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White-Collar Crime. International Business

In the 1990s, the Sears network of car repair centers was struggling financially, achieving the worst results of the members of the already troubled Merchandising division of the company. Shareholders became concerned about the low revenues and profits and pressured the company to address the problem as soon as possible. As a result, Sears decided to introduce an incentivization system by rewarding employees with a commission for every sale made. Workers were given specific targets to achieve and paid for each repair operation they performed. However, the move attracted the attention of the California Department of Consumer Affairs, which expressed a concern that the mechanics would be encouraged to perform unnecessary repairs. Having conducted an investigation, it presented the results to Sears, claiming that it uncovered significant issues in the company’s operations.

Case Analysis

The root cause of the problem is the flawed compensation system, which encourages repair technicians to perform as many operations as possible regardless of their necessity. Griffin (2016) notes that, in many cases, the practice can be effective at improving productivity, which has made it popular among many different businesses. However, in the case of the repair industry, the problem of the worker determining how much work they need to do arises. As a result, customers are charged more and leave dissatisfied, but the worker is rewarded for their misconduct.

The compensation system is vital for Sears, as it is meant to increase the productivity of the company and its revenues as well as profits. With that said, it is not necessarily the only option available, as, for example, Griffin et al. (2016) list several other incentive options. Applied appropriately, one of them may improve the Auto Centers’ performance without inviting the problems associated with the compensation system. As such, further consideration is warranted for whether the option chosen was the only viable one, given the circumstances.

The CEO should take the allegations extremely seriously, considering their validity and making changes if they are warranted. While the company may be hurt by the compensation it would need to pay out if the DCA’s allegations proved true, reputation is a more concerning item. As Williams (2019) notes, recovering it can take a long time, which Sears Auto Centers cannot afford due to their already-struggling performance. As such, the damage incurred by the investigation needs to be controlled with care.

The most problematic allegation is the one that asserts Sears Auto Centers technicians would perform unnecessary repairs for brakes. Per Payne (2016), this act constitutes auto repair fraud, a crime for which the company would need to take responsibility. Moreover, with the recent introduction of the incentive system, the allegation fits within a logical framework that lends it additional credibility. As such, if it were to enter the public consciousness, it would be challenging to address and overcome this narrative. Adding to the present public concern regarding fraudulent repairs, the backlash could effectively destroy the division.

Sears has a counterargument, but it is relatively weak, given the circumstances and the context in which it would be used. The preventive maintenance claim may be valid, as replacing parts that are likely to fail while doing repairs can help avoid later breakdowns. However, the employees featured in the investigation did not disclose the nature of the replacements properly, instead relying on scaremongering tactics. The brake caliper issue also is not necessarily relevant, as customers are likely to side with the DCA on the matter. The public lacks the expertise needed to judge the subject and will likely trust the government agency, especially as the position it takes reduces repair costs in the short term.

The targeting of Sears may be considered unfair, though it is based on mostly legitimate concerns. It has competitors that engage in the same practices, but the case study makes no mention of these companies receiving the same treatment as Sears. Moreover, the DCA may be targeting Sears not as part of a legitimate effort to curb a problematic practice but rather as a way of asserting its importance. With the impending budget cuts, the department is slated for elimination as unnecessary. With a large-scale discovery such as that contended for Sears and the broader repair industry, it can assert its necessity and avoid termination.


Ultimately, the allegations against Sears are threatening and based on a sound theoretical framework, which means they at least warrant an analysis. With that said, the DCA likely has ulterior motives for conducting the investigation, which, along with disagreements on terms, weakens its position. Sears cannot afford to abandon its new compensation system unless it finds a viable alternative and should fight the allegations and refute them. The most important aspect is understanding the public sentiment, which is currently against car repair companies. People need to be informed about the reasons why Sears performs replacements that may seem unnecessary, or the company should adopt DCA guidelines and abandon these practices altogether. Overall, increased transparency is required from the company, but scare tactics such as those alleged by the DCA need to be curbed, as well.


Griffin, R. W. (2016). Management (12th ed.). Cengage Learning.

Payne, B. K. (2016). White-collar crime: The essentials (2nd ed.). SAGE Publications.

Williams, D. A. (2019). International business blunders: Lessons for future managers. Emerald Publishing Limited.

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