NA0353

Facebook Folly at Northeast BMW (A)

Gabrielle R. Lopiano, The University of Tampa
Mary Anne Watson, The University of Tampa

“W
hat were you thinking?” demanded Bill Thompson, vice president
and general manager of Northeast BMW, a car dealership in Dover,
Massachusetts. He revealed copies of two Facebook postings involv-
ing the company, one related to a company-hosted event and the other referencing an
accident that took place at an adjacent company-owned Land Rover dealership.
Thompson was confronting Brett Buckley, a salesperson at Northeast BMW, at
a meeting he called with other managers on June 16, 2010, to discuss the Facebook
postings that included photos and sarcastic remarks about the company. In response to
Thompson’s inquiry, Buckley responded that it was his Facebook page and that what
he posted to it was none of Thompson’s or any other manager’s business.
Thompson informed Buckley they had received phone calls from neighboring Land
Rover dealers who had seen the negative postings and told Buckley that he embar-
rassed his managers and colleagues at Northeast BMW. At the end of the meeting,
Thompson stated that management would be reviewing this issue and that Buckley
would be contacted when a decision was made. Buckley was asked to turn in his key
and leave the premises.

Company History
Northeast BMW was part of the Northeast Automotive Group that had serviced the
Greater Boston area since 1934. Before establishing itself as an industry leader, North-
east Automotive founder Karl Kelley began selling DeSoto automobiles out of his
small service station. He added Chrysler and Plymouth to his portfolio by 1940, and
by the early 1970s, both Mercedes and BMW were included in the brand mix. Later
additions included Land Rover and Buick. By 2010, Northeast Automotive owned
several dealerships that offered consumers a range of luxury vehicle brands, including
Mercedes-Benz, MINI, Land Rover, and Hyundai, in addition to BMW.

Copyright © 2015 by the Case Research Journal and by Gabrielle Lopiano and Mary Anne Watson.
This case was presented at the North American Case Research Association Annual Conference in Octo-
ber 2013 in Victoria, BC. The authors would like to acknowledge conference roundtable participants,
reviewers, and the editor for providing feedback. The authors would also like to thank Carol Cumber
for classroom testing an earlier version of this case in her undergraduate Human Resources Management
course. The case was based on publicly-available primary and secondary sources. The events and individu-
als in the case are real, but their names have been disguised.

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 The area had one of the highest per-capita incomes in the country, making it an
ideal location to grow an auto park of high-end brands. BMW was one of the world’s
premier brands for high-end automobiles. In 2008, the brand was valued at over $23
billion. It was an emotional brand whose consumers typically had a higher level of
affluence and less price sensitivity than the average car buyer.
When Karl Kelley retired, his son Bill took over running the dealership and con-
tinued to operate and grow the family business as his father had done. When he first
stepped in as CEO, Bill Kelley got to know all of his customers by name, and although
that became increasingly difficult as the company grew, Northeast Automotive con-
tinued to see a large amount of repeat business from children and grandchildren of
former customers.
During Bill Kelley’s tenure, Northeast Automotive saw tremendous growth. Sales
revenues more than doubled in his last ten years as CEO. In 2000, Bill Kelley stepped
down from running the daily operations, although he remained chairman of the exec-
utive board, and turned the company over to his son-in-law, William Mitchell. Upon
taking the reins, Mitchell acknowledged the foundation of Northeast Automotive
by stating, “Most importantly, we wanted to continue perpetuating this as a family-
owned business.”

Employee Recruitment and Retention

Northeast BMW prided itself on its practices for recruiting and retaining employees.
According to Bill Kelley, these practices, which he learned from his father, included:
• Treating employees and customers the way they wanted to be treated.
Many employees were hired through high school automotive courses, busi-
ness acquaintances, friends, and even customers. A common statement from
Bill Kelley was, “We are in it for the long haul, and we treat people accord-
ingly because we rely so heavily on repeat business.’’
• Always being open to new sources for employees. For example, a few years
before, Bill Kelley had met a man who was a Land Rover enthusiast who
worked on his own vehicle and others in his spare time. Although the man
held a building maintenance job, he agreed to join Kelley at Northeast Auto-
motive and learn the auto business when the dealership opened its new Land
Rover store.
• Training their own technicians. When a young man who was washing cars
at the dealership wanted to quit his job to attend mechanics’ school, Bill
Kelley offered to train him on-site. He became one of the dealership’s top
Mercedes-Benz mechanics.
From its establishment, the owners of Northeast Automotive expressed a philoso-
phy of mutual respect at the company, reducing the risk of employee turnover, an
uncommon characteristic in an industry where many employees had a commission-
based compensation structure. In 1998, roughly 20 percent of employees had been on
staff ten years or more. The company’s treatment of employees reduced the likelihood
of its employees being hired away by other dealers.

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 Salesperson Compensation Structure
In 2010, salespersons at Northeast BMW earned compensation by means of three
contributing factors:
1. Sales commission: Sales personnel received a commission of 25 percent on
the profit netted from each sale. The net profit is the difference between the
dealer’s invoice cost and the amount the customer paid for the car, less over-
head expenses. For example, a $20,000 sale of a car with an invoice cost of
$18,000 yielded a $2,000 profit before overhead costs were deducted. After
$500 in overhead costs was subtracted, the net profit of the sale was $1,500.
The sales person earned 25 percent of that profit (or $1,500 × 0.25), which
brought the total commission on the sale to $375. A commission rate of 25
percent matched the industry average.
2. Sales volume: Sales employees also received bonus compensation based on
the total number of automobiles sold. An employee who sold twelve vehicles
in a calendar month, including two used vehicles, would earn an additional
fixed amount in compensation.
3. Customer Satisfaction Index (CSI): The third way for sales staff to earn
compensation was through their performance on the CSI, which was derived
from customer responses to post-purchase questionnaires. These responses
provided feedback to the car manufacturer to evaluate its dealers on how well
its customers were being treated. If scores were low, the brand could lose
customers, and the manufacturer might not send the newest inventory to
the dealer. Therefore, the dealership typically incentivized its salespeople to
perform well by tying CSI results to their compensation.
Each of these factors was directly aligned with the employee’s individual sales.

Ultimate Driving Event

In June 2010, the dealership planned to host the Ultimate Driving Event to launch
the redesigned BMW5 Series model. At a planning meeting for the event, Buckley
had stated, “I can’t believe we’re not doing more for this event,” upon learning that the
company was planning to serve hot dogs and chips. The other salespeople present at
the meeting had concurred with Buckley’s concern and questioned the decision.
“This is not a food event,” Paul Calhoun, the general sales manager, had responded,
and proceeded to inform his staff of what was expected of them and the incentives
being offered at the event. Customers and potential customers were invited to the event
through a mailing, in which there was no mention of the food that would be provided.
After the meeting, the sales staff continued to voice their complaints about the
menu among themselves. One member said that he thought the event should be
catered and added that at the Mercedes-Benz dealership, customers were offered hors
d’oeuvres with servers. “It’s our bread and butter car for BMW. . . . it should be more
professionally done,” he said.
Buckley, who began his employment with Northeast Automotive in 1998 at the
Land Rover dealership before transferring to the BMW dealership in 2004, felt that
what management had planned for the event “was not up to par with the image of the
brand, ‘the ultimate driving machine,’ a luxury brand . . . The two just don’t mix.” He
added that, “Everything in life is perception. BMW’s a luxury brand . . . when some-
body walks into our dealership . . . it’s a beautiful auto park . . . it’s a beautiful place.”

Facebook Folly at Northeast BMW (A) 3

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 The event was held on June 9, with hot dogs served from a cart, bags of chips, cook-
ies, and bowls of apple and oranges available for customers. Buckley took pictures of
his coworkers mocking the refreshments at the event and told them that he planned
to post them to Facebook.

Land Rover Accident

On June 14, less than a week after the Ultimate Driving Event, there was an acci-
dent at the Northeast Land Rover dealership located adjacent to the BMW dealership.
A customer was being shown a vehicle by a Northeast salesperson. The customer’s
thirteen-year-old son was sitting in the driver’s seat, as allowed by the salesperson who
was sitting in the passenger’s seat with the door open. The boy drove the vehicle into a
nearby pond and the salesperson was thrown into the water, but remained unharmed.
The Land Rover accident could be seen from the BMW dealership. When Buckley
heard about the accident, he walked over to the scene and took pictures of the vehicle
in the pond and the salesperson wrapped in a blanket.

Facebook Postings
Later that day at home, Buckley posted the photos he took of both the Ultimate Driv-
ing Event and the Land Rover accident, and accompanied them with sarcastic and
mocking remarks. The photos of the BMW driving event, titled “BMW 2011 5 Series
Soiree,” were of himself and his fellow sales staff around a hot dog cart holding hot
dogs and of a snack table containing fruit and cookies. Buckley supplemented these
pictures with a comment:
I was happy to see that Northeast went “All Out” for the most important launch of a
new BMW in years . . . the new 5 series. A car that will generate tens in [sic] millions of
dollars in revenues for Northeast over the next few years. The small 8 oz. bags of chips,
and the $2.00 cookie plate from Sam’s Club, and the semi fresh apples and oranges
were such a nice touch . . . but to top it all off . . . the Hot Dog Cart. Where our clients
could attain a [sic] over cooked wiener and a stale bunn [sic] . . .
Comments from Buckley’s Facebook “friends” and his responses followed. Another
picture showed a colleague holding bottles of water, under which Buckley wrote:
No, that’s not champagne or wine, it’s 8 oz. water. Pop or soda would be out of the
question.
Buckley also posted the photos he took of the Land Rover accident the same day
with the caption:
This is your car: This is your car on drugs.
Under a picture of the car in the pond, the salesperson with a blanket, the cus-
tomer, and the boy, Buckley wrote:
This is what happens when a sales person sitting in the front passenger seat . . . allows a
thirteen year old boy to get behind the wheel of a 6000 lb. truck built and designed to
pretty much drive over anything. The kid drives over his father’s foot and into the pond
in all [sic] about four seconds and destroys a $50,000 truck. OOOPS!
About fifteen of Buckley’s ninety-nine Facebook “friends” at the time of the post-
ings were Northeast Automotive employees, and his privacy settings also allowed

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 access to “friends of friends,” meaning that everyone who was Facebook “friends” with
Buckley’s “friends” could see the things he posted.

Employee Handbook
While Northeast BMW had no policies explicitly referencing social media usage, it
had distributed an employee handbook to all employees that included the following
guidelines:
Bad Attitude: Employees should display a positive attitude toward their job. A
bad attitude creates a difficult working environment and prevents the dealership
from providing quality service to our customers.
Courtesy: Courtesy is the responsibility of every employee. Everyone is expected
to be courteous, polite, and friendly to our customers, vendors, and suppliers, as
well as to their fellow employees. No one should be disrespectful or use profanity
or any other language which injures the image or reputation of the dealership.
Unauthorized Interviews: As a means of protecting yourself and the dealership,
no unauthorized interviews are permitted to be conducted by individuals repre-
senting themselves as attorneys, peace officers, investigators, reporters, or someone
who wants to “ask a few questions.” If you are asked questions about the deal-
ership or its current or former employees, you are to refer that individual(s) to
your supervisor. A decision will then be made as to whether that individual may
conduct any interview and they will be introduced to you by your supervisor
with a reason for the questioning. Similarly, if you are aware that an unauthorized
interview is occurring at the dealership, immediately notify the general manager
or the president.
Outside Inquiries Concerning Employees: All inquiries concerning employees
from outside sources should be directed to the human resource department. No
information should be given regarding any employee by any other employee or
manager to an outside source.

Management Response
The day after Buckley’s Facebook postings of both the BMW event and the Land
Rover accident, managers at Northeast BMW received phone calls from other local
Land Rover dealers informing them of the demeaning photos and comments posted
online by one of their salespeople. Calhoun asked Buckley to remove the postings, and
he immediately complied.
On June 16, two days after the postings, Thompson called Buckley into a meeting
with Calhoun, his direct supervisor, and the sales director of Northeast BMW. After
questioning Buckley and allowing him the chance to respond, Thompson told him
they would need to decide how to handle the situation and until then, Buckley was to
go home and wait for them to contact him once a decision had been made.
Thompson had been the vice president and general manager at Northeast BMW
for ten years, joining the company the same year that William Mitchell took over as
president. Prior to joining Northeast, he had worked in several other organizations in
the industry in financial and operational positions. He arranged to bring his managers
to a meeting with Mitchell and Bill Kelley on June 21 to discuss the incident, where
they would want to hear his recommendation for how to respond to Buckley’s Face-
book postings.

Facebook Folly at Northeast BMW (A) 5

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