Lauren's wardrobe.

Whisenant, Warren ; Kavanaugh, Joseph

CASE DESCRIPTION

The case highlights the many human resources issues that challenge small business owners, including the sensitivity of conducting business in a predominantly ethnic community. Among the issues raised are job abandonment, willful misconduct, employee theft, hostile work environment, hiring practices, termination practices, progressive discipline, the importance of clearly promulgated employee policies, and constructive discharge. The case is appropriate for use primarily with undergraduate and graduate courses studying Human Resources Management in a small family owned business.

CASE SYNOPSIS

Lauren's Wardrobe is one of two stores owned and managed by Kelly Brown. The stores are located in a heavily Hispanic border community in Texas. Kelly employs eight to twelve employees depending on seasonal demand. One afternoon, three of the four employees in both stores walk off the job, leaving one store abandoned, and the other covered by only one employee. The precipitating event seems to be prejudicial comments made by Kelly's mother (not officially an employee) regarding the Hispanic employees, and her conduct toward them. After addressing the immediate issues of covering the stores until closing, Kelly talks with her one remaining employee, Rosie, who gives Kelly insight into the conditions faced by her employees. Now, Kelly must decide what actions to take before the stores reopen the next day.

INTRODUCTION

Kelly's Tuesday afternoon quickly went from bad to worse. She learned that her two boutiques were open but not staffed. Kelly was at home when she received a call from a friend who was shopping at one of Kelly's stores. The friend told Kelly that she had overheard two employees at Lauren's Wardrobe talking and that one was saying how unfair "she" was being treated and that they were not going to take it. A few moments later, the two employees gathered their personal belongings and left, leaving the store unattended. Kelly's friend, a customer, was the only person in the store. Suspecting Kelly was at home, the friend had called Kelly to tell her about the situation.

Lauren's Wardrobe and Mind's Eye were two small women's boutiques specializing in moderate to upscale priced clothing and accessories and were owned and operated by Kelly Brown. The stores were located in two strip-centers on the north side of a predominantly Hispanic community located in Texas along the Mexican border. Kelly's customer base was primarily Anglo and Hispanic women with middle- to upper- incomes. Despite only having been in business for four years and the stores being her first business venture as an owner or manager, Kelly had established a loyal customer base within the surrounding communities. She was also experiencing significant sales growth due to patronage from an increasing number of Mexican women who were crossing the border to shop at Lauren's Wardrobe. While both locations carried similar merchandise, Kelly would rotate older merchandise from Mind's Eye to Lauren's Wardrobe in the hope that the women shopping from Mexico would purchase the items the locals had not bought. Weekly sales had risen to approximately $15,000 for the two stores combined, however store profitability and cash flow remained low. The mark-up on merchandise averaged 65% and the stores' operating margin usually ran at a rate of 3%. The two stores, while operating under two different names, were incorporated as one entity.

Kelly employed a dozen high school and college-aged women, all of whom were Hispanic. Most of the women were hired because they looked appealing in the store's clothes or had been frequent customers when the stores had originally opened. Kelly served as the manager of both stores. Her mother often assisted her. Her mother had loaned Kelly a substantial amount of the money needed to open the business. The money was given to Kelly, interest free and without any due date for repayment. As a result of the loan and Kelly's inability to repay the loan, Kelly found it difficult to restrict her mother's involvement with the stores.

Kelly asked her friend to please wait there at the store, while Kelly called the other store, Mind's Eye. Kelly intended to have one of the two employees from Mind's Eye go to the unattended store. The friend agreed to stay at the store until relieved. When Kelly called Mind's Eye, it took much longer than usual for the phone to be answered. Rosie, Kelly's best employee, finally answered the phone. Kelly asked her why it had taken her so long to get to the phone. Rosie told Kelly that the other employee, Carla, had left the store saying she was quitting. Carla had told Rosie to tell Kelly that no one wanted to work for Kelly's mother. Rosie had customers in the store and was waiting on them when the phone had rung. Kelly told her to go back and wait on the customers and that she would make other arrangements to staff Lauren's Wardrobe, and have her daughter come to the store to help Rosie. Kelly's cell phone rang while she was on the house phone with Rosie. She said goodbye to Rosie and answered the cell phone.

Kelly's mother was calling from Lauren's Wardrobe. "Hello Kelly, this is mom. I just stopped by the store and nobody's here. What's going on?"

"I'm not sure. Can you stay there until I get there?"

"Well, I guess somebody has to. Your friend just left, so I guess I have to. The only other choice is to close the doors. Aren't those two Mexican girls supposed to be working today?"

"Yolanda and Estelle were working, and then for some reason they left, momma."

"Well, I'm not surprised. I think they were stealing from us anyway. We don't need girls like that working here. Someone just came in. I have to go before she loads up her purse with junk."

Kelly hung up the phone and wondered why she had ever agreed to let her mother work in the stores. Her mother was rude to the employees and suspicious of all Hispanic customers. As soon as her daughter Lauren got home from high school, Kelly took her to Lauren's Wardrobe, to work with her grandmother. Kelly then went to Mind's Eye to work with Rosie. Once at the store, Kelly called two of the other women who worked part-time and asked them to go to Lauren's Wardrobe to work the rest of the day. They agreed to relieve Lauren and her grandmother as soon as they could.

Later that evening after closing, Kelly asked Rosie to stay after work to talk about what had happened earlier in the day. Rosie was Yolanda's younger sister. Kelly thought Rosie would know why her sister and the two other employees had walked out.

"Rosie, I really need to know what is going on here. I can't run the stores with just one fulltime person, you. Why did they leave?"

"I don't know for sure," Rosie said reluctantly. "But I think it has something to do with your mother. Yolanda came home really upset the other day. She said she heard your mother talking to a customer about the employees stealing clothes or wearing them and then bringing them back and putting them on the rack. Your mother said you were going to fire all of us."

"Well, we have had some problems. Sometimes I find some of the clothes smell like smoke or perfume. I just assumed someone was taking them to wear out and then bringing them back and putting them on the rack."

It was actually Kelly's mother who had noticed some of the clothes had an odor. Kelly knew it was common for some customers to buy clothes, wear them, and then return them for a refund. The customers who did that usually returned them within a week or so after they were purchased. Over her mother's objections, Kelly would exchange the clothes or give the customer a store credit. Kelly would then have the clothes dry-cleaned and placed on a clearance rack after retagging the clothes. She also suspected some of the women who were working for her were taking clothes from the store and then returning them to the rack. She had asked her mother what to do about the employees taking clothes without paying for them. Her mother said she should fire them.

Continuing her discussion with Rosie, Kelly asked, "Have you or the other girls been taking clothes without paying for them?"

Rosie's head sank as she answered, "Oh Kelly, we thought it would be OK. Some of those customers do it. They come in here and buy such nice things and then wear them for one night and expect to get their money back. Usually we just take the things that the customers bring back."

"No one ever keeps things without paying for them?"

"I don't think so. I know I always pay for what I keep. I take the 50% discount that we get."

"Who told you, you get a 50% discount? Employees only get a 10% discount."

Rosie looked surprised. "Yolanda and the other girls told me it was 50%. Your mother and Lauren, when they do pay for the things they take, always take 50% off. So I just assumed that was what all of us got."

"What do you mean, 'when they do pay for things?' We all have to pay for anything we buy or take out of the store."

Rosie realized that perhaps Kelly did not know that her mother and daughter came into the store quite often and took clothes and accessories without paying for them. "Actually, they usually don't pay. But we do."

"So why did everyone walk out?"

"Because your mother was going around telling customers that we were stealing from you and that we were going to be fired. Kelly, she really treats us bad. And she treats the Hispanic customers bad too. I've had several people tell me they won't come into the store when she works. She's rude."

Kelly asked, "Do you think the other girls will come back to work if I ask my mom not to be so involved with the stores?"

"I don't know. My dad is an attorney and when Yolanda told him how she treats us, he was really mad. He told us to quit and he was going to sue you. I told him not to. I really like working here."

"So can you get them to come back? I really don't want them to go back to work at my competitor's store. When they came here to work, they brought a bunch of their friends and customers with them."

"Oh, Yolanda won't be going back to Kaleidoscope. She got fired after you asked her to work here. The owner caught her giving her friends special discounts. Actually, that's how she's lost her last three jobs."

Kelly was surprised to hear Yolanda was fired from her earlier job. As a customer, Kelly had always received very good service from Yolanda at Kaleidoscope. Yolanda was always dressed very professionally and eager to wait on customers. When Kelly was preparing to open her stores, she had approached Yolanda to see if she might be interested in working at one of Kelly's new stores. Kelly had known Yolanda would bring customers with her if she were to leave Kaleidoscope and work at either Mind's Eye or Lauren's Wardrobe. Kelly recalled the day Yolanda came to the store to ask if Kelly's offer for a job was still available. Kelly was so excited about Yolanda's interest, she hired her on the spot. There was no need in Kelly's mind to have Yolanda fill out an application or check references, since Kelly had been one of Yolanda's customers at Kaleidoscope. Besides, Kelly had thought, the owner of Kaleidoscope probably would not have given Yolanda a good reference anyway since she was going to work for a competitor.

Shortly after Rosie left for the evening, Kelly's mother and Lauren arrived at the store. Kelly's mother had several brochures in her hand, which she tossed on the checkout counter. Kelly looked and saw the materials were about security cameras.

"What are these for?" asked Kelly.

"I'm tired of all these customers and kids you hire stealing us blind," her mother responded. " You shouldn't be having such a hard time making ends meet with the mark-up you have on all this stuff. I think its time we put in some hidden cameras to catch them in the act. We can put some in the back room where the girls take their breaks and hang out, and in the ceiling above the cash register. That way you know what's going on when you aren't here."

Kelly was not sure how to respond. "I'm not sure that's legal."

"What about it? You have a right to watch over your merchandise."

Kelly thanked her mother and prepared to leave the store for the night. She had a great deal to consider before the stores opened again on Wednesday.

Warren Whisenant, University of Miami

Joseph Kavanaugh, Sam Houston State University