COURSE PROJECT-HHGREGG-MGMT 591

Course Project-hhgregg
MGMT 591
Professor Ugboaja
December 5, 2016

COURSE PROJECT-HHGREGG-MGMT 591

Table of Contents

Introduction3
Problem Statement.4
Literature Review...5
Analysis..7
Solutions.9
Reflection..12
References.14

COURSE PROJECT-HHGREGG-MGMT 591

Introduction
Hhgregg, Inc. (hhgregg), incorporated on April 10, 2007 and was founded in 1955. The
company basis its headquarters out of Indianapolis, Indiana. The company is a multi-regional
retailer and has approximately 228 physical locations in 20 states. They carry a variety of
consumer electronics including televisions, computers, and tablets. I addition to electronics they
also sell a large variety of appliances, furniture and home products. They provide delivery, repair
and installation service through their third party vendors. The company has grown their
distribution and warehousing system to include five regional and none local distribution centers.
The company does have a great deal of competition in the market which includes the well-known
Best Buy chain (hhgregg Inc, 2016).
With a company as large as hhgregg there are bound to be challenges with employee
satisfaction but it is important for management to identify and address those issues early on.
Unfortunately employees have been giving negative reviews of the company, they often criticize
the current pay structure. Current and former sales staff of the company have suggested that the
basis of the commission structure, which they feel rewards employees for selling the higher
priced inventory to be unfair and in turn does not promote motivation or employee job
satisfaction. One employee noted that, the company makes them do a lot of operational and
administrative work but since they are on commission they do not get compensated fairly for the
additional work. In addition to poor employee satisfaction hhgregg has not been able to impress
shareholders with increasingly stagnant returns. The company has been struggling with decreases
sales and profits of in recent years. Its shares fell more than forty percent in the past year alone
while the wider stock market has seen substantial increases in the same period of time. (Frolich,

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2014) According to the chart below hhgregg has seen substantial decrease in value over the past
3 years.

Hhgreggs 3 Year Stock Trends

(http://www.reuters.com/finance/stocks/company, 2016)
I am currently a Human Resource Partner with hhgregg and have been asked to provide a
research based analysis identifying a possible cause for companys high employee turnover rates
as well as causes for the above trends. I have been with the company for 6 years and have been
witness to the employee life cycle for countless employees.
Problem Statement
How can hhgregg improve the organizational culture as it relates to their pay structure to
improve employee satisfaction and reduce high employee turnover rates?

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Literature Review
Work motivation and organizational behavior evaluates motivational theories as they
relate to employee satisfaction. Vrooms theory is most interesting in how it relates to employee
motivation. Vrooms expectancy theory is grounded on four presumptions: that people enter
companies with certain necessities in regards to their demands, incentives, and previous
experiences and it also contends that a persons conduct is a consequence of deliberate
preference. In addition it points out that people require specific things from the company is in
regards to salary, job security, promotion, and difficulty of tasks. Last but not least people will
select among choices so as to hone end results for them personally (Lazaroiu, 2015). This
theory is relevant in that it really identifies what is needed for most people to be satisfied in their
choice of positions.
The impact of perceived supervisor listening on emotional exhaustion, turnover intention,
and organizational citizenship behavior was composed from a study that includes employee
turnover and how employees perception of their supervisor actively listening to them contributes
to turnover. The research indicates that an employees perception of their supervisor listening to
them is likely to influence an employees intentions of leaving. Content employees are more
likely to be devoted to their position regardless of other opportunities elsewhere, whereas unsatisfied employees may be easily inspired to look for another position with a different
organization. (Lloyd, 2015).

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Emotional intelligence in organizational behavior is an interesting piece as it explores the

emotional aspect as an essential constituent of leadership capability. The research tries to
determine how emotion can impact an employees work habits and outcomes. The function that
emotions have in organizational settings are also analyzed. The theory that the paper elaborates
on puts considerable accentuation on positive sodalities between emotional astuteness and
functioning outcomes, the handling of emotions in public spheres, and the direct consequences of
emotional astuteness on public workforce. (Ljungholm, 2014)
(UN)Ethical Behavior and Performance Appraisal: The Role of Affect, Support, and
Organizational Justice is based on a study that reviews the use of performance appraisals from a
behavioral ethics standpoint. The use of a singular yearly performance appraisals are used by a
multitude of organizations and has been said to contribute to both ethical and unethical
demeanors at work. The finding that ethical and unethical aspects of employee demeanor as it
relates to performance appraisals and reviews is discussed from an organizational justice
perception standpoint. Many organizations utilize the annual performance appraisal system to
determine wage increases as well as vertical movement within the company which based on
studies can result in poor employee morale (Jacobs, 2014).
Implementing a Performance-Based Compensation System discusses todays
compensation models. One of the newest and perhaps most innovative of compensation plans is
what is known as the Pay-for-Performance plan. This compensation system ties compensation
directly to specific business goals and management objectives. The process of implementing a
Pay-for-Performance plan into place requires intricate strategic planning by the leaders of the
company. They need to determine what their organization goals and strategies are, also

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employees must understand these goals and objectives are and how they can successfully
achieve. With this in place the companies must distribute competitive pay for competitive levels
of performance, pay above market for exceptional performance, and reduced pay for poor
performance. To achieve this, companies must match quantifiable and controllable performance
targets to company objectives. (Implementing a Performance-Based Compensation System,
2004).
Review and analysis of the employee turnover process analyzes literature and reveals that
age, tenure, overall satisfaction, job content, intentions to remain on the job, and commitment are
consistently and negatively related to turnover. There has been a multitude of research since the
time this article was composed but it can still be seen as relevant as the same issues exist to this
day. The quest to identify the cause of employee turnover has continued for a substantial amount
of time. According to this article it identified that a lack of a clear conceptual model, failure to
consider available job alternatives, insufficient multivariate research, and infrequent longitudinal
studies are identified as factors precluding a better understanding of the psychology of the
employee turnover process (Mobley, 1979).
Analysis
It is apparent that hhgregg has been through some significant financial struggles
recently. Higher expenses and lower sales have led to an over twenty five million dollar loss for
hhgregg in its fiscal fourth quarter, this has resulted in driving the company to reduce its number
of distribution and store locations. The results were driven by sedulous sales declines for which
the multiregional consumer electronics, appliance and furniture chain has been unable to apply
the brakes. Net sales slid 9.8 percent for the period and comp-store sales decremented ten

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percent. To avail turn the tide, president/CEO Dennis May verbally expressed the company is
fixated on ameliorating its cost structure and inverting the sales slide. For the full year, net sales
fell 8.9 percent to $2.1 billion, comp sales decremented 9.2 percent, and the net loss totaled
$132.7 million compared with a profit of $228 million for the prior year (Wolf, 2015). The
financial struggles that hhgregg is being confronted with are also reflected in the growing list of
departures from its executives. The company has recently hired their fourth merchandising
officer in about three years which may indicate that the organizations culture may be a
considerable cause for its recent struggles with revenue and turnover rates.
In addition to executives ranks hhgregg suffers high employee turnover in general.
Employees have been giving negative reviews of the company, they often criticize the current
pay structure. Current and former sales staff of the company have suggested that the basis of the
commission structure, which they feel rewards employees for selling the higher priced inventory
to be unfair and in turn does not promote motivation or employee job satisfaction. One employee
noted that, the company makes them do a lot of operational and administrative work but since
they are on commission they do not get compensated fairly for the additional work. In addition to
poor employee satisfaction hhgregg has not been able to impress shareholders with increasingly
stagnant returns. The company has been struggling with decreases sales and profits of in recent
years. Its shares fell more than forty percent in the past year alone while the wider stock market
has seen substantial increases in the same period of time. (Frolich, 2014).
While compensation models appear to be a large contributor to the high employee
turnover at hhgregg there are likely other causes as well. They verbalize people dont leave jobs,
they leave managers, and a survey by B2B emporium Approved Index corroborates that this
adage is true. In its survey of 1,374 employees in the U.K., proximately a moiety of them have

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left a job because of an arduous manager and virtually a third of them feel their current manager
is a deplorable manager. When asked why they disrelished their managers, forty one percent
cited a lack of apperception, while forty percent verbally expressed they felt overworked. The
common business focus on processes, procedures and results ignored the human dimension of
work and productivity. Based on the report those employees who do not have good relationships
with their managers are unfortunate as it does not appear bosses are likely to improve anytime
soon. A 2014 report from the Chartered Institute of Personnel and Development revealed that
the quality of managers had not improved over the last decade (Higginbottom, 2015). When
considering that culture is key to a successful work environment it must be assumed that
managers need to represent a strong, diverse, motivational culture. Even positions that pay well
will have a high turnover if the employee does not feel the culture of the company is beneficial.
Solutions
Design an alternative compensation plan for employees:
Compensation used to mean a fine-tuned salary with annual increases. This model
reposed upon employee demands to be paid predicated on the number of hours worked and years
of accommodation.One of the newest and perhaps most innovative of compensation plans is
what is known as the Pay-for-Performance plan. This compensation system ties compensation
directly to specific business goals and management objectives. The process of implementing a
Pay-for-Performance plan into place requires intricate strategic planning by the leaders of the
company. They need to determine what their organization goals and strategies are, also
employees must understand these goals and objectives are and how they can successfully
achieve. With this in place the companies must distribute competitive pay for competitive levels
of performance, pay above market for exceptional performance, and reduced pay for poor

COURSE PROJECT-HHGREGG-MGMT 591

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performance. To achieve this, companies must match quantifiable and controllable performance
targets to company objectives. (Implementing a Performance-Based Compensation System,
2004)
It is important that compensation is linked to the organizations business strategy. In order
to achieve this, the direction and goals or the organization need to be identified and
communicated clearly. Ascertaining employees are compensated well is a very efficacious
implement getting employees to move in the same direction and follow the same path and goals
as the organization. Prosperous compensation plans pay for results but they withal need to
apperceive effort because no matter how hard employees work, sometimes they don't achieve
desired results due to no fault of their own. In a sales level job there are many elements that
contribute to results outside of the employees control. Employees can work hard and not reach
their goals, this should not be ignored. The plan should have other ways to reward and recognize
hard work built into it. On the other cessation of the spectrum results you additionally have to
distinguish between performance levels. Most emolument plans pay very little distinction
between average performance and outstanding performance. An efficacious emolument plan
should have a very clear correlation between superior results and superior rewards and

employees who excel in their field should be compensated as such.

Implement a culture plan for the organization that contributes to employee job satisfaction:

The process of implementing a new culture plan for the organization will require the
current culture and performance be evaluated. This can determine what is currently working for
or harming the company. This includes clarifying the initial vision and defining the vision on
improving results in specific areas. Leaders need to clearly communicate the expected behaviors
in line with cultural changes of the organization. These comportments would be consistently

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exhibited in the organization if you they were living their values. People interpret values from
their own perspective so define expected comportments. (Kuppler, 2016)
Clarifying the companys strategic priorities includes defining and clearly sharing
strategic priorities that the company will focus on to support the goals and objectives put in
place. If the performance goals are centered on growth, it may be achieved through new products
or services or other strategies. Employees want and need to understand what is expected of them
and look for the guidance to identify the big picture. Identify a small number of overall
measures that support the one or two top priorities, it may help to have one highly visible
unifying metric even if some employees dont directly influence it (Kuppler, 2016).
Employees need to be able to assist in implementing the overall culture of the company as they
are representing the company on a daily basis and in most cases are the face of the organization
to the public.

Solicit input from employees:

A great way to achieve this would be to engage your team in defining SMART goals.
This can be accomplished by engaging the organization and utilizing extensive feedback and
prioritization to define the objectives that support each strategic priority. These goals need
defined in a way to fortify the expected demeanors for the impotencies you identified. For
example, if productivity is an impuissance, goals should include more disciplined plans,
measures, reviews, apperception, and other approaches to fortify the demeanor that is needed to
achieve the set goals. Goals additionally need to be translated to all levels from upper
management down in more immensely colossal organizations so that employees understand how
their categorical goals and measures impact the broader organizations overall goals. Employees

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have to have the opportunity to provide insight as to how to effectively accomplish their
individual goals. Being that they perform their specific functions and duties on a daily basis they
would be best to identify areas of improvement within their area that upper management may not
be able to easily identify. Having the opportunity to verbalize is only one part of the
communication process between employees and supervisors. Employees withal react to whether
or not they perceive the supervisor as actively hearing them. (Lloyd, 2015).
While asking for an employees impute is a good step management truly needs to listen to
what they are saying. Taking employee suggestions and finding ways to implement those ideas is
a great way to show that the management appreciates and values the opinions of its employees.
Reflection
This research assignment has broadened my knowledge as it pertains to our course
objectives. It has served as a catapult for me to research this specific topic. I have learned a great
deal about organizational structures and cultures and how they can relate to employee
satisfaction and retention. It has identified the importance of setting strategic goals in an
organization for success and has also reiterated the need for clear concise communication from
management and employees alike. Not only do employees need to be given a platform to
contribute to the goals and culture of the company they also need to know that their input is
appreciated and valuable. In addition the assignment reiterated the fact that employee
compensation is a key issue in relation to employee satisfaction and turnover rates. There are
many contributing factors to employee turnover and it cannot be addressed properly unless all
areas are reviewed. While compensation is important so is the overall culture of the organization
and managements ability to effectively communicate with employees in a positive and

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productive manner. Overall this assignment was very insightful and hopefully I will be able to
utilize what I have learned from it in the near future.

References

13

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Frolich, T. C. (2014, June 21). America's Worst Companies to Work For. Retrieved from 24/7
Wall St: http://247wallst.com/special-report/2014/06/21/americas-worst-companies-towork-for-3/3/
hhgregg Inc. (2016, April 2). Retrieved from Reuters:
http://www.reuters.com/finance/stocks/companyProfile?symbol=HGG
Higginbottom, K. (2015, September 8). Bad Bosses At The Heart Of Employee Turnover.
Retrieved from Forbes: http://www.forbes.com/sites/karenhigginbottom/2015/09/08/badbosses-at-the-heart-of-employee-turnover/#2af37a4d4075
Implementing a Performance-Based Compensation System. (2004, January 6). Retrieved from
Accountingweb: http://www.accountingweb.com/practice/team/implementing-aperformance-based-compensation-system
Jacobs, G. B. (2014). (Un)Ethical Behavior and Performance Appraisal: The Role of Affect,
Support, and Organizational Justice. Journal Of Business Ethics, 63-76.
Kuppler, T. (2016, November 26). The 9 Clear Steps to Organizational Culture Change .
Retrieved from Talent Management and HR: http://www.eremedia.com/tlnt/the-9-clearsteps-to-organizational-culture-change/#
Lazaroiu, G. (2015). Wor Motivation and Organizational Behavior. Contemporary Reading in
Law & Social Justice, 66-75.
Ljungholm, D. P. (2014). Emotional Intelligence in Organizational Behavior. Economics,
Management & Financial Markets, 128-133.
Lloyd, K. B. (2015). Is My Boss Really Listening to Me? The Impact of Perceived Supervisor
Listening on Emotional Exhaustion, Turnover Intention, and Organizational Citizenship
Behavior. Journal Of Business Ethics, 509-524.
Mobley, W. H. (1979). Review and conceptual analysis of the employee turnover process.
Psychological Bulletin, 493-522.
Wolf, A. (2015, May 15). hhgregg Losses Widen, Store Closures Considered. Retrieved from
Twice: http://www.twice.com/news/financial/hhgregg-losses-widen-store-closuresconsidered/57169