CHICAGO-Still smarting from a 1992 scandal involving allegations of fraud in its automotive service operations, Sears, Roebuck and Co. is testing two concepts nationwide that may ultimately determine how its auto service center personnel are paid. Both rely heavily on customer satisfaction as a wage barometer, rather than sales and service incentives.
In 1993, prompted by the controversy, the Chicago-based firm restructured and refocused its auto service business.
Today, the mechanic's job remains. But the ``service adviser'' position has disappeared from Sears' auto center vernacular, replaced by the term ``customer service consultant''-a new job with a ``significant difference'' from the old one, according to Bob McHenry, public relations manager for Sears' auto service group.
Where the former adviser diagnosed what was wrong with a car, then made the sale to the customer-and received a partial commission for the work done-the consultant now acts as a liaison between customer and mechanic, he explained.
The auto service technician now makes the diagnosis, tells the customer service consultant, who then informs the customer.
Service consultants receive compensation consisting of a 60 percent base salary plus 40 percent sales incentive on tires, shocks and battery sales, but receive no commissions on brakes or front-end work, areas that got Sears in trouble in the first place two years ago, Mr. McHenry said.
The company, which currently has 22,000 employees in 785 auto service centers nationwide, is conducting pilot programs in one store each in 49 of its 50 U.S. districts.
In one pilot program involving 25 of the centers, he said a service consultant receives a base salary ``and some commissions and incentive pay based on customer satisfaction.'' In the other test, under way in 24 centers, a consultant gets a base salary; the remainder of his potential pay is based totally on customer satisfaction.
To measure that satisfaction, every customer receives a postcard-sized mail-in questionnaire that asks them to rate their auto center experience, including:
How happy are you with the service you received?
Was the attitude of the sales person friendly? Courteous?
Was the sales person knowledgeable? Helpful?
The timeliness of the service and quality of the work; and
Would you recommend Sears to a friend?
The cards go to an independent auditing firm which tallies them for each auto center. Every month the centers are indexed based on cards received, not on individual customers or employees, Mr. McHenry said. To prevent abuse, Sears installed safeguards, he added, to make sure ``no one stuffs the ballot box with cards. We know statistically how many cards should be coming in.''
The company also hired a shopping service that randomly makes unannounced purchases of products and services from auto centers. Employees ``never know if it's truly a customer, or an undercover shopper-we feel that's one of the best ways to keep them honest,'' Mr. McHenry said.
``We're trying to create teamwork within the auto centers.''
The technicians in these pilot programs get a ``small but significant'' customer service index reward, so that ``when their auto center receives high marks, they share in that reward,'' he said.
``The technicians do not get any commissions on sales of anything. But we feel they are integral to customer satisfaction, although a service consultant spends a greater amount of time dealing with the customer, so it has a more significant impact on his pocketbook.
``But mechanics have an interest in it, too. They have to do their job on a timely basis, do it completely and do it well.''
He could provide no data as yet for customer-or employee-reaction to the tests. Sears is still evaluating the programs, Mr. McHenry said, and hopes to reach a decision, perhaps by late spring, on which program to adopt. But he pointed out that it could decide to try other plans and do more testing before rolling out a new compensation plan nationwide.
Mechanics not involved in the tests receive only a straight hourly salary. Before the scandal, they also received a fixed dollar amount for each service completed, Mr. McHenry said. ``It was a quantity issue. We wanted to encourage them to do work quickly but thoroughly....''
The former service advisers had sales and service goals set for them, he said, and were encouraged by the company to meet those goals. ``Now, (service consultants) are not driven to meet any kind of sales goals, only customer satisfaction goals-and that's a very, very big difference.''
It was, in fact, those incentives that got the company into hot water when, on June 11, 1992, California's Department of Consumer Affairs went public with its undercover probe of Sears' auto service centers in the state.
Spurred on by inducements for higher commissions, Sears' mechanics and service advisers were said to have systematically sold unneeded parts and recommended and performed unnecessary repairs, investigators asserted.
The charges-and threats to close down the retailer's California auto service centers-led Sears Chairman Edward A. Brennan, on June 22, 1992, to announce the immediate elimination of incentives for service advisers.
Eventually, 41 states jumped on the bandwagon, launching investigations of Sears' practices.
Pressed to clean up its tarnished image, Sears-without acknowledging any liability or wrongdoing-in September 1992 paid $15 million in refunds and other costs in a settlement that also brought an end to 19 class-action lawsuits. And, with the blessings of the National Association of Attorneys General, Sears also agreed to help finance the Maintenance Awareness Program, an industry effort to educate consumers about auto repair and upkeep.
As part of its auto center restructuring, Sears decided to focus on its five core areas-tires, brakes, batteries, shocks and front-end alignments-while eliminating tuneups and oil changes ``and a lot of other things we did before,'' Mr. McHenry said.
``We're totally different auto centers than we were prior to June 1992,'' he added. ``We're looking forward, not backward.''
The spokesman bristled at a recent Wall Street Journal story that claimed Sears has ``partly restored a variation of the sales-incentive practice that led to widespread charges of bilking consumers....'' He said the paper did not emphasize that the incentives are only being tested, not adopted on a corporate-wide basis.
Consumer protection officials in several states told the Journal they planned to closely monitor the new compensation programs to insure Sears was not lapsing into its former practices.
It's no secret the scandal hurt Sears' auto repair enterprise. Mr. McHenry said as much, noting business is ``not at the same size'' and doesn't have the same revenues and results it had prior to 1992.
That year, the automotive unit produced 9 percent of Sears' U.S. merchandise group revenue, which totaled $25.4 billion.
But Mr. McHenry said the company is ``very pleased'' with its auto centers' January and February 1994 performances-``they've met their business plans and goals set for them''-and in February the retailer saw double-digit increases in tire sales compared to February 1993 results.
``You can be assured,'' he emphasized, ``no one in our auto centers wants to repeat what was happening before. Everyone is very concerned about the customer and doing what is right, because it's not good for the company-and the auto centers-if we begin to do those types of practices again.''