spot. On top of this, they both had a strong work ethic and always strived to do well on group projects. “Anything but an A is not okay” was their motto, and through their hard work and dedication, both finished each year of the program on the dean’s list.

Graduation was just around the corner, and neither Jessie nor Ashton had selected a major throughout their program. Nothing had really appealed to them, so they had both decided to finish with a general business degree. Therefore, when Jessie approached Ashton with the idea of starting their own business, they both thought it was a terrific chance to use all the knowledge they had acquired over the past years while being their own bosses. They agreed that “Friends to the end!” would be their new motto as they began the process of starting their new company.

The Company

Many of Jessie’s friends had commented that the price of high-quality perfumes was ridiculous. Body sprays were a cheaper option but certainly didn’t provide the same quality or aroma as perfume. Therefore, when Jessie read an article about a company in Mexico that specialized in making knock-off perfume, she was intrigued. Market research showed that the products were of high quality and that consumers really couldn’t tell the difference between a brand name and the mock fragrance. Jessie and Ashton quickly took this product idea and put together a very financially solid and viable business plan, being careful not to infringe on trademarks and to clearly market their products as “mock” perfume and not counterfeits. A small store space in a busy strip mall was leased, profit margins on products were calculated, expenses (including a reasonable annual salary for both Jessie and Ashton, who would split the shifts) were accounted for, and a bank loan was easily secured to get the company off the ground.

The company, This Makes Scents, opened for business on March 1, and in just 8 months, business had increased beyond initial projections. Sales were growing, and it was often difficult to keep enough inventory on hand. Both Jessie and Ashton agreed that this was a terrific problem to have as they rarely had items sitting on the shelf for long periods of time. The growth in business had also meant that 4 new employees were hired to help with the various shifts. As such, the store was now open 7 days a week, from 9:00 a.m. to 4:00 p.m. on each day.

The Current Situation

Jessie was furious! When she started the company with Ashton, she assumed that they would be partners and share in the responsibilities. However, she was responsible for all the product ordering and inventory tracking, and to make matters worse, all the complaints from their 4 employees and all the problems seemed to be directed at her. This wasn’t the type of environment she wanted to work in, and the stress was taking a toll on her physical and mental health.

The strip mall where the store was located just sent out notification that the stores had to be open from 9:00 a.m. to 6:00 p.m. each day or leases would not be renewed. One employee told Jessie that he could not work past 4:00 p.m. on any day as he had to pick up his children from daycare. He muttered something about requiring accommodation and expected the company to follow the law. He also suggested that an employee handbook be developed so that clear policies were available to everyone. Another employee sent Jessie an email stating that she wanted clarification on overtime payments and statutory holidays. Specifically, this employee wanted to know why the store wasn’t closed on the last Canada Day and demanded explanations regarding scheduling and payments. “I used to like working here, but now the hours are a grind, and I don’t have any input into when I work.” A third employee was upset because he wasn’t getting enough overtime and felt the distribution of extra shifts was unfair. He wanted to be able to bank his extra time and then take time off at a later date. He also wanted to book 2 weeks of vacation, had asked Ashton about this, and had been told “no.” As such, he was threatening to sue the company and told Jessie, “You better get your partner in line as employees are entitled to 2 weeks of vacation according to the law. I don’t care that I didn’t receive a written offer letter when I started this job, but I know my rights! I thought this would be a neat place to work, but the customers are mean and the owners are worse.” The fourth employee had sent Jessie an email noting that a customer dropped a bottle of perfume, and while cleaning up the broken glass, this employee got a bad cut and later had to receive 5 stitches at the local emergency room. Jessie wondered what she was supposed to do with this information. Also, Ashton had just sent her an email indicating that they should think about hiring more people. “What, now I have to do this as well?” thought Jessie.

Jessie was exhausted. “When the company first opened, I had fun working with Ashton, and it was rewarding to watch the sales expand. Now I dread coming to work and am anxious every time I open my emails. I can’t take this anymore!” Jessie grabbed her phone and sent the following text to Ashton: “It is time that you took responsibility for this company and its problems. You are a horrible partner, and I’m sorry that we went into business together. In fact, it doesn’t make ‘scents’ to me anymore. So there!”

The company was now in its second year of business. Sales and profits continued to grow, and more staff had been hired. There were now 8 sales clerks and 1 inventory specialist, in addition to Jessie and Ashton, who shared the responsibility of managing the store. Employees seemed to get along with one another, shifts were being split equally, and product was arriving in a timely manner, so all inventory concerns seemed to be addressed. Jessie and Ashton were convinced that the future was golden and that business would carry on as usual and the profits would continue to roll in.

Things were going so well that Jessie and Ashton were considering opening a second location. This new location would be in Cosmo Fair, a big, bright mall that was the talk of the town. Everyone was excited about the upcoming grand opening of this shopping haven, and Jessie and Ashton had a solid lead on leasing a beautiful spot in this new venue. They were thinking that they could each manage 1 store location, and given the current economy, it would be easy to hire sales clerks for the new location. The plan was to have new hires job-shadow current employees in order to learn how to be effective sales clerks. These new hires could then move to the new store after they had learned the ropes. However, plans for expansion were put on hold when unexpected news arrived.

You’re Leaving Us?

Jessie was shocked when she arrived at work and opened the envelopes on her desk. Sandra, the most senior sales clerk who had been with the company since it opened, was giving 2 weeks’ notice. The second envelope also contained a resignation letter from Jason, the inventory specialist. Jason indicated that he would be leaving the company next week. “How can this be happening?” thought Jessie, who picked up the phone to call Ashton for an emergency conversation.

The Conversations

Jessie and Ashton asked to meet with Sandra to inquire as to why she was leaving. Was it because of money? If they increased her hourly rate, would she stay? How much would it take? Sandra indicated that although the job she was moving to did pay slightly more per hour, she was mainly moving because the new role provided her with more responsibility and room for career growth and development. Her new employer promised to send her on leadership courses and invest in her future development. Sandra also indicated that her new job was in Cosmo Fair, and she was excited about working in a new, energized shopping mall.

When speaking with Jason, he indicated that he was tired of always showing sales clerks how to do inventory and that he wasn’t really being paid for all the work he did. Jessie and Ashton explained to Jason that he was a valuable member of the team and that they didn’t want him to leave, especially with expansion plans in the works. Jason was shocked and replied, “I have never been given any feedback or encouragement from either of you. How was I supposed to know any of this? Also, when you gave out bonuses last month, everyone got the same dollar amount. Why did I get the same money as sales clerks, when my salary is higher and my contributions are more meaningful? Also, everyone knows that the 2 of you took a sizeable bonus. I’m done. Consider this my last day!” Jason stormed out and slammed the office door behind him. That meeting had not gone as planned, and Jessie and Ashton were stunned. They knew they had to regroup and possibly rethink their expansion plans.

Running Case: This Makes Sense (Part 3) Quiz

Questions:

1. Jessie and Ashton had offered Sandra more money to stay in her current role with the company. What problems could have occurred if Sandra had accepted their offer?
2. What unique benefits could This Makes Scents offer employees? Why did you select these items?
3. If a second location opens, how should new sales clerks be trained? Explain why this is the preferred method.
4. Is there anything wrong, from an HRM perspective, with the expansion plans?
5. What performance management plan should be implemented for sales clerks? What performance management plan should be implemented for the inventory specialist?
6. Is it time for Jessie and Ashton to hire an HR person? How should a company determine if it is time to hire someone with this specialized knowledge and/or experience?