Johansen's has just completed its first year under a new scorecard system for evaluation of manager performance. The manager of Store 51 has traditionally been one of the company's top-performing managers from a financial standpoint, but his overall performance rating has declined due to performance in nonfinancial dimensions. The managers at the performance summit must discuss his performance in the context of a new performance evaluation system, measurement issues around the nonfinancial metrics, and retention concerns. An alternative version of this case, (UVA-C-2349) takes a less conventional role-play pedagogical approach to the same material.
Regional and corporate managers at Johansen's, a large high-end department store, are preparing to attend the company's annual performance summit, at which the performance of each of the company's store managers is reviewed and rated. The company has just completed its first year under a new scorecard system for evaluation of manager performance. The manager of Store 51 has traditionally been one of the company's top-performing managers from a financial standpoint, but his overall performance rating has declined due to performance along nonfinancial dimensions. The managers at the performance summit must discuss his performance in the context of a new performance evaluation system, measurement issues around the nonfinancial metrics, and retention concerns. Students engage in a role-playing exercise. They are assigned specific management roles and debate the evaluation of the performance of Store 51's manager while at the performance summit.
The case graphically presents various working capital ratios (days inventory outstanding, days sales outstanding, days payables outstanding, cash conversion cycle, and operating cycle) over the 2009 through 2012 period by industry and for specific well-known companies. Students are given the opportunity to craft an intuitive story around the ratios they are given in the case. The case works well as a supplement for classes on working capital management. It is designed to help students relate the often difficult-to-grasp concepts around working capital and working capital ratios to industries and companies that they are familiar with, using companies whose business models and business practices are particularly good illustrations of the relevant concepts.