Sears CEO Demands Loyalty
By George Anderson
A recent incident where an employee got on board a company plane with a competitor’s shopping bag got Sears’ new chief executive Aylwin Lewis so upset he sent out a memo to workers reminding them who signs their paychecks.
The memo, as reported in the Chicago Sun-Times, asks employees to prove their loyalty to the company by not bringing anything related to a competitor onto Sears Holdings’ property.
“Our direct competitors are opening more than 700 stores a year, trying to steal our customers. They do not have Sears Holdings’ interests at heart,” he wrote.
Mr. Lewis also offered suggestions on how employees could further the goals of their employer. These included:
- Visiting Sears Holdings’ stores three or four times a month and providing feedback on the experience.
- Applying for and using a Sears credit card if they do not already have one.
- Urging friends, family and acquaintances to go to Sears stores and make recommendations on how the company can improve.
Sears Holdings’ CEO also offered some carrots to employees. He said the company is working on a new system of employee discounts and is conducting focus groups to find ways to improve the company.
Don Delves, president of the executive compensation firm Delves Group, said Mr. Lewis’ action was appropriate considering the position his company is in. “Sears must define its culture with pride and some significant assertiveness if it’s going to change and survive in this marketplace.”
Whether the memo and promised changes will help remains to be seen. Mr. Lewis leads an organization with a workforce that has been described as being demoralized in the face of on-going weak sales, massive layoffs and cuts in employee benefits.
Moderator’s Comment: Is employee morale and loyalty to its employer playing a role in holding Sears Holdings back? What can (should) Aylwin Lewis and
company do to create a culture of loyalty to the organization? –
George Anderson – Moderator
While I understand the concerns and frustration of Mr. Lewis, it’s hard to believe you can mandate loyalty, unless maybe you’re in the military, which he isn’t. When employees don’t shop at their own stores, there is a reason – the alternative experience is better. Mandates and memos won’t solve that problem – improving the experience will.
I disagree with most of you. Here is a guy who is trying to change decades-old attitudes about loyalty to the company. I think he is totally within his right to champion this as a rallying point for his company.
Think of the opposite scenario. What if he does nothing? What does that say to other employees who witness the incident? It says that it is acceptable. In his mind, it obviously is not.
We have a small company that runs branded convenience stores. I remember a company picnic a couple of years back where an employee brought a plastic fountain soda cup from a competitor to the picnic. The CEO made a big deal out of it, not to embarrass the employee, but to let everyone know that it was not acceptable. He crushed the competitor’s cup to the cheers of everyone in attendance. He then replaced the cup with one with our company logo on it. That one incident showed all in attendance that we are at ‘war’ with our competitors and it is not acceptable to shop them for similar products and flaunt it, especially at company functions.
I just read a column somewhere criticizing the new Chrysler campaign… “if you can buy a better car elsewhere do it…” featuring Lee Iacocca. The point the columnist made is that the competitors like Toyota and Honda started from a better position (vis-a-vis the last few years) and they are still improving, and that U.S. car companies have to accept this and strive even harder, because most of their offerings aren’t competitive, especially in terms of product quality problems likely to develop in the first year or two of the car being in service.
Similarly, in college I read a quote by the new VP for Development when he said “students become alumni in 4 years and I don’t think they think that way…”
My response was, neither does the university or they wouldn’t treat “potential funders” so cavalierly during the 4-5 years they are on campus.
While the individual getting on the Sears plane was kinda dumb, I think the Sears CEO is thinking more like Iacocca and less like Toyota… He should at the same time wonder, “what is it about the Sears experience and product and marketing mix that is so negative that people likely to be the best customers (employees, who probably are entitled to steep discounts on purchases) aren’t choosing to shop there?”
How many young people do you know who want to work at Banana Republic just so they can buy clothes at a discount? Sears?
The West Wing TV show is so full of it–“Telling truth to power?” No one really wants to hear it.
That shopping bag should be a wake up call to the Sears CEO that the Sears experience is the problem. He alludes to it–the 700 new competitors that are opening each year. To stay the same is to fall behind when your competitors continue to move forward…
I am sure the Sears Holding Executives do not wear suits, shoes or many other items from their stores. That would be beneath them to shop for those items at a Sears or Kmart store. As a past employee, I can assure you that morale is extremely low. They have beat up so many people. While the executives continue to make millions with salary, stock and bonuses, the associates have to scrape by as their pay and benefits are cut. Anyone can understand why employees would go to their competitors to purchase items for less. When the cost of an item at Sears Holding stores (with your discount) is higher than the competitor, you will probably shop at the competitor. I think most employees are very loyal to their company, however everyone should do what is in their best interest, not foolishly waste money because their company is incapable of stocking the right merchandise for the right price.
Retailers must earn the business of their employees, not decree it. And in companies as large as Sears Holdings, employers cannot expect employees to link the company’s success to their personal purchases. “How can my little purchases affect my employer, and if I can save money by buying elsewhere, why shouldn’t I?”
This was a bad move by Aylwin Lewis. The knee-jerk reaction was very revealing, however, a classic product of anger caused by frustration and disillusionment. Ask any shrink. Further, it revealed a suspect management style – more bean-counter than merchant.
Anyone familiar with AmWay knows their term for competitive products: “Brand X.” They challenge their distributors to buy only from AmWay in their hundreds of categories, and to recruit more disciples to do the same. When visiting each other’s homes, they actually inspect the bath and laundry rooms to root out Brand X. A breakdown of AmWay sales would reveal that the vast majority of their individual (not corporate) sales are made by their distributors for personal use (plus the huge sales of motivational tapes). They developed this business model from the beginning, and a culture to match and perpetuate it.
How far in the direction of the AmWay model is Lewis willing to go?
Closing stores, cutting pensions, and reducing health care might be needed but it doesn’t help employee morale. Being a big crybaby because someone brought a competitor’s shopping bag on an airplane is an overreaction. When you are good, those things don’t matter. But when you are getting clocked by your competition and have become the laughing stock of the retail industry, CEOs have panic attacks over the most insignificant things.
CEOs who worry about petty things and issue dictatorial orders alienate employees and worsen morale. Employees hate “grandstanding.” Employees of Sears/Kmart know they can buy better products for less money in competitors’ stores. Most have to pinch pennies, so they gravitate to good value. Pretending Sears and Kmart offer competitive value has been an important part of the problem for Sears and Kmart while they lose market share. The company would be better served by heeding the advice above and addressing the real issues, and morale will take care of itself. It would be better to admit that “the emperor has no clothes” and to solve that problem.
I totally agree with Sears’ CEO. If you cannot practice what you preach, then, do not preach it.
I’m willing to cut Lewis some slack. First, it sounds like he may have gotten called on the carpet and then overreacted or was possibly in CYA mode. It doesn’t suggest to me that the spirit behind the possibly “overkill” memo was malicious necessarily, just misapplied.
I don’t get that he’s saying, “Don’t shop anywhere else,” but more like, “If you do, don’t wear your company badge while swinging the branded competitor’s bag around town.”
Awareness is a tough thing to “train” and sometimes people never develop it and are asleep during important moments when they need to really show up in front of customers/potential customers.
Sounds like a frustrated exec not making a potentially valuable point in a way that lands well…AND he gets in the national limelight to boot! Don’t forget, it’s a journalist that used the phrases “reminds them who signs their paychecks” and “prove their loyalty” which sets a certain tone to catch our interest and flavor the rest of the article.
Loyalty is earned, not dictated. A memo that demands loyalty has no place in today’s workplace….an environment that stimulates loyalty has a place in today’s workplace. This almost smells of the times when various UAW unions and Detroit automakers have dictated only American made cars could be parked in the parking lots. This type of action only results decreased quality and performance due to the false perception of thinking you’re good only because you’re not paying attention to the competition.
Loyalty, along with respect need to be earned not dictated. Sears, at one time, had my undying loyalty. After 40 years, this loyalty has been eroded, along with many promised benefits. This is corporate greed at its best.
I agree that this mandated loyalty is completely out of touch with the “People” who make up the company brand. Many CEOs, as brilliant as they are, lose the “reality” that makes up the retail experience. How many days a month are the CEOs going to Kmart and Sears to buy their suits? How many of them hold 19% interest rate Sears credit cards? When you feel comfortable barking orders and not exploring the situation yourself, then it’s time for those in the trenches to look to where their input is heard and not dictated. Carrying a competitor’s shopping bag is a loud and clear message; doesn’t sound like it’s going to be heard. The tower the CEO sits in is just too high.
You cannot demand loyalty from your employees; you have to earn their loyalty. Instead of getting “mad” at the incident on the airplane and reacting to the incident with a memo, the CEO of Sears should undertake the task of learning why the person or persons are not shopping with Sears. Was it a selection issue where Sears did not carry the product purchased or was it a cost issue? Who knows? Certainly the CEO did not have the answer. Why not use the employees at your disposal and see what it takes to earn their business? If your own employees, who have a vested interest in the success of the company, will not shop with you, how can you expect the average consumer to grace your aisles and spend their hard earned dollars with you? Use the incident on the plane as a catalyst to determine what it takes to earn your customers loyalty and shopping dollars. You company will be better for it in the long run.
Al is exactly right. Beyond that, there is nothing else to say.
The morale can’t be good at Sears Holdings for all the obvious reasons and this incident probably won’t help much. I agree that it is just a lack of common sense to take a competitor’s product on a company plane, but making a big deal out of it just makes it worse. It must be very hard for their employees to embrace what they see happening and be loyal and enthusiastic about it. How can former Sears employees be proud to be owned by Kmart? Sears Holding’s problems are so much larger than these issues that it must have just offered a brief relief from thinking about them.
Low morale causes many of the best people to look for another employer. Retailing is labor-intensive. Retailers need to motivate the best people to do their best, not leave. I agree that morale is better when everyone understands the goal, strategy, roadmap, and the role each person has to fulfill. I do not think most people at Sears or their customers know these things. What steps has the management taken to communicate the critical issues and specific, constructive responses to those issues?
Employee morale is key to holding a company back but you can have good or great morale and still buy competitive products. If your company can’t match or beat a competitive product, then you should have the right to buy competitive products. Carrying a competitor’s bag on the plane was clearly not the brightest thing to do and you have to wonder about that person. I remember denying my kids Lucky Charms and Cinnamon Toast Crunch during my Kellogg tenure. We couldn’t match the offering at the time but I would not let my wife buy competitor products. That was a mistake! You can learn from buying competitive products and you can buy items on deal where the competitor does not make any money on the transaction. And you can enjoy a good product. So there are some good reasons to go competitive. On the focus group front – I recommend ethnology as an adjunct to really see what is going on in the decision to buy/not buy lifecycle. My sense is Sears Holdings does not have a clear strategy or plan, at least one the consumers (and maybe employees) understand.
He needs to take a deep breath and count to 10. Make these people enthusiastic members of the team, not yell “bad dog!” at them. It’s a much slower, much more difficult process, and it has to start from within, at the top. Honest communication, and unrestrained give-and-take would be better in coming up with ideas, rather than knee-jerk complaints, especially at a time like this. I once had a president who sent out memos about making sure the blinds in the building all lined up across all the windows, so it would look prettier from the outside. It was my personal signal to leave, and I did, thank heaven.
Culture change is not something that occurs as a result of reactive management. It is the result of carefully constructed, patient, and pervasive efforts across all aspects of the organization. No organization of any significant size has ever changed its culture through emotion-based decree management.
Pressure at Sears Holdings is probably something you can feel crawling on your skin. Senior Executives, please, beware of this. No one works effectively under that circumstance — yourselves included. Was Mr. Alwyn’s reaction understandable? Probably. Was his response appropriate, in the long term, and conducive to a high functioning team? Probably not.
Change management can indeed include short term goals, objectives and tactics. Manipulating the bottom line is a reality of today’s market-driven financial reporting. Open plea to Mr. Alwyn: have a plan, execute the plan, and don’t live day-to-day. Your best assets are your people, and your best people really do have options outside of working for you. Calm, reasoned, appropriate behavior is the ONLY way to manage large scale, long term culture change. Set the agenda, establish the pace, and stick to it.
Or not. But remember….history is littered with emotionally reactive leaders who, through their own passion, drove their organizations into accelerated decline.
While it wasn’t the smartest move to walk on board a company aircraft with a competitor’s bag, the results are just as stupid. The memo to the stores doesn’t really say that you shouldn’t bring a competitor’s merchandise into the stores, it says you must buy from a Sears Holding store.
Absent from the memo is the recommendation to send anyone to a Kmart while telling everyone to send them to Sears — another morale buster at Kmart. Just goes along with all the other things that are taking place to bring down the associates. No one really wants to go to work any more at Kmart. You will probably see a large departure of employees prior to the Christmas shopping season. I think Kmart is hoping for that. They can get the uninformed, inexperienced, low paid associate to take their place.
Demanding loyalty seems counterintuitive. A strategic response could be to answer the question of why employees are finding competitors’ products more attractive? If you know why competitors’ products are more attractive, maybe you need to change some of your products to make them more attractive. In addition to requiring employees to visit your own stores, maybe it’s also important to require them to visit competitive stores to identify differences, to sharpen your competitive advantage, to make your advantages clear to consumers.
What’s holding them back is an unwillingness to listen to their employees about what is really going on in the competitive world and in the world of consumers that are not forced to shop at Sears. One thing is to instill pride and to have a brand that people are proud to promote publicly and another thing is to be myopic and militant about absolute loyalty.
As I said in a recent discussion on loyalty, most companies have it backwards. Companies need to be loyal to their employees and customers by delivering on their promises. In return, the customers continue to buy their products and employees perform their jobs as expected.
Unfortunately, the Sears example may characterize why it is the place “Americans used to shop.”
The previous responses have articulated a definite challenge that lies before Sears Holdings’ executives; I would like to add this consideration as a postscript: Mr. Lewis’ memo has a bit of a feel of “Do as I say”…but perhaps Sears employees are not convinced Mr. Lewis is also saying “Do as I do” as well. In considering internal stakeholders (employees), maybe an advertising campaign featuring Sears executives showing how they incorporate the various assets of Sears Holdings into their lives could be a powerful statement in building and strengthening employee loyalty and morale.
When I worked for Target (many years ago), there were items they did not sell what I bought from other retailers. I suppose I should never have worn a suit or dress shoes during that period? There were items that were better quality at other stores or had features that Target’s selection did not offer.
I don’t think I would flaunt it by walking into a meeting or function carrying a competitor’s bag, but get a grip. Was it quicker to pick up an item on the way to the airport at a drug store because it was on the way?
Wal-Mart execs were chastised after an annual meeting several years ago for wearing suits instead of clothing that came from within the chain. Should Lee Scott appear on TV or at financial meetings in jeans or khaki’s to represent the chain? Should they refuse to do business with people not wearing George apparel?
Loyalty should be a 2 way street and it is not in far too many companies. Is Sears going to promise not to lay off any of the “loyal” employees? Absolutely not! If there is a chance to close a store and sell some real estate, it will get done in a heartbeat. Loyalty, like respect, is earned and the “memo” in question is evidence that neither is due.
Sears had the most amazingly loyal associates when I started to work for them some years back. Sadly, those day are now gone. The “conversion” (the term internally for the program to make the stores more discount-like) sent many long-term highly-paid managers home with pink slips. These were people who bleed Sears-blue blood. Since then, working conditions and store morale has declined worse than the same store sales figures. Many long-term store employees have left in waves of severance packages. Skill and knowledge of how to provide both customer service and profitable store operations have left with them. Commission-only sales associates, which were generally considered the most professional and product-wise people in the industry, have seen their earnings eroded year after year. Many of these professionals now work for the competition. Many more are hanging on for retirement although Sears Holdings has jettisoned the pension plan and reduced the health benefits of these soon to be retired associates. Ten years ago, you would find rabid Sears fans in the break rooms. Today you find high schoolers and other part-timers who willingly change jobs for a quarter-an-hour pay raise. Sears had great loyalty. Sears Holdings has almost none. Sears was once the store of choice for the great American middle class. Sears Holdings’ current and proposed policies will drive away the declining customer base. Sad.
It is kind of amusing to see any CEO requesting loyalty from their employee, being aware that most States have employment at will laws, and very much abused by most corporations which choose to replace the Employee vs. trying to resolve possible issue.
Loyalty as a Customer? All my appliances came from Sears, I loved them for 17 years, when I replaced them it took me well over 40 hours shopping, 3 washers, 2 driers, 3 refrigerators to get one of each working, in 3 instances they did not last longer than the time it took to plug them in. Loyalty is a 2 way street, plain and simple.
Lewis was right in being upset about an employee carrying a competitor’s bag on the company plane; and, yes, there is a “but” here, in the wake of layoffs and lagging sales, Lewis needs to also recognize the employee loyalty factor that Sears and it’s leadership convey. To have loyalty, you have to give loyalty…your best friend is with you for life, even if you have other friends (in this case, shopping at competitors), if you treat them right. His people are his best asset–chastising is out–understanding and developing a “real culture” of loyalty is in. Find the answer to that and he finds the key — as Kousnes & Posner (1990) described leadership:
*Challenge the Process
*Inspire a Shared Vision
*Model the Way
*Enable Others to Act
*Encourage the Heart
Lewis would do well to brush up on these skills.