Sears, Roebuck, and Co. the Auto Center Scandal

2635 Words Nov 8th, 2010 11 Pages
SEARS, ROEBUCK, AND CO.
THE AUTO CENTER SCANDAL

History and Introduction of Sear, Roebuck, and Co.

Sears, Roebuck and Co began in the 19th century and sold farm supplies and consumer items as a small mail order company. The first Sears retail store opened up in Chicago on the 2nd February 1925 in the building named the Merchandise. This store had included a soda fountain and an optical shop. The first detached and separate retail store opened up on the 5th October 1925 in a city called Evansville in Indiana. During the summer season in 1928 3 more Chicago department stores opened newly, one on the 63rd and Western a second on the south side at Kenwood and 77th, and the third at north side at Lawrence and Winchester Street. In 1929
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of sacrilegious acts in the Auto Repair Act and required to remove the licenses of any Sears’ Auto shops in California for the unethical acts, as Sear’s cost cutting methods were being played out. The allegation came from a huge number of consumer complaints which was followed by an undercover investigation of the repair of brakes. Other states quickly followed on with California. The reason was that Sears was overcharging them for unnecessary repairs which also diminished customer trust.

The Incentive Plan

Sears, Roebuck, and Co. came up with a productivity incentive plan to raise its profits in its auto centers. The mechanics of the auto centers used to be paid an hourly wage and the service advisors (employees who take orders and consult with the mechanics, then respond and advise the customers) were paid a salary. However, under the new plan, their payment was changed to include a commission component. With this new plan, mechanics and the service advisors were given a goal to sell a certain number of repairs during their shifts. The unethical behavior was derived from the change of compensation plan – the service advisors and the mechanics had mislead their customers and charged them for unnecessary repairs. When the California Department of Consumer Affairs accused Sears, Roebuck, and Co. in the 1192, for violating the Auto Repair Act, the Chairman and the CEO of Sears, Edward Brennan denied that such fraud occurred and said he’d take for actions…