Full opinion text
ON MOTION FOR PARTIAL SUMMARY JUDGMENT NORDBERG, District Judge. This matter is before the court on the motion of plaintiff Equal Employment Opportunity Commission (“EEOC”) for partial summary judgment. For reasons set forth below, the EEOC’s motion is denied. Facts In its motion, the EEOC moved the court to grant partial summary judgment against defendant Sears, Roebuck and Co. (“Sears”) as to liability on the following claims: 1. Sears violated Title VII of the Civil Rights Act of 1964, § 701 et seq., as amended, 42 U.S.C. § 2000e et seq. (“Title VII”), by limiting the working hours of women pursuant to state protective laws. 2. Sears violated Title VII by maintaining a policy of refusing to hire pregnant applicants. 3. Sears violated Title VII by maintaining a policy in its Personnel Manual whereby women absent due to pregnancy-related disabilities were subject to lay-off during such absenses, but persons absent because of other temporary disabilities were not subject to lay-off during such absences. 4. Sears violated Title VII by maintaining a policy in its Personnel Manual of involuntary transfer of pregnant women when appearance was deemed to be a factor in the performance of the job. 5. Sears violated Title VII by maintaining a policy in its Personnel Manual of granting to a male employee a day’s paid absence when the employee’s wife gave birth, but not granting a day’s paid absence to a female employee when she gave birth. The period of liability for all of these claims commenced on August 30,1971, two years prior to the filing of EEOC’s charge against Sears. See infra n. 10. The EEOC contended in its motion that there was no genuine issue of material fact as to Sears’ liability on each of the above five claims. The EEOC submitted, in support of its motion, a summary of Sears’ responses to the EEOC’s First Request for Information and the affidavit of Jane L. Dolkart, the EEOC’s Director of the Litigation Enforcement Division of the Office of Systematic Programs, with attached Exhibits. In its Response to the EEOC’s motion for partial summary judgment, Sears asserted that: (1) each of the EEOC’s five claims was based upon a long-discontinued policy; (2) material issues of fact existed with respect to each claim; (3) the EEOC was not entitled to summary judgment as a matter of law, because it failed to meet its initial burden of demonstrating that unlawful discrimination had been a regular procedure or policy followed by Sears; and (4) the injunctive relief sought by the EEOC was moot and the monetary relief barred by the doctrine of laches. Sears attached to its Response various documents refuting the EEOC’s claims that Sears violated Title VII by limiting the hours of female employees pursuant to state protective laws, by maintaining a policy of refusing to hire pregnant applicants, by maintaining a policy whereby women absent due to pregnancy-related disabilities were guaranteed less protection from reductions in force than employees receiving disability benefits, and by maintaining a policy of involuntary transfer of pregnant women. The EEOC, in its Reply to Sears’ Response, asserted that the fact that all of the alleged discriminatory policies had ceased was not a defense. The EEOC also asserted that it need not produce the number and identity of the persons affected by the policies in the Personnel Manual because, absent evidence by Sears that the policies were not implemented, the necessary presumption is that the policies were implemented and did affect individuals. In addition, the EEOC contended that both injunctive and monetary relief were appropriate, and that there was no genuine issue of material fact as to Sears’ liability on each of the claims, except for the claim that Sears violated Title VII by limiting the working hours of women pursuant to state protective laws. The EEOC attached to its Reply a Sears Directive which ordered that the policy of allowing a day off with pay for male employees whose wives gave birth be discontinued effective October 1, 1974. After the EEOC filed its Reply Brief, on April 7, 1982, the EEOC produced a Statement of Issues. All five of the claims on which the EEOC sought a partial summary judgment were included in the April 7, 1982 Statement of Issues. The EEOC submitted another Statement of Issues on October 15, 1982. In the October 15, 1982 Statement of Issues, the EEOC omitted the claims that Sears violated Title VII by limiting the working hours of women pursuant to state protective laws and by maintaining a policy of refusing to hire pregnant applicants. Therefore, the EEOC had withdrawn these claims against Sears. This is confirmed in the transcript. Subsequently, in an order dated January 27, 1984, the court stated the following: The April 7,1982 statement was the clarification of the definitive statement of issues of December, 1981 ordered by Judge Grady to be the final statement of issues in the case. EEOC will not be permitted to expand its case beyond the specific job categories listed in the April 7, 1982 statement. Memorandum Opinion and Order of January 27, 1984, p. 3. Thus, the court invalidated those portions of the October 15, 1982 Statement of Issues which added claims not included in the April 7, 1982 Statement. However, the court did not invalidate the portions of the October 15, 1982 Statement of Issues which withdrew claims included in the April 7, 1982 Statement. Therefore, the EEOC’s withdrawal stands, and the court denies the EEOC’s motion for partial summary judgment as to these two claims, because they have been withdrawn by the EEOC. The remaining claims on which the EEOC seeks partial summary judgment are that Sears violated Title VII by: (1) maintaining a policy whereby women absent due to pregnancy-related disabilities were guaranteed less protection from reductions in force than employees receiving disability benefits; (2) maintaining a policy of involuntary transfer of pregnant women; and (3) maintaining a policy of granting to a male employee a day of paid absence when the employee’s wife gave birth, but not granting a day of paid absence to a female employee when she gave birth. Summary Judgment In a Title VII Disparate Treatment Action The EEOC has moved for partial summary judgment as to Sears’ liability on these three claims. On a motion for summary judgment, the moving party has the burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Cedillo v. International Association of Bridge and Structural Iron Workers, 603 F.2d 7, 10 (7th Cir.1979). The non-moving party is entitled to all reasonable inferences that can be made in its favor. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Matthews v. Allis-Chalmers, 769 F.2d 1215 (7th Cir.1985) (per curiam). However, the non-moving party may not merely rely on conclusory pleadings to withstand summary judgment. In responding to a motion for summary judgment, a non-moving party must set forth specific facts in affidavits or otherwise show that there are genuine issues that must be decided at trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968), reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983); Fed.R.Civ.P. 56(e). On a motion for summary judgment in a Title VII case, consideration of whether the moving party has shown that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law necessarily involves an examination and application of the Title VII burden of proof analytical framework. In a recent case, Coates v. Johnson & Johnson, 756 F.2d 524 (7th Cir.1985), the Seventh Circuit outlined the Title VII burden of proof framework for a government or class action alleging a pattern or practice of disparate treatment. The Seventh Circuit first stated that the general Title VII burden of proof framework in government or class disparate treatment cases is “essentially comparable” to the framework for individual disparate treatment actions, as outlined in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981), but “the content of the specific stages of that framework will be different.” Coates, 756 F.2d at 532. The general Title VII burden of proof framework for disparate treatment cases, as set out in McDonnell and Burdine, consists of the following stages: (1) the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination; (2) if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for its action; and (3) should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant are merely a pretext for discrimination. Burdine, 450 U.S. at 252-253, 101 S.Ct. at 1093. In private, nonclass Title VII disparate treatment actions such as McDonnell and Burdine, in order to establish a prima facie case of discrimination, the plaintiff must prove by a preponderance of the evidence that he or she applied and was qualified for an available position, but he or she was rejected under circumstances which give rise to an inference of unlawful discrimination. Burdine, 450 U.S. at 253, 101 S.Ct. at 1094; McDonnell, 411 U.S. at 802, 93 S.Ct. at 1824. In a government or class disparate treatment action, on the other hand, in order to establish a prima facie case of discrimination, the plaintiffs must demonstrate “that unlawful discrimination has been the regular policy of the employer, i.e., that ‘discrimination was the company’s standard operating procedure — the regular rather than the unusual practice.’ ” Coates, 756 F.2d at 532 (quoting International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336, 360, 97 S.Ct. 1843, 1855, 1867, 52 L.Ed.2d 396 (1977)). On motions for summary judgment in Title VII disparate treatment cases, the courts have defined the burdens of the moving and non-moving parties in terms of the plaintiff’s establishment of a prima facie case, the defendant’s articulation of a nondiscriminatory reason, and the plaintiff’s demonstration of pretext. In other words, courts have defined the burdens of parties on motions for summary judgment in terms of the general Title VII disparate treatment burden of proof framework. For example, in cases where defendant-employers have moved for summary judgment, the Seventh Circuit has held that a plaintiff-employee, in order to defeat the summary judgment motion, must present facts sufficient to establish a prima facie case, and, if the defendant-employer presents some legitimate reason for its action, the plaintiff-employee must also present evidence that the legitimate reason is a pretext for discrimination in order to defeat the summary judgment motion. Parker v. Federal National Mortgage Association, 741 F.2d 975 (7th Cir.1984); Kephart v. Institute of Gas Technology, 630 F.2d 1217 (7th Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981). See also Trembath v. St. Regis Paper Company, 753 F.2d 603 (7th Cir.1985); Herman v. National Broadcasting Company, Inc., 744 F.2d 604 (7th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 1393, 84 L.Ed.2d 782 (1985); Huhn v. Koehring Company, 718 F.2d 239 (7th Cir.1983). In Weahkee v. Perry, 587 F.2d 1256 (D.C.Cir.1978), a Title VII disparate treatment action, the plaintiff-employee moved for summary judgment, and the District of Columbia District Court entered judgment for the plaintiff-employee. However, the Court of Appeals reversed, holding, inter alia, that there were genuine issues of material fact precluding summary judgment. The Court of Appeals stated: It is elementary that summary judgment is granted properly only where no material fact is genuinely in dispute and only if the movant is entitled to judgment as a matter of law. ... In this case Weahkee bore the initial burden to present a prima facie case of discrimination. Weahkee, 587 F.2d at 1265 (citations omitted). Thus, the Court of Appeals found that a plaintiff-employee must at least present a prima facie case of discrimination in order to prevail on a motion for summary judgment. Applying the above analysis to the present case, the court finds that the EEOC must at least establish a prima facie case of discrimination in order to prevail on its motion for summary judgment. Under Coates, that prima facie case consists of a demonstration that discrimination was Sears’ “regular policy” or “standard operating procedure.” Establishment of a Title VII Pattern or Practice Prima Facie Case The EEOC has established that, as to each of the three claims still remaining in its motion for summary judgment, there were included in Sears’ written materials allegedly discriminatory policy statements which were in existence during the relevant time period. However, in its pleadings, EEOC does not identify any victims of the policies, nor does it present any statistical evidence demonstrating discriminatory treatment of pregnant employees. The EEOC contends that it need not identify victims of the policies in this liability phase of the pattern or practice action because the policies are clearly unlawful, and that, “absent evidence by Sears that the policies were not implemented, the necessary presumption is that the policies were implemented and did affect individuals.” Plaintiff EEOC’s Reply Brief, p. 2. In Durant v. Owens-Illinois Glass Co., Inc., 517 F.Supp. 710 (E.D.La.1980), aff'd, 656 F.2d 89 (5th Cir.1981) (per curiam), the plaintiffs similarly contended that they need not identify victims of a maternity leave policy in order to prove liability under Title VII, because the policy was explicitly set out in their Production and Maintenance Contract and was clearly discriminatory. In that case, the Special Master had concluded that, even if the maternity leave provision did not comport with Title VII, the plaintiffs still had no claim under Title VII, because there was no evidence that the provision had ever been enforced against or adversely affected anyone in the class. The plaintiffs challenged the Special Master’s interpretation of their burden of proof in the District Court. The plaintiffs contended that all they need to prove in the liability stage of the litigation is the existence of a discriminatory policy, and that identification of those harmed by the policy should be postponed until the relief stage. The District Court held: Plaintiffs’ description of their burden is correct, but the fact is they have failed to prove the existence of a policy. They have been unable to show that anyone was ever affected by the attacked provision, which was never enforced and which ceased to be a part of the collective bargaining agreement six years ago. A provision which was never applied and now cannot be applied to a single individual does not constitute a discriminatory policy. Plaintiffs have failed to meet their burden of proving liability in this area. Durant, 517 F.Supp. at 723. As in Durant, the EEOC has failed to show that Sears ever enforced these three policies against pregnant employees or that the policies adversely affected pregnant employees in any way. Although the court agrees with the Durant court that identification of all victims of the policies should be postponed until the relief stage of the litigation, the court also agrees with the Durant court’s holding that plaintiff must show the existence of a discriminatory policy that affected actual employees in the liability stage of the case. Here, the EEOC failed to provide any evidence that the policies were ever enforced. While the EEOC need not identify every victim of the policies, it does need to identify some victims or produce some valid direct or circumstantial evidence to show that Sears actually followed the policies in its treatment of employees. Absent some evidence of such action by Sears, the EEOC has failed to establish a prima facie case of discrimination. The court notes that the holding of the Durant court is in accord with Teamsters, the leading Supreme Court case dealing with the burden of proof framework in a government or class Title VII action alleging a pattern or practice of disparate treatment, and Coates, the recent Seventh Circuit case following Teamsters. In Teamsters, the Supreme Court held: The plaintiff in a pattern-or-practice action is the Government, and its initial burden is to demonstrate that unlawful discrimination has been a regular procedure or policy followed by an employer or group of employers____ At the initial, “liability” stage of a pattern-or-practice suit the Govermnent is not required to offer evidence that each person for whom it will ultimately seek relief was a victim of the employer’s discriminatory policy. Its burden is to establish a prima facie case that such a policy existed. Teamsters, 431 U.S. at 360, 97 S.Ct. at 1867. The Supreme Court went on to hold that the Government’s evidence, statistics and testimony by forty individuals of specific instances of discrimination, was sufficient to establish a prima facie case that a racially discriminatory policy existed in fact. Although Teamsters and Coates did not involve written discriminatory policies, as did Durant and the present case, the Supreme Court in Teamsters and the Seventh Circuit in Coates did not in any way indicate that the requirement of establishing the existence of a discriminatory policy would differ in a case where such a policy was referred to in an employment contract or a personnel manual. The court finds no basis in Teamsters, Coates, or any other case, for the EEOC’s theory that the existence of written discriminatory policy language creates a presumption that the policy was enforced and did affect individuals. Conclusion For the reasons stated above, the court finds that the EEOC has failed to establish a prima facie case that the three allegedly discriminatory policies in fact existed during the relevant time period. The EEOC presented no evidence that Sears ever enforced any of the policies. Therefore, the court denies the EEOC’s motion for partial summary judgment. Since the EEOC has previously stated that it wishes to dismiss these claims with prejudice should its motion for summary judgment be denied, the court hereby dismisses these claims with prejudice. MEMORANDUM OPINION AND ORDER TABLE OF CONTENTS I. Introduction 1278 A. Jurisdiction 1279 B. Legal Standards 1279 1. Disparate Treatment 1279 2. Disparate Impact 1281 C. Statistics 1285 1. Iri General 1285 2. Statistical Significance 1286 3. Multiple Regression 1287 II. Hiring and Promotion Into Commission Sales 1288 A. General Background 1288 1. Commission Sales at Sears 1289 2. Qualifications for Commission Sales Positions 1290 3. The Hiring Process 1291 4. Affirmative Action at Sears 1292 B. EEOC’s Evidence: Hiring Into Commission Sales 1294 1. Data Bases 1294 2. Statistical Analyses - Unadjusted Analysis 1295 3. Adjusted Analyses 1296 4. Possible Biases 1298 5. Other Statistical Evidence 1299 6. Nonstatistical Evidence 1300 C. EEOC’s Evidence: Promotions Into Commission Sales 1300 1. Year-end Store Pool Analysis 1300 2. Year-end Division Pool Analysis 1301 D. Analysis of EEOC’s Evidence: Hiring 1301 1. Inadequacies in Data and Variables Analyzed by EEOC 1301 a. Data Analyzed 1301 b. Omission and Inadequate Coding of Important Variables 1302 c. Coding Errors 1304 2. Faulty Basic Assumptions 1305 a. Assumption of Equal Interest 1305 (1) Store Witnesses 1306 (2) Survey Evidence 1308 (3) Comparing Sears to National Data 1312 (4) Other Evidence of Interest 1314 b. Assumption of Equal Qualifications 1315 3. Other Deficiencies in EEOC’s Statistical Analysis 1315 4. EEOC’s Applicant Interview Guide Analysis 1317 5. EEOC’s Nonstatistical Evidence 1317 E. Sears’ Commission Sales Analyses: Hiring 1313 1. Hiring and Promotion Figures at Sears 1319 2. Characteristics of Commission Salespersons 1319 3. Sales Performance Data 1320 4. Applicant Interview Guides 1322 F. Conclusions Regarding Commission Sales Claim: Hiring 1324 G. Promotion Claim 1324 1. EEOC’s Promotion Analysis 1325 2. Sears’ Evidence Regarding Promotions 1326 H. Conclusions Regarding Commission Sales Claim: Promotions 1327 III. Checklist Compensation 1328 A. Legal Standards 1328 1. Elements and Burdens of Proof 1328 2. “Similar” Work Standard 1332 B. Background 1334 1. Pre-1976 Organization and Compensation 1335 2. New Executive Compensation Program 1336 C. EEOC Evidence 1337 1. Persons and Jobs Analyzed 1338 2. Statistical Analyses 1340 D. Deficiencies in EEOC’s Evidence 1340 1. 1973-1975 Analysis 1340 2. 1976-1980: Equality of Jobs 1341 3. Overall Statistical Analyses 1342 a. Data Base 1343 b. Omitted Variables 1343 c. Other Flaws in EEOC Models 1345 E. Sears’ Evidence 1346 1. Regression Analysis 1346 2. Cohort Analysis 1350 3. Sears’ Witnesses 1352 F. Conclusion: Checklist Compensation 1352 ORDER 1353 I. Introduction This opinion marks the culmination of a lengthy dispute between the Equal Employment Opportunity Commission (“EEOC”) and Sears, Roebuck & Co. (“Sears”), the world’s largest retail seller of general merchandise. In 1973, an EEOC commissioner’s charge was filed. After an extensive investigation and extensive conciliation discussions, EEOC filed this suit in 1979, alleging nationwide discrimination by Sears against women in virtually all aspects of its business, in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (“Title VII”), and the Equal Pay Act, 29 U.S.C. § 206(d). This is a case of claimed statistical disparities. As originally filed, this suit involved 42 distinct claims of nationwide sex discrimination by Sears. By the time of trial, EEOC had abandoned all of its Equal Pay Act claims, and all but two of its claims under Title VII. The two allegations EEOC sought to prove at trial were that Sears engaged in a nationwide pattern or practice of sex discrimination: (1) by failing to hire female applicants for commission selling on the same basis as male applicants, and by failing to promote female noncommission salespersons into commission sales on the same basis as it promoted male noncommission salespersons into commission sales (commission sales claim); and (2) by paying female checklist management employees in certain job categories lower compensation than similarly situated male checklist management employees (checklist compensation claim). The allegations are limited to the time period beginning March 3, 1973 and ending December 31, 1980. ■ A trial before the court was held lasting 10 months. The court observed each witness, made extensive contemporaneous trial notes of the testimony of each witness, and made specific determinations of the credibility of each witness and the weight to be given to the testimony as the witness testified. The court has drawn what it believes to be the correct reasonable inferences from this evidence and has evaluated the legal principles presented by the parties and developed through legal research of the court. Based on all of the testimony presented, the credibility of the witnesses and the weight to be given their testimony, the exhibits received in evidence, and the law governing this case, the court concludes that the EEOC has failed to prove its case on either claim of discrimination and finds that Sears has not discriminated against women in hiring, promotion, or pay, as claimed. The court makes the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure: A. Jurisdiction The court finds that it has subject matter as well as personal jurisdiction, pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. The court adheres to the prior decisions in this case, including Equal Employment Opportunity Commission v. Sears, Roebuck & Co., 504 F.Supp. 241 (D.C.Ill.1980). The EEOC has presented sufficient evidence to support this court’s finding that EEOC has met all the minimum statutory preconditions to this suit. B. Legal Standards The court must first determine the legal standards to apply to this case. Two separate legal analyses are applied to Title VII cases, disparate treatment and disparate impact. Each has its distinct elements and burdens of proof. In this case, the EEOC relies principally on the disparate treatment theory. (Plaintiff’s Final Argument.) However, the EEOC has also made a number of vague references to the disparate impact theory. The EEOC failed to specify this legal theory of its case prior to trial. Even at the close of trial, the extent of its reliance on the disparate impact theory was unclear. EEOC stated in its trial brief and on several other occasions that, although it contends that the disparate impact model should be applied to “subjective” hiring systems such as Sears’, “the characterization of the alleged discrimination as disparate impact or disparate treatment ought not affect the outcome here.” (Plaintiff’s Final Argument at 2.) However, the choice of theory can make a difference, since intent to discriminate need be proved only under the disparate treatment theory, not under the disparate impact theory. Despite EEOC’s contention that the choice of theory is unimportant, and its decision to discuss all the evidence in terms of disparate treatment analysis only, EEOC apparently now seeks application of both theories to its case. Therefore, both the disparate treatment and disparate impact theories must be discussed. 1. Disparate Treatment The disparate treatment theory evolved under § 703(a)(1) of Title VII, 42 U.S.C. § 2000e-2(a)(1). Under this theory, employers are prohibited from treating an employee less favorably than the employee’s peers because of the employee’s sex, race, color, religion, or national origin. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). In a disparate treatment case, a plaintiff must prove discriminatory intent. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 256, 101 S.Ct. 1089, 1095, 67 L.Ed.2d 207 (1981). This is the most common type of discrimination claim. It may be brought by an individual, or as a “pattern and practice” claim alleging systemic disparate treatment of a protected group. See, e.g., Hazelwood School District v. United States, 433 U.S. 299, 97 S.Ct. 2736, 53 L.Ed.2d 768 (1977); Coates v. Johnson & Johnson, 756 F.2d 524 (7th Cir.1985). The Supreme Court has provided an analytical framework for disparate treatment cases “progressively to sharpen” the inquiry into the defendant’s intent. Burdine, 450 U.S. at 255 n. 8, 101 S.Ct. at 1094 n. 8. To establish a prima facie case of intentional discrimination, the plaintiff must prove that he is a member of the protected class, has substantially the same qualifications as those not in protected classes, but was not treated on an equal basis by the employer. Id.; Coates, 756 F.2d at 531. A plaintiff’s prima facie case creates a rebuttable presumption that the defendant unlawfully discriminated against the plaintiff. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094. The defendant must then offer evidence that “raises a genuine issue of fact as to whether the defendant discriminated against the plaintiff.” Id. This burden may be met by articulating a legitimate, nondiscriminatory reason for the defendant’s employment action. Burdine, 450 U.S. at 254, 101 S.Ct. at 1094; McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. If the explanation provided by the defendant is “legally sufficient to justify a judgment for the defendant,” then “the presumption raised by the prima facie case is rebutted, and the factual inquiry proceeds to a new level of specificity.” Bur-dine, 450 U.S. at 255, 101 S.Ct. at 1094-95 (footnote omitted). The plaintiff then must persuade the court that the defendant’s explanation is unworthy of credence, or that a discriminatory reason more likely motivated the defendant. Id. at 256, 101 S.Ct. at 1095. Importantly, the plaintiff always retains the ultimate burden of persuasion. Id. This analytical framework is applied, in modified form, to government or class actions alleging a pattern or practice of discrimination. The burden of proof is “essentially comparable” to that applied in individual disparate treatment cases, but “the content of the specific stages of that framework will be different.” Coates, 758 F.2d at 532. In a pattern or practice class claim, the plaintiff has the initial burden of demonstrating that unlawful discrimination has been the regular policy of the employer, that “discrimination was the company’s standard operating procedure — the regular rather than the unusual practice.” International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336, 360, 97 S.Ct. 1843, 1854, 1867, 52 L.Ed.2d 396 (1977); Coates, 756 F.2d at 532. The focus often is on a pattern of discriminatory decisionmaking, not on individual employment decisions. Teamsters, 431 U.S. at 360 n. 46, 97 S.Ct. at 1867 n. 46. The plaintiff’s prima facie case in a pattern or practice case usually consists of statistical evidence of substantial disparities between the protected group and the unprotected group, buttressed by evidence of general discriminatory policies or specific instances of discrimination. Coates, 756 F.2d at 532. Once the plaintiff establishes a prima facie case in a pattern and practice case, the burden shifts to the employer to defeat the showing by demonstrating that the plaintiffs proof is inaccurate or insignificant, or by providing a nondiscriminatory explanation for the apparently discriminatory result. Teamsters, 431 U.S. at 360 n. 46, 97 S.Ct. at 1867 n. 46. See also Dothard v. Rawlinson, 433 U.S. 321, 338 — 39, 97 S.Ct. 2720, 2731-32, 53 L.Ed.2d 786 (1977) (Rehnquist, J., concurring). The strength of the evidence the defendant must produce depends on the strength of the plaintiff’s proof. Coates, 756 F.2d at 532; Segar v. Smith, 738 F.2d 1249, 1268 (D.C.Cir.1984), cert. denied sub nom., Meese v. Segar, — U.S. -, 105 S.Ct. 2357, 86 L.Ed.2d 258 (1985). However, at the liability stage of a pattern or practice suit, the plaintiff always bears the burden of persuasion with respect to discrimination. Coates, 756 F.2d at 532. 2. Disparate Impact The disparate impact theory evolved under Section 703(a)(2) of Title VII, 42 U.S.C. § 2000e-2(a)(2). The seminal case interpreting this provision is Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). In Griggs, the Court held that this provision prohibits employers from applying policies or job requirements which, although neutral on their face, disproportionately disqualify members of a protected class from employment opportunities. Proof of discriminatory motive is not required under this theory. If a plaintiff can prove that a job requirement or policy impacts disproportionately on a protected group, and the requirement or policy is not related to job performance, it violates Title VII. Examples of policies found to violate § 703(a)(2) are educational requirements, Griggs, supra; intelligence tests, id.; and height and weight requirements, Dothard, supra. To establish a prima facie case under the disparate impact theory, the plaintiff must show that a facially neutral standard for hiring excludes a disproportionate number of members of a protected class. The burden of proof then shifts to the defendant to show that the job requirement has a manifest relationship to the job in question. If the employer demonstrates that the challenged requirements are job related, the plaintiff may then show that other selection devices would also serve the employer’s legitimate interest in efficient and trustworthy workmanship. Dothard, 433 U.S. at 329, 97 S.Ct. at 2727. In this case, EEOC has admitted that it cannot identify any specific employment practice of Sears which has a discriminatory impact on women. Instead, EEOC contends that there is “something in the process” at Sears which causes the disparities shown in EEOC’s statistical evidence. It asserts that the hiring and promotion “process” at Sears is highly subjective, and that the disparate impact analysis should be applied to such subjective systems. EEOC relies on a number of cases in which courts applied the Griggs disparate impact analysis to overall hiring processes which are subjective in nature. For example, in Rowe v. General Motors Corp., 457 F.2d 348 (5th Cir.1972), decided shortly after the Griggs decision, the court applied the impact analysis to a “subjective” promotion system. However, the court made no mention of the disparate treatment theory, did not compare the two theories or discuss which should apply, and did not discuss why the disparate impact analysis would apply when a specific facially neutral employment policy had not been identified. The Seventh Circuit, relying on Rowe, applied the Griggs analysis in similar circumstances in Stewart v. General Motors Corp., 542 F.2d 445 (7th Cir.1976), cert. denied, 433 U.S. 919, 97 S.Ct. 2995, 53 L.Ed.2d 1105 (1977), reh. denied, 434 U.S. 881, 98 S.Ct. 244, 54 L.Ed.2d 165 (1977). Without mentioning the disparate treatment theory or any reasons for applying either theory to the facts of the case, the court analyzed a “highly subjective and loosely structured” promotion system under the Griggs analysis. 542 F.2d at 450. Other cases applying the Griggs analysis to “subjective” systems have been equally unilluminating. E.g., Rowe v. Cleveland Pneumatic Co., 690 F.2d 88, 93 n. 10 (6th Cir.1982); Hung Ping Wang v. Hoffman, 694 F.2d 1146, 1148 (9th Cir.1982). None of these decisions analyze the United States Supreme Court cases applying the disparate impact analysis, or provide any justification for extending the application of the Griggs analysis beyond cases in which plaintiffs attack specific facially neutral employment practices which impact disparately on protected groups. In all of its decisions under the disparate impact theory, the Supreme Court has applied the theory only to specific facially neutral employment policies, and has implicitly indicated that the theory should be applied only to specific neutral policies. The Supreme Court first recognized the disparate impact theory in Griggs, supra. In Griggs, the Court found that the defendant’s policy of requiring a high school diploma or a passing score on a standardized intelligence test, although neutral on its face, had the effect of disproportionately excluding black employees from promotions. The court held that proof of the disparate impact of the test or diploma requirement was enough alone, without proof of the defendant’s motive, to establish a violation of Title VII under § 703(a)(2), 42 U.S.C. § 2000e-2(a)(2). The court reasoned that Congress intended to eliminate such “artificial, arbitrary and unnecessary barriers to employment.” 401 U.S. at 431, 91 S.Ct. at 853. As the Court later noted in Connecticut v. Teal, 457 U.S. 440, 102 S.Ct. 2525, 73 L.Ed.2d 130 (1982), the focus of the Griggs analysis is on “procedures and testing mechanisms that operate as ‘built-in headwinds’ for minority groups.” 457 U.S. at 448, 102 S.Ct. at 2531 (quoting Griggs, 401 U.S. at 432, 91 S.Ct. at 854). When summarizing the elements and burdens of proof of a Griggs disparate impact case in Dothard, the Court stated, ‘‘[Griggs and Albermarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975)] make clear that to establish a prima facie case of discrimination, a plaintiff need only show that the facially neutral standards in question select applicants for hire in a significantly discriminatory pattern.” 433 U.S. at 329, 97 S.Ct. at 2726-27 (emphasis added). By specifically referring to “facially neutraj standards,” the Court indicated that the impact theory would apply only to such facially neutral policies. Similarly, in Teamsters, supra, the Court defined the two theories as follows: [djisparate treatment ... is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion, sex, or national origin. Proof of discriminatory motive is critical, although it can in some situations be inferred from the mere fact of differences in treatment____ Undoubtedly disparate treatment was the most obvious evil Congress had in mind when it enacted Title VII. ****** Claims of disparate treatment may be distinguished from claims that stress “disparate impact.” The latter involve employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another and cannot be justified by business necessity____ Proof of discriminatory motive, we have held, is not required under a disparate-impact theory. 431 U.S. at 335 n. 15, 97 S.Ct. at 1854 n. 15. By once again defining disparate impact only in terms of facially neutral employment policies, the court indicated that other types of discrimination should be analyzed under the disparate treatment analysis. In Griggs, Dothard, and indeed in all cases decided by the Supreme Court under the disparate impact theory, the Court has applied the theory only to specific employment practices that were neutral on their face, but had the effect of disproportionately excluding members of a protected class from employment opportunities. E.g., Albermarle, supra (employment test); Connecticut, supra (ability test); Dothard, supra (height and weight requirements); New York City Transit Authority v. Beazer, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979) (employer’s refusal to employ persons who use methadone). Moreover, in McDonnell Douglas, supra, the Court refused to apply the disparate impact analysis to the plaintiff’s claim because he could not identify a specific employment practice of the defendant which disproportionately excluded blacks. The Court distinguished the plaintiff’s claim from Griggs because the employer did not seek to exclude the plaintiff “on the basis of a testing device which overstates what is necessary for competent performance,” or through some “sweeping disqualification” of all applicants on the basis of a particular characteristic. 411 U.S. at 806, 93 S.Ct. at 1826. The Court concluded that the plaintiff had not presented the kind of “artificial, arbitrary and unnecessary barriers to employment” that violated Title VII under Griggs. The Court therefore refused to apply the impact theory when no specific policy had been identified. All of the Supreme Court’s discussions of the disparate impact theory indicate that it should be applied only to specific employment practices which are neutral on their face, but disproportionately exclude members of protected groups from employment opportunities. The Court has applied the theory only in these circumstances, and has never stated or suggested that the theory should be applied in other circumstances. Thus, there is no basis in Supreme Court decisions for applying the disparate impact theory to cases where the employer merely uses a “subjective” hiring system, as most employers do. Several Courts of Appeals have specifically rejected the extension of the Griggs analysis to “subjective” hiring decisions. For example, in Pouncy v. Prudential Insurance Company of America, 668 F.2d 795 (5th Cir.1982), the same court which ten years earlier decided Rowe v. General Motors Corp., supra, rejected application of the disparate impact theory to a wide-ranged attack on a company’s hiring system. In Pouncy, the plaintiff alleged that the defendant systematically failed to promote blacks within its workforce and otherwise afford them the same conditions of employment given to whites. He pointed to a number of employment policies which he alleged resulted in the discrimination, including the failure to post job openings, the selection of employees for promotion using minimal objective criteria, and the use of subjective criteria in employee performance evaluations. 688 F.2d at 799. He sought to apply the disparate impact analysis of Griggs to his challenge of the defendant’s company-wide system of “subjective” employment decisions. The court rejected the plaintiff’s attempt to fit his case within the disparate impact model by listing specific “practices” of the defendant. It reviewed a number of Supreme Court decisions on disparate impact. Relying on Supreme Court precedent, the Court concluded that a prima facie case under the disparate impact model is shown by “identification of a neutral employment practice coupled with proof of its discriminatory impact on the employer’s work force.” 668 F.2d at 800. The court rejected use of the disparate impact model of proof for a wide-ranging attack on the cumulative effects of a company’s employment practices, stating that, “The disparate impact model applies only when an employer has instituted a specific procedure, usually a selection criterion for employment, that can be shown to have a causal connection to a class based imbalance in the workforce.” Id. The court reasoned that proof of such a specific employment policy is required under the disparate impact model to fairly allocate the parties’ respective burdens of proof at trial. Id. The plaintiff must first prove a disparate impact due to the selection procedure. Id. The employer then has the burden of proving that the selection procedure is justified by a legitimate business reason. Id. Identification of the specific practice is necessary so that the employer can respond with proof of its legitimacy. 668 F.2d at 801. A plaintiff cannot challenge an entire range of employment practices under the impact model merely because the employer’s workforce reflects a racial imbalance that might be related to any one or more of several practices, because to do so “would allow the disparate impact of one element to require validation of other elements having no adverse effects.” Id. (quoting Rivera v. City of Wichita Falls, 665 F.2d 531, 539 (5th Cir.1982)). The court found that none of the employment practices singled out by the plaintiff — failure to post job openings, use of a “level” system, and evaluating employees with subjective criteria — were akin to the facially neutral employment practices the disparate impact model was designed to test. Id. The court therefore applied the disparate treatment model to the plaintiff’s claims. A number of other Courts of Appeals have reached the same conclusion. For example, in EEOC v. Federal Reserve Bank of Richmond, 698 F.2d 633, 638-39 (4th Cir.1983), rev’d on other grounds sub nom., Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 104 S.Ct. 2794, 81 L.Ed.2d 718 (1984), the court refused to apply the disparate impact model where the plaintiff offered no evidence of any “objective standard, applied evenly and automatically.” 698 F.2d at 639 (quoting Statsny v. Southern Bell Tel. & Tel. Co., 628 F.2d 267, 274 n. 10 (4th Cir.1980)). The plaintiff alleged only that the employer' practiced discrimination against an entire group. The court found the disparate treatment model was appropriate for “subjectively based practices.” Id. (quoting Statsny, 628 F.2d at 274 n. 10). See also Talley v. U.S. Postal Service, 720 F.2d 505, 507 (8th Cir.1983), cert. denied, 466 U.S. 952, 104 S.Ct. 2155, 80 L.Ed.2d 541 (1984); Mortensen v. Callaway, 672 F.2d 822, 824 (10th Cir.1982); Heagney v. University of Washington, 642 F.2d 1157 (9th Cir.1981). But see Hung Ping Wang v. Hoffman, 694 F.2d 1146, 1148 (9th Cir.1982) (court held without citation of any authority, that to prevail on disparate impact claim, plaintiff need only demonstrate lack of objective criteria and a disparity); and Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 481-82 (9th Cir.1983) (court noted division within circuit on this issue, and then assumed without deciding that impact analysis applies to subjective hiring process, because plaintiff failed to make case under either analysis). In Coates, supra, the Seventh Circuit addressed this issue. The plaintiffs in Coates alleged racial discrimination in the defendant’s pattern and practice of employee discharges. No specific neutral policy of the defendant was identified by the plaintiff. The plaintiffs asserted on appeal that, although they tried their case primarily on the theory of disparate treatment, they also alleged disparate impact. They argued that the district court erred in ignoring this theory. 756 F.2d at 530 n. 7. The Coates court distinguished between the two theories, quoting the Teamster’s, decision set forth above, which defines the disparate impact model as applying to facially neutral employment policies. The court noted that plaintiffs had alleged facts appropriate for disparate treatment analysis, but that they never argued that there were facially neutral termination rules that had a disproportionate impact on blacks. Rather, they alleged that the rules were more severely applied, through supervisory discretion, to blacks than whites. The court concluded that the case was therefore susceptible to a disparate treatment, and not a disparate impact, theory. Id. The court then cited EEOC v. Federal Reserve Bank of Richmond, supra; Pouncy v. Prudential Insurance Company of America, supra; and Mortensen v. Callaway, supra, all cases discussed above which reject the application of the disparate impact theory when the plaintiff has not identified a specific, facially neutral practice of the employer which disproportionately excludes members of a protected group. Thus, without specifically discussing the decision in Stewart v. General Motors, supra, the Seventh Circuit has now aligned itself with those courts which apply the disparate impact theory only in circumstances similar to those in which the Supreme Court has applied the theory, for example, when the employer has a specific practice which is neutral on its face but impacts disproportionately on protected groups. This court therefore concludes that, under Supreme Court precedent, Coates, and the Pouncy line of cases, the disparate impact theory should be applied only when such a policy has been identified by the plaintiff. Since the EEOC admits that it has not identified any specific, facially neutral policy of Sears which disproportionately excludes women from the jobs at issue in this case, the court will apply only the disparate treatment theory to this case. C. Statistics 1. In General Virtually all the proof offered by the EEOC in this case is statistical in nature, or related to the statistical evidence. Statistics are an accepted form of circumstantial evidence of discrimination. In some cases, where “gross disparities” are shown, statistics alone may constitute a prima fade case. Coates, 756 F.2d at 532 n. 6; Segar v. Smith, 738 F.2d at 1278. However, as the Court in Teamsters cautioned, “statistics are not irrefutable; they come in an infinite variety and, like any other kind of evidence, they may be rebutted. In short, their usefulness depends on all of the surrounding facts and circumstances.” 431 U.S. at 340, 97 S.Ct. at 1856-57 (citations omitted). Statistical evidence, like other evidence, must not be accepted uncritically. The usefulness of statistics depends to a large extent on “the existence of proper supportive facts and the absence of variables which would undermine the reasonableness of the inference of discrimination which is drawn.” White v. City of San Diego, 605 F.2d 455, 460 (9th Cir.1979) (iquoting United States v. Ironworkers Local 86, 443 F.2d 544, 551 (9th Cir.1971), cert. denied, 404 U.S. 984, 92 S.Ct. 447, 30 L.Ed.2d 367 (1971)). Inaccuracies or variations in data or in the formulae used to test such data may easily lead to different, contradictory, or even misleading conclusions by experts. E.E.O.C. v. Federal Reserve Bank of Richmond, 698 F.2d at 645. Courts therefore must carefully evaluate all the assumptions and data underlying the statistical analyses to determine whether they are sufficiently related to reality to provide any useful information to the court. As this case will demonstrate, the assumptions made by a statistician in formulating a model can be far more important than the numerical complexities and results of the analysis. Without a sound theoretical basis, which is carefully reasoned and closely tailored to the factual circumstances of the case, the statistical results can be meaningless. Close attention will therefore be paid in this case to the assumptions made by the experts and their relation to reality. 2. Statistical Significance In view of the highly statistical nature of the EEOC’s proof in this case, a short discussion of a few relevant statistical principles is necessary. An important concept to bear in mind in evaluating any statistical analysis is that no statistical analysis can prove causation per se. Statistical experts on both sides of this case have readily admitted this. Rather than attempting to prove what caused the results obtained from their analyses, statisticians endeavor to estimate the likelihood that the results occurred merely by chance. In statistical terms, they attempt to measure the level of statistical significance of their results. One commonly used measure of statistical significance, the likelihood that the result occurred by chance, is the standard deviation. The standard deviation measures how much a typical observation varies from the average of all observations. D. Barnes, A Commonsense Approach to Understanding Statistical Evidence, 21 San Diego L.Rev. 809 (1984). A standard deviation of 2 indicates that there is a .045 probability (that is, almost a 5% probability), that the results observed occurred due to chance. A standard deviation of 3 represents a .003 probability, and a standard deviation of 4 represents a .006 probability that the result occurred by chance. Statisticians generally consider results to be statistically significant at two or three standard deviations. However, statistical significance merely indicates that chance is not likely to have caused the result. As EEOC’s expert, Dr. Siskin, testified, statistical significance and practical significance are two completely different concepts. Statistical significance can be determined merely by calculating the standard deviation or some other test statistic. To determine the practical significance of statistical results, a court must look at the theories and assumptions underlying the analysis and apply common sense. Courts have not blindly adopted any test of statistical or practical significance. In Castaneda v. Partida, 430 U.S. 482, 496 n. 17, 97 S.Ct. 1272, 1281 n. 17, 51 L.Ed.2d 498 (1977), and Hazelwood School District v. United States, 433 U.S. at 308 n. 14, 311 n. 17, 97 S.Ct. at 2742 n. 14, 2743 n. 17, the Court indicated that, as a general rule, if the observed result is more than 2 or 3 standard deviations from the expected or average value, a hypothesis that the result occurred by chance is suspect. However, the Court has not laid down any hard and fast rules for evaluating statistical or practical significance in every case, and the Court's “2 or 3” standard deviation approach should be applied with caution. See D. Baldus and J. Cole, Statistical Proof of Discrimination 294-95 nn. 12-13 (1980). The Seventh Circuit has recommended using “extreme caution” in drawing any conclusions from statistical significance at a two-to-three standard deviation level. Coates, 756 F.2d at 547 n. 22. See also EEOC v. American National Bank, 652 F.2d 1176, 1198 (4th Cir.1981), cert. denied, 459 U.S. 923, 103 S.Ct. 235, 74 L.Ed.2d 186 (1982). The Coates court recognized that courts are not required to conclude from low standard deviations that the statistics conclusively prove discrimination, particularly when the statistical model is not well adapted to the facts. Coates, 756 F.2d at 547 n. 22. See Teamsters, 431 U.S. at 340, 97 S.Ct. at 1856-57 (the usefulness of statistics depends on surrounding facts and circumstances). The court will therefore carefully examine the models underlying the statistical analyses before attributing practical significance to standard deviations in the 2 to 3 range. As a guide for discussion, however, this court will generally consider that differences between actual and expected values that exceed 3 standard deviations may be statistically significant. However, it is important to emphasize that the standard deviation and other measures of statistical significance merely attempt to eliminate chance as the reason for the results. They do not prove what in fact caused the results. EEOC’s statistical expert calculated “z” statistics for the disparities between his estimated actual and expected results for the commission sales claim. These z values represent the number of standard deviations between his actual and expected results. “T” values were calculated to measure the same for the checklist compensation analyses. Accordingly, when z values or t values in the analyses exceed three, the court will assume that the disparities may be statistically significant. The court’s view of the practical significance of the results will be discussed at length below. 3. Multiple Regression The primary statistical analyses performed by the EEOC in this case were multiple regression analyses. Multiple regression is a statistical technique designed to estimate the effect of several independent variables on a single dependent variable. It attempts to measure the effect of factors such as age, education, experience, or sex, on an outcome, such as a hiring decision. It estimates how much each factor affects the outcome. The most important issue in a regression analysis is what factors should be included as the independent variables. It is important to include all variables that significantly influence the dependent variable. However, if too many factors are added that do not significantly affect the dependent variable, the model can become distorted and then may not accurately estimate how much the independent variables influence the dependent variable. For a regression analysis to be meaningful, it is therefore important to strike a balance by including all factors which significantly affect the dependent variable, and excluding those variables which do not significantly affect the dependent variable. As discussed above, the assumptions underlying any statistics must be critically examined by the court. In a regression analysis, this requires a careful evaluation of the variables included in the model, the ability to accurately measure these variables, and the importance of variables not included in the model, including variables which cannot be measured on a mathematical scale. In short, the court must evaluate “the fit” of the model to the reality of the facts and circumstances. See T.J. Campbell, Regression Analysis In Title VII Cases: Minimum Standards, Compa rabie Worth, and Other Issues Where Law and Statistics Meet, 36 Stan.L.Rev. 1299, 1306-09 (1984). Measures of statistical significance estimate the likelihood that the results occurred by chance, assuming that the model accurately reflects the decision making process it evaluates. Id. Measures of statistical significance will not have meaning where the model does not accurately reflect the process it seeks to replicate. As discussed above, the court in Coates, 756 F.2d at 547 n. 22, recognized this in advocating caution in relying on statistics in the standard deviation of 2 or 3 as proof of discrimination, particularly when the model does not have a good “fit.” Courts need not accept the results of any regression model as proof of a prima facie case merely because the results are statistically significant, unless the model has a sufficiently good “fit” to justify an inference of discrimination. The court therefore will carefully examine the factors included and excluded from the regression analyses in this case, and the weight given to measures of statistical significance will depend upon the fit of the statistical model to the actual hiring and compensation practices of Sears. Finally, it is important to recognize at the outset the limitations of statistical analyses when evaluating complex decision making processes. Although mathematical models such as those used in regression analyses can provide useful information in appropriate circumstances, the intricacies of human decision making often cannot be reduced to mathematical formulae. The more complex the decision making, the less accurate a regression model will generally be. Thus, statistical analyses can be quite accurate when used to analyze relatively simple fact situations, such as when a job requires only a small number of minimum objective job qualifications. However, as will be seen below, as more qualifications and subjective factors are required, mathematical models are less able to accurately analyze the decision making process. II. Hiring and Promotion Into Commission Sales EEOC attempted to prove at trial that Sears intentionally discriminated against women in hiring and promotion into commission sales on a nationwide basis from 1973 until 1980. Both parties have analyzed separately those hired directly into commission sales and those promoted to commission sales from other jobs at Sears. Full time and part time positions in each category were also analyzed separately. The court will structure its analysis accordingly. A. General Background Sears is the nation’s largest retailer of general merchandise, employing approximately 380,000 persons in over 4,000 facilities across the country. During the relevant time period, Sears had approximately 920 retail stores. Its corporate headquarters is located in Chicago, Illinois. Between 1973 and 1980, the relevant time period, Sears was divided into five territories: Eastern, Midwestern, Pacific Coast, Southern, and Southwestern. General corporate policies at Sears are formulated at the corporate headquarters, communicated to the territorial organizations, and eventually disseminated to individual stores. Although Sears has some very strongly enforced corporate policies, its entire management system overall is highly decentralized. This includes its hiring and compensation practices. Maximum flexibility, within bounds, is given to individual store managers to respond to the surrounding markets. Each store manager’s compensation is significantly tied to the profitability of his or her store. Commission sales is a major source of store profits, and having a qualified and successful commission salesforce is of great importance to individual store managers. All of this has been very important to Sears’ success over the years. 1. Commission Sales at Sears During 1973-1980, Sears retail stores were divided into approximately 55 retail divisions. Salespersons in these divisions were paid either on a commission or non-commission basis. Merchandise sold on commission was usually much more expensive and complex than merchandise not sold on commission. Commission selling usually involved “big ticket” items, meaning high cost merchandise, such as major appliances, furnaces, air conditioners, roofing, tires, sewing machines, etc. Noncom-mission selling normally involved lower priced “small ticket” items, such as apparel, linens, toys,