Pearle Vision's Managers Think like Entrepreneurs

Article excerpt

Monday morning, 8:00 a.m. You drive into the parking lot of the store that you've been managing for the past five years and notice that your boss is standing at the front door, waiting for you. The discovery makes you worry, but you manage to remain calm as she welcomes you to a new week--and to your new store.

"Funny," you think to yourself, "the store looks exactly the same as it did on Friday evening when I left." But you're afraid to say it--so you don't. You just smile and say, "Thanks," as your boss hands you a key.

"What's this for?" you ask.

"It's the key to your new store," she says, matter-of-factly. "Run it as if you own it."

As a store manager, you probably couldn't get any more empowered than that. As for Pearle Vision, a 31-year-old retail chain providing eye-wear products and services, there probably isn't any other action that would increase your organization's profitability more.

But management at Pearle Vision, a wholly owned subsidiary of Dallas-based Grand Metropolitan, didn't always know that. It found out the hard way that the keys to success would amount to empowering its 500 store managers through a new bonus system, a training program and a new company culture. Already it seems to be worth it--in profits, commitment and future growth.

MANAGERS HAD LESS CONTROL THAN FRANCHISEES. Something odd had been happening at Pearle Vision. Senior managers looking at data reports that compared the 557 franchise stores with 500 corporate-owned stores discovered that franchisees consistently outperformed corporate store managers in total profits.

Vice President of human resources, Roy J. Wilson, sat down to discuss the matter with the company's CEO and COO in early 1991. They came to the conclusion that franchised owners had three things that corporate store managers didn't have:

* A store license--empowerment to make their own choices

* The ability to manage their own bills and employees

* The power to develop their own marketing strategy and to control their own local marketing dollars.

These three seemingly simple differences meant large gaps in performance between franchisees and corporate store managers. "When we explored why a franchisee seemed able to do better, we realized that, from the corporate perspective, the system didn't allow managers of company-owned stores to operate in the same environment as franchisees," Wilson explains. "In essence, store managers were unable to run their stores in a way that allowed them to serve the customers' needs best. They simply weren't encouraged to think and manage innovatively," he adds.

The store managers were required to adhere to rigid corporate rules. All the stores were operated exactly the same way, regardless of their location, size, projected growth or previous profitability. These constraints made it impossible for store managers to have more than limited creativity in almost any area, including budget, local marketing and personnel management.

HR IDENTIFIED THREE TOOLS VITAL TO RETAIL SUCCESS. Pearle's HR department took on the challenge of developing a program that would help corporate store managers reach their full potential. This, in turn, would help the business grow.

Senior management gave Wilson a month to come up with a solution. "Obviously, 30 days wasn't nearly enough time to do something as dramatic as we were talking about," says Wilson. Development of the complete plan, Optipreneur, aligned with the idea of the entrepreneurial--spirit took seven months

Wilson started by putting together a team of eight content experts from different areas of the company, including finance specialists, store managers, franchisees and so on. The group looked at several layers of the organization---senior, mid-level and first-line management. Early on; the group realized that a big issue was the company's compensation and incentive-pay structure. …