Grant’s Negative Incentives
As Grants department store lurched towards bankruptcy in the mid 1970s, its senior management instituted a program to motivate store managers to meet sales goals — with a particular emphasis on trying to get more customers to sign up for credit accounts. This program involved using "negative incentives," which was a euphemism for publicly humiliating managers whose employees didn't meet sales goals. Details from Leadership Theories and Case Studies by Garry Wade McGiboney:
According to newspaper reports from the time, one store manager was forced to walk around a hotel lobby dressed only in a diaper. Another was thrown into a blow-up swimming pool full of ice.
And sometimes these humiliations were forced upon store managers even if their employees met sales goals, because the company executives "believed it would somehow motivate employees if they saw the boss suffer some indignities." So really, whatever the managers did, they were going to be humiliated.
The employee motivation plan was labeled the "Steak and Beans" incentive program. It focused on motivating store managers to meet their sales and credit quotas each month. However, it was based on negative incentives instead of positive motivation. Managers that did not meet their sales and credit quotas received a visit from a regional manager who would gather all of the store employees together and in front of them slam a pie in the face of the store manager for his failure to meet quotas. Other negative incentives included cutting the underperforming store manager's tie in half, requiring managers to push peanuts with their nose across a table, and making managers run backward around the store...
Stories of the company's focus on outrageously negative motivation seemed exaggerated, but court documents from bankruptcy hearings confirmed the stories. At the time, W.T. Grant's bankruptcy was the second largest in business history...
The negative motivation led to store managers threatening and intimidating their store employees to the point that they were giving credit to almost every customer without any effort to discern if the customer had the means to pay the credit card bill. This negative-based practice spiraled out of control and eventually put the company in debt of over $200 million in unsecured credit.
Stories of the company's focus on outrageously negative motivation seemed exaggerated, but court documents from bankruptcy hearings confirmed the stories. At the time, W.T. Grant's bankruptcy was the second largest in business history...
The negative motivation led to store managers threatening and intimidating their store employees to the point that they were giving credit to almost every customer without any effort to discern if the customer had the means to pay the credit card bill. This negative-based practice spiraled out of control and eventually put the company in debt of over $200 million in unsecured credit.
According to newspaper reports from the time, one store manager was forced to walk around a hotel lobby dressed only in a diaper. Another was thrown into a blow-up swimming pool full of ice.
And sometimes these humiliations were forced upon store managers even if their employees met sales goals, because the company executives "believed it would somehow motivate employees if they saw the boss suffer some indignities." So really, whatever the managers did, they were going to be humiliated.
Comments
As an employee of J.C. Penney during the late 1970's, I remember the chain pushing credit accounts for customers but no "negative incentive" programs. I did find that it was impossible to get my own credit account, though I was twenty in my first fob out of high school and really had no credit history, even though I had been employed by the company for the previous two years. Just look at J.C. Penney today...
Posted by KDP on 09/11/21 at 09:30 AM
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Category: Business | 1970s