Background
Sparks Sporting Company deals with the stocking, sale, and distribution of sporting equipment and accessories across the US. The company is headquartered in New York City with distribution centers, sales points, and warehouses located in different states depending on the demand. The company prides itself on selling custom made, affordable and environmentally friendly sportswear, sporting gear, and sporting equipment. For the last two years, Sparks has managed to get a significant market share owing to efficient market practices that are customer-center. Moreover, the company has managed to adopt the best labor and human resource practices to ensure that its employees are motivated. Sparks' pay structure is designed to ensure that every employee receives compensation that matches his or her skills, academic qualification, and professional input. An analysis of the Sparks payment system and structure establishes that it is aligned with the demands of the sporting industry and compares well with its competitors.
Industry
Sparks Sporting Company is a for-profit business that is in the category of sporting goods and equipment industry. The industry is quite extensive considering that there are endless sporting activities ranging from swimming, football, rugby, gymnastics, boxing, and canoeing (Zhang, Kim, Marstromartino, Qian and Nauright, 2018). These athletes, players, supporters, trainers, and sponsors require sporting equipment and sportswear to be effective. Companies that have invested in this industry specialize in fitness and athletic wear, sporting goods, and fitness equipment on either wholesale or retail terms. The US sporting goods and equipment market is a billion-dollar industry with about 22,000 multi-location and single location companies which when combined bring in $47 billion dollars annually (Manoli, 2017). The US is considered a market leader in sports apparel and equipment considering that it has 36 percent in market share. The sporting industry is quite concentrated which forces companies to get involved in rigorous marketing and merchandising activities to increase profitability.
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Justification for Sporting Goods Industry
Sporting goods industry is poised for accelerated growth as more countries and individuals take on sporting activities either for personal or monetary purposes. Sporting has in the past become a lucrative professional venture that aligns with the discovery of more sporting activities. Apart from its economic advantage, sporting has become the most effective way of dealing with the diverse effects of lifestyle diseases. According to Zhang, Huang and Nauright, 2017), more and more people are engaging in physical activities such as running and gym sessions to be in their best physical fitness. These new developments translate to increased demand for sporting equipment and sportswear most specifically trainers and sweatpants. Sparks being aware of this fact is keen on ensuring that it taps into the industry that demonstrates such as high potential. The company is assured of getting returns for its investment considering that the sporting sector is getting more attention than before. This industry has personal value considering that it supports people who want to achieve their dreams in the sporting world. Almost all of the sportsmen and women who go into sporting competition go in to win and get the reward, therefore. It gives me great pleasure to provide them with the best sporting wear and equipment to increase their chances of winning. At the end of it, I feel that I have played a major role in helping these individuals to achieve their personal and professional goals.
The sporting industry is the best venture not only because of the personal value associated with it but also because of its economic value. First, this industry is an equal employer as it requires both professional and unskilled employees to handle its operations and in this way reduces the unemployment burden. The industry has both microeconomic and macro-economic value as it contributes to the local economy due to the employment of locals and to the national economy on taxation. The communities in which the sporting goods stores are located benefit a lot as they are given the first consideration during the hiring process. The thinking behind this strategy is the fact that the company will not require to incur extra costs in moving or housing the employees. At the same time, the immediate community stands to benefit as the employees in the sporting industry utilize the community’s housing, healthcare, educational, recreational, and catering services. In this regard then, there is constant financial flow within the community, which helps in uplifting the community members’ living standards.
Competition
The sporting industry is quite competitive considering that it is one of the lucrative industries and as such, most people want to tap into this economic opportunity. Currently, there are more than 20,000 businesses that deal with sporting goods and equipment across the country and the number is bound to rise. This huge number of businesses compete for the US 34 percent market share meaning that the competition is bound to be stiff. Sparks is aware of this fact and it has major and established competitors including Cabelas, Dick’s Sporting Goods, REI, Big 5 and Hibbett Sports. These major sporting goods companies use up to 55 percent of the US market share and the other companies have to compete for the remaining 45 percent. Sparks are bound to get competition from sportswear manufacturers such as Nike Inc, Adidas AG, Reebok, Puma SE, and other established companies. Clients are likely to order merchandise directly from the company as opposed to purchasing from the distributors who may have higher prices. This consumer preference may prove uneconomical for Sparks, which distributes these products at a higher price.
Dealing with Competition
Sparks Sporting Company is aware of the rigorous competition that exists in the sporting goods industry must have effective strategies in place to set it apart from its competitors. The main strategy that Sparks will put in place is a market-friendly pricing strategy that attracts customers while maintaining profitability. While it is not possible to offer lower prices than the manufacturers offer, the prices will be competitive enough. In this regard, Sparks will adapt the free delivery system and in this way match the prices that the sporting goods manufacturers offer. Sparks understands that employees play a central role in enhancing their profitability and it is for this reason that it will adopt a competitive pay system that exceeds the competitors. Cabela, which is Sparks’ major competitor, pays an average of $11.82 with cashiers averaging at $ 9.44, Retail Sales Associate at $ 11.61 and Sales Associate at $10.95 (PayScale, nd). Hibbett Sports hourly wage averages at $ 8.36 for cashiers, Customer Service Associate at $8.52 and Retail Sales Associate at $ 26.20 (Indeed, nd). These wages are not reflective of the US labor market regulations, which establish that retail sales associates in the sporting goods industry ought to get an average of $12.04 per hour (United States Department of Labor, 2018). Both Hibbett and Cabela pay their retail sales associates below the national minimum and Sparks hopes to abide by the provision by paying them $13 per hour. These rates are likely to motivate the employees knowing well that the company abides with the labor laws, which are aimed at promoting their economic wellbeing.
The basis for Pay System
Sparks Sporting Company is committed to ensuring that all of its employees are remunerated well to avoid high employee turnover, which is bad for business. In pursuit of this objective, the company will pay the salary scale on both seniority and merit with a bias on seniority. Senor employees will get higher salaries considering that they set the pace for the other employees. These employees should own the company’s vision and objectives and this is only possible if they feel that the company appreciates their efforts. The junior employees tend to undertake the harder tasks of dealing with customers, marketing, and distributing merchandise. In appreciating their efforts, the company will base their payment on merit to encourage them to work more. The salary scale will range from $34 for general managers to $13 for retail sales associates, which will be reviewed bi-annually. The salary review will be dependent on various regulatory and economic factors such as change of labor policies and changes in the minimum wage. In particular, an increase in minimum wage will require the company to review its hourly wages upward to adhere to changing policies.
Job Descriptions
Sparks Sporting Company requires the services of various employees with varied personal and professional skills to achieve its goals. In particular, the company needs employees to fill executive, professional, administrative, and casual positions with each employee tasked with different responsibilities. In this regard, the company will require a Chief Financial Officer, Sales Representative, Human Resource Manager, Retail Manager, and Sales Associates. The Chief Financial Officer plays a crucial role in an organization as he or she is tasked with the responsibility of managing the company’s financial operations. The CFO analyses profit and sales margins, set budgets, control costs, ensure compliance with financial policies and oversee bookkeeping and accounting staff. This role is crucial to the company as the major goal for establishing the company is to be profitable and competitive. The Human Resource Manager is a crucial employee who is tasked with the responsibility of overseeing employees’ welfare, remuneration, and services to enhance employee motivation and in turn productivity. The position of a Retail Manager is significant as he or she is expected to develop and implement strategies aimed at maximizing sales by ensuring that customers’ demands and targets are met. A Sales representative is a crucial employee in a sporting goods company as he or she acts as a link between the clients and the company. Furthermore, this person is tasked with the responsibility of conducting cost-benefit analyses on the existing and potential customers to test the applicability of marketing strategies. Finally, a sales associate is the first person that the customer meets and is responsible for answering clients’ questions to enhance customer service. Moreover, the sales associate may operate cash registers, balance drawers, and manage financial transactions. These five sets of employees are crucial if Sparks’ is to be competitive and sustainable in this era of increased competition.
Performance Appraisal System
Sparks Sporting Company understands the need to manage its employee performance to ensure that they are aligned to the organizational goals and objectives. More so, the appraisal guides the human resource department in the development of affair promotion and pay increase system. The company has a rigorous performance appraisal system that captures both qualitative and quantitative employee and customer feedback. In line with evaluating employees' productivity, Sparks uses the Trait-focused Performance Appraisal System. The reason why Sparks uses this appraisal system is the fact that it works well in customer service industries and departments. According to DeNisi and Murphy (2017), this system focuses on individual traits and attributes most notably punctuality dependability and helpfulness. Supervisors normally have checklists that they use to rate employees who are either classified as excellent, satisfactory, requires improvement, poor, or any other option. Employees who score highly in these ratings are more likely to be considered for promotions and salary increases as compared to those who score poorly.
Comparing Trait-Focused Performance Appraisal Stem to other appraisal systems
The trait-focused Performance Appraisal system is different from other appraisal systems most notably the Straight Ranking Method and Paired Comparison Method. Straight ranking Method ranks employees from the best to work by comparing them against each other. In this case, there are the top employees, the middle employees, and the bottom employees. While it is easy to pick the bottom and the top employees, it is hard to determine how the employees in the middle compared to one another (Rubin and Edwards, 2018). Straight Ranking Method compares with the Trait-Focused Method considering that both are subject to bias making them unreliable. On the other hand, Paired Comparison Method is about comparing an employee to other employees in the group to find the most eligible employee for promotion and pay increase. Unlike the Straight Ranking Method and Trait-Focused method, the Paired Comparison Method appears more reliable and objective. However, this method only works when it is only one employee is to be promoted and must stand out from among the rest.
Incentive Plans
Organizations, which are keen on thriving economically, must invest in their employees to ensure that they are motivated and productive. The most effective way to ensure that the employees exceed expectations and help grow the business is by coming up with rigorous incentive plans. Sparks being aware of this fact has several incentive plans in place to attract and retain productive plans. The first incentive plan that Sparks has is a sales commission on top of the basic salaries for every employee who brings in new clients. According to Fatima(2017), Employees are attracted to this incentive as they are assured of financial security even when the company is experiencing an economic downturn. Furthermore, sales commission motivates the employees to work harder so that they earn higher incomes as they now have a chance to determine their pay package. Apart from the sales commission, the company shares a percentage of its annual net profits with full-time employees. The sharing is based on employees’ wages, salaries, as well as the results of the performance appraisal. Employees who have scored highly on the evaluation, as well as highly paid employees, get a higher percentage of the portion of the profits. These two types of incentives have been chosen owing to the fact that it calls on the employees to put more effort as these incentives are more of merit than compulsory.
Discretionary Benefits
Sparks Sporting Company is focused on ensuring that its employees are motivated enough so that they own the company’s goal and work as hard to achieve them. In line with this, the company has lucrative discretionary benefits for both its full-time and part-time employees. The main discretionary benefit that applies to all employees is health insurance as part of the wellness program. The insurance package covers the employees’ health needs including dental, prescription drugs, and their immediate family members mainly the spouse and children without the dental option. This benefit works considering that 8.4 percent of employees more likely to choose lower-paying jobs that have health insurance as opposed to higher-paying jobs without health insurance (Nemekova, 2017). Apart from health insurance, Sparks offers a comprehensive retirement benefit plan for all full-time workers. Each of the workers contributes 2 percent of his or her annual salary and the company matches the workers' contribution by 5 percent. This plan ensures that the employees will have fiancés to lean on once they retire and when they can no longer work due to old age. Together these two benefits motivate the employees to work as hard so that they can enjoy the benefits during the time they need them the most. Sparks also offers its employees both maternity and paternity leaves with full pay for a period not extending 100 working days for women and 30 days for men. These leaves send a message that the company does not only exist to pursue economic gains but also cares for the family unit
Defined Contribution Plan
Sparks Sporting Company is keen on ensuring that its employees not only benefit the company but also gain from working here. In this regard, the company has a well-defined contribution plan that allows the employee to contribute towards his retirement. The main defined contribution plan at the company is 401k, a tax-advantaged plan named after the U.S. Internal Revenue Code’s section. According to Ghilarducci, Saad-Lesler, and Reznik (2018), the company withholds prevent of the employees' payroll and matches these contributions. All this while these earnings are not taxed until the employee decides to withdraw them on retirement. This arrangement ensures that employees have fiancés to fall back on when they can no longer work due to old age or illnesses. The defined contribution plan is excellent in ensuring that all employees in different capacities work hard to secure their future.
Country of Choice for Expansion
Sparks Sporting Company currently operates in the US but it has plans to expand to other countries in an attempt to grow its business. The company is considering expanding into China owing to the fast pace that the Chinese economy is growing. All this while the US and Europe have been the market leaders in the sporting goods industry holding up to 60 percent but the trend is about to change. According to Manoli (2017), China is keen on growing its sporting industry by empowering more sportsmen to compete with the rest of the world. This support will definitely increase the demand for sporting goods and apparel and Sparks is ready to tap into this potential market. Sparks hopes that a decision to open shop in China will pay off considering that China has a population explosion in excess of a billion people. A decision to expand to China will affect the pay system significantly, as the company will require reviewing its pay structure. The company may have to increase the pay for its executives, professionals, and administrators, as they will be from the US. Moving them to China will require a 50 % increase in their remuneration and benefits as they will be operating in unfamiliar territory.
References
DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3):421-433.
Fatima, Z. (2017). Impact of Compensation Plans on Salesforce Motivation. Review of Professional Management, 15(2):70-76.
Ghilarducci, T, Saad-Lessler, J., & Reznik, G. (2018). Earnings volatility and 401(k) contributions. Journal of Pension Economics & Finance, 17(4):554-575.
Indeed. (2019, November 5). Hibbett Sports - Retail Salaries in the United States. Retrieved on December 7, 2019, from https://www.indeed.com/cmp/Hibbett-Sports/salaries?job_category=retail
Manoli, A. E. (2017). Sports marketing’s past, present, and future; an introduction to the special issue on contemporary issues in sports marketing. Journal of Strategic Marketing, 26(1):1-5.
Nemekova, I. (2017). The role of benefits in employee motivation and retention in the financial sector of the Czech Republic. Economic Research, 30(1):694-704.
PayScale. (nd). Average Hourly Rate for Cabela's Employees. Retrieved in December 2019 from https://www.payscale.com/research/US/Employer=Cabela%27s/Hourly_Rate
Rubin, E. V., & Edwards, A. (2018). The performance of performance appraisal systems: understanding the linkage between appraisal structure and appraisal discrimination complaints. The International Journal of Human Resource Management, DOI: 10.1080/09585192.2018.1424015:1-20.
Sharp, L. A., Moorman, A.M., & Claussen, C. L. (2017). Sport Law: A Managerial Approach. New York: Routledge
United States Department of Labor. (2018). Occupational Employment and Wages: 41-2031 Retail Salespersons . Retrieved on 7 December 2019, from https://www.bls.gov/oes/current/oes412031.htm
Zhang, J. J., Huang, H., & Nauright, J. (2017). Sport Business in Leading Economies. Bingley, UK: Emerald Publishing Limited.
Zhang, J. J., Kim, E., Marstromartino, B., Qian, T.Y., & Nauright, J. (2018).The sports industry in growing economies: critical issues and challenges. International Journal of Sports Marketing and Sponsorship, 19(2): 110-126.
Appendix I: Salary Ranges
| Job Title | Mean Hourly Wage | Mean Annual Wage |
| Chief Financial Officer | $103 | $214,000 |
| Human Resource Manager | $53 | $110,000 |
| Sales Representative | $14 | $58,000 |
| Retail Manager | $35 | $90,000 |
| Sales Associate | $11.45 | $25,600 |
Appendix II: Job Description
Chief Financial Officer
Recruit staff whenever the need arises.
Make high-level decisions on organizational strategies and policies
Oversee the company’s financial reporting, budgeting, and auditing.
Ensure compliance with regulations and laws during the filing of financial documents.
Advise the company on financial opportunities and risks.
Oversee the operations of budgeting and financial reporting teams.
Sales Representative
Perform cost-benefit analysis on existing as well as potential customers.
Persuading customers to buy the company’s products through solid arguments.
Promoting positive relationships with clients to secure future sales.
Liaising with clients through social media, phone, and face-to-face meetings.
Collecting and analyzing client data using relevant media.
Participating in marketing activities to promote the company’s products and services.
Human Resource Manager
Developing human resource strategies that align with short and long-term employees’ needs.
Preparing job advertisements and descriptions to recruit new employees.
Selecting applicants that will attend job interviews using a variety of selection techniques.
Advising the company on efficient employee benefits and promotion strategies.
Interpreting employment legislation to ensure compliance with the exiting labor policies and practices
Implementing requisite disciplinary procedures to deal with erring employees.
Retail Manager
Guiding and supervising other staff to ensure maximum performance on tasks.
Organizing store operations by allocating responsibilities to different staff members.
Controlling the store’s expenditure to enhance economies of scale.
Preparing and maintaining financial and statistical records.
Handling customer's complaints and queries.
Setting sales targets and following up on them to maximize profitability.
Sales Associate
Greeting and handling customer questions and queries to ensure excellent customer service.
Guiding customers into the store’s varied merchandise.
Ensuring that the store is clean and orderly at all times.
Increasing sales by cross-selling the merchandise.
Create promotions campaigns and discounted opportunities for the customers.
Requirements
Bachelor’s degree in business, economics or relevant degree.
At least two years of work experience in the respective positions.
Hands-on experience with computer application programs such as Accounting software.
Have excellent planning and organisation skills.
Good networking ability and communication skills.
Additional certification e.g. CPA is an added advantage.
