Few jewelers have structured compensation plans to help them decide how to measure and reward top performance. Instead, many base pay decisions on how well the business did. Last year’s modest business gains mostly meant modest pay. increases &endash; or none at all
Last year was pretty ho-hum for jewelry-store paychecks. Increases from 1993 were modest, decreases were scatter-shot through a number of job categories. But any employees who were unhappy with what they took home in net pay may feel better to learn that many bosses also were unhappy. That’s because they realized the compensation plans they offered weren’t as good as they should be in rewarding employee effort and promoting better performance and greater productivity.
These are the main points to emerge from JCK’s annual salary study, based on salary information provided by members of the magazine’s retail panel. The panel’s 500-plus members represent primarily independent stores in all parts of the nation.
Year-to-year figures don’t allow an exact comparison because not all the same stores reported both years. By using medians, however, the figures over the years have shown clear and consistent trends.
Changes from 1993 showed no special pattern. For example, the median salary for owners and presidents was higher last year than in 1993 in stores with annual volume under $1 million&endash; $41,600 compared with $34,900 &endash; and lower in the $1 million-plus category &endash; $73,000 compared with $87,400.
The situation was reversed for store managers. Salaries were lower for those in the smaller-volume category last year &endash; $28,000 compared with $30,500 &endash; but higher in the larger-volume category &endash; $40,000 compared with $37,300.
While a number of CEOs earned top dollar, the percentage in the top bracket (more than $100,000 a year) dropped from 23% in 1993 to 13% last year. The situation was reversed for male store managers. In 1993, 38% of them earned more than $40,000; last year, the figure was 50%.
Two of the most distinct changes came in salaries for male store managers and for benchworkers. For all reporting stores, male managers had median 1994 salaries &endash; which include base pay plus commissions and bonuses where these were paid &endash; of $39,400, up more than 10% from 1993’s total of $35,600. Pay went in the opposite direction for benchworkers. Last year’s median salary of $22,500 was off more than 14% from 1993’s $26,200.
The management issue: Ask store owners to identify their most difficult tasks and chances are that more than nine out of 10 will say people management. This involves a wide range of tasks: hiring, training, motivating, supervising, disciplining, promoting, delegating and, in extreme cases, firing. It also involves compensation. Most panelists seem to have at best a tenuous handle on this subject.
Let’s look at a few findings.
By a margin of more than four to one, panelists say they have no formal plan to determine when to give raises and how much to give.
By a margin of almost three to one, they say they have no formal performance appraisal process to rate employees’ work.
Almost one in three says the compensation plan now in operation “doesn’t do the job I want in encouraging performance and productivity” or “I’d like a better plan.”
Nine out of 10 say they’ve never consulted with a compensation expert to help create a good pay-and-benefits plan.
Only about one in three has ever asked for staff input on how they believe they should be compensated.
A core issue is whether to pay sales commissions; panelists are highly ambivalent. For example, individual bonuses are by far the most popular way to reward special effort, yet commissions are considered the No. 1 incentive to improve sales productivity. Those in favor of commissions say mostly that they provide a direct and tangible benefit. Those opposed are concerned about the controversy they can arouse.
Doug Brougham of Brehmer’s Jewelers in Kerrville, Tex., says flat out that his staff “hates commissions. They don’t want to argue over a sale.” The business pays base salary, group bonuses and spiffs. Jim Nielsen, manager of Condon Jewelers in Madison, Wis., touches on the same issue. He says his staff “likes commissions during the busy times of year, but [when commissions are in force] sales stealing increases. It isn’t a big problem, but just one stolen sale can cause problems.” Nielsen’s preference: sales spiffs for the whole staff if the store hits certain sales levels.
After individual bonuses, spiffs are No. 2 on panelists’ lists as the best way to reward the top producers. Commissions are close behind. Group bonuses are a distant third.
Stressing the positive: It’s true that a significant number of panelists wish they had a better compensation plan. But even more believe their compensation plans, however informal, reward employees fairly and generously. And many stores owners responding to this study say their employees seem happy with their financial lot.
Three factors stand out as benchmarks for giving raises. The most important is performance/productivity, something that can be observed fairly easily without any formal charting. Next comes profitability and growth of the business; if sales and profits are growing, it’s much easier to share the rewards with the staff. Third comes length of service. This appears to be an important factor for quite a few jewelers, with some indicating that time on the job and loyalty to the business can be as important as sales productivity. Other less-often-mentioned factors include competitive salaries in the marketplace, employee attitude, employee need and, in a number of cases, seat-of-the-pants judgments.
Arthur Sokolof of Simms Jewelers in Bedminster, N.J., is one of those with a more structured approach. He sets salaries based on a review of the previous year’s volume and each salesperson’s part in achieving that volume. Non-selling personnel’s increases “are tied to positive change in volume and/or increased responsibilities and the level of clerical/office remuneration in our area,” Sokolof explains. Established employees have a yearly performance review with management; new employees have three reviews in their first year and then move to annual reviews.
Wayne Jewelers & Silversmiths in Wayne, Pa., also has a structured compensation policy. “We give annual raises to our regular employees, unless we had a really lousy year,” says Bill Shepherd, the store manager. “Those who have done an outstanding job get larger increases than the others and most of the time will get raises even if the year has been lousy. We give a raise to people for completing a gemological course, if their overall performance is satisfactory.
“We give annual bonuses, with the largest going to the best performers. The bonus amount will depend on how the year has been. We also award bonuses for closing a really large and profitable sale &endash; usually $35,000 or more.”
Rewards for pursuing educational opportunities are not uncommon. Philip Minsky, president of Wyman Jewelers in Stoughton, Mass., and a former president of the American Gem Society, is a true believer in this type of reward. An employee who achieves any AGS title receives a pay raise of $2,080 and at the conclusion of the Diamond Promotion Service’s lessons each season “at the weekly sales meeting we increase wages by 50¢ an hour or $1,040 annually,” says Minsky.
Input that counts: In some stores, what the employees themselves have to say can have a direct impact on their paychecks. About a third of the panelists replying to this study say they’ve asked their staffs for input when putting together compensation packages. These requests are taken seriously and acted on quite often. Terry Chandler of Michelson Jewelers in Paducah, Ky., for example, added more contests, incentives and “special ways” to increase compensation as a direct response to staff suggestions. Mark Moeller of R.F. Moeller Jeweler in St. Paul, Minn., also invites staff input. “There is always discussion and continual refinement of the compensation process,” he says. “I rely on my employees to come up with creative solutions.”
Not all staff suggestions are practical, however. Charles Zerbe of Zerbe Jewelers in Colorado Spring, Colo., once asked for staff input. “They all seemed to think that larger salaries combined with shorter hours, lower goals, fewer demands and longer lunches sounded good,” he recalls wryly.
ARE YOU HAPPY WITH YOUR PLAN?
How jewelers responded to the following options when asked how satisfied they are with their compensation plan.
| It rewards employees fairly and generously | 26% |
| It encourages top performance and productivity | 15% |
| It seems to have inconsistencies | 11% |
| It does not do the job I want in encouraging performance and productivity | 10% |
| The employees seem very happy with it | 16% |
| I get employee complaints about it | 1% |
| I’d like to have a better plan | 21% |
| Source:JCKRetail Jewelers Panel | |
REWARDS: WHO GETS WHAT
| Median | |||
| Job title | 1994 | 1993 | 1994 salary range |
| Chairman, president, owner, partner | |||
| All stores | $50,000 | $55,000 | $12,000-$230,000 |
| Stores with annual volume over $1,000,000 | $73,000 | $87,400 | $40,000-$230,000 |
| Stores with annual volume under $1,000,000 | $41,600 | $34,998 | $12,000-$57,000 |
| Vice presidents, treasurers, controllers | |||
| All stores * | $48,800 | $39,500 | $17,800-$153,300 |
| Stores with annual volume over $1,000,000 | $50,000 | $47,500 | $35,000-$153,300 |
| Stores with annual volume under $1,000,000 | $19,580 | $39,500 | $17,800-$30,800 |
| All store managers | |||
| All stores | $35,000 | $35,423 | $12,000-$90,000 |
| Stores with annual volume over $1,000,000 | $40,000 | $37,324 | $13,800-$90,000 |
| Stores with annual volume under $1,000,000 | $28,000 | $30,557 | $12,000-$50,000 |
| Store managers, men | |||
| All stores | $39,400 | $35,648 | $12,000-$90,000 |
| Stores with annual volume over $1,000,000 | $40,630 | $35,648 | $12,000-$90,000 |
| Stores with annual volume under $1,000,000 | $31,000 | * | $18,560-$50,000 |
| Store managers, women | |||
| All stores | $32,650 | $31,500 | $13,800-$57,500 |
| Stores with annual volume over $1,000,000 | $40,000 | $35,716 | $23,000-$57,500 |
| Stores with annual volume under $1,000,000 | $26,000 | $29,000 | $13,800-$45,000 |
| Assistant store managers, buyers | |||
| All stores * | $25,000 | $28,250 | $13,900-$45,000 |
| Stores with annual volume over $1,000,000 | $30,500 | $28,500 | $20,000-$45,000 |
| Stores with annual volume under $1,000,000 | $17,300 | $28,000 | $13,900-$22,800 |
| Jeweler, gemologist, goldsmith, appraiser | |||
| All stores | $26,000 | $25,705 | $13,500-$65,700 |
| Stores with annual volume over $1,000,000 | $29,500 | $31,000 | $13,500-$65,700 |
| Stores with annual volume under $1,000,000 | $24,850 | $22,800 | $15,600-$36,000 |
| Benchworker, jewelry repair | |||
| All stores | $22,500 | $26,227 | $9,600-$50,470 |
| Stores with annual volume over $1,000,000 | $23,350 | $28,000 | $13,000-$42,000 |
| Stores with annual volume under $1,000,000 | $19,800 | $24,960 | $9,600-$50,470 |
| Watchmaker | |||
| All stores * | $28,000 | $24,188 | $18,700-$56,440 |
| Stores with annual volume over $1,000,000 | $33,500 | $30,307 | $24,500-$56,440 |
| Stores with annual volume under $1,000,000 | $20,955 | * | $18,700-$33,370 |
| General sales, men | |||
| All stores | $31,200 | $26,084 | $12,480-$65,000 |
| Stores with annual volume over $1,000,000 | $35,500 | $28,000 | $12,480-$65,000 |
| Stores with annual volume under $1,000,000 | * | $21,000 | * |
| General sales, women | |||
| All stores | $18,100 | $16,640 | $8,200-$49,000 |
| Stores with annual volume over $1,000,000 | $20,200 | $17,500 | $9,000-$49,000 |
| Stores with annual volume under $1,000,000 | $13,300 | $15,200 | $8,200-$27,700 |
| Bookkeeper, accountant | |||
| All stores | $25,000 | $20,868 | $12,000-$36,300 |
| Stores with annual volume over $1,000,000 | $25,500 | $26,000 | $15,400-$36,300 |
| Stores with annual volume under $1,000,000 | * | $17,400 | * |
| Office staff and miscellaneous | |||
| All stores | $16,000 | $14,560 | $6,500-$60,000 |
| Stores with annual volume over $1,000,000 | $16,600 | $15,250 | $14,000-$60,000 |
| Stores with annual volume under $1,000,000 | * | $13,500 | * |
| * The sample is too small to calculate realistic medians and ranges. The relatively small number of stores reporting salaries for vice presidents, treasurers and controllers; assistant managers; and watchmakers indicates a continuing trend by many stores to eliminate such positions. For the first two categories, this indicates fewer people in these positions; for watchmakers, it indicates a greater willingness to farm out watch repairs to trade shops or to return repairs to the manufacturer. | |||