Strategic Decision-Making - Charlie and Cameron - Essay Example

Executive Summary Decisions made in business organizations need to be strategic which means that such decisions should have long-term implications. In the case of 24/7, the optimal strategic decision that Charlie and Cameron can make is to hire another employee for the four 12-hour shifts per week. Based on the sales data for the last three months, it is necessary for the two to assign the permanent contractual employee on Monday morning, Tuesday night, Thursday morning, and Friday night of each week using the pay scheme that gives the new employee 50% of the take for the shift. But such decision is too linear as it fails to take into account other aspects of the business, like corporate responsibility. It is highly suggested that Charlie and Cameron look for other salary and wage strategies for this new employee that would both fit the purpose of the organization and is socially responsible to all the persons involved. 24/7 Recommendation Report [Name] [Student Number] Table of Contents Introduction ………………………………………………………………….. Case Scenario and Objectives………………………………………………… Proposed Course of Action …………………………………………………… Discussion ……………… ………………………………………………….. Conclusion ………………………………………………………………….. Recommendation …………………………………………………………… References ………………………………………………………………….. Introduction Organizations of any type face decisions on a daily basis. Decisions could range from simple ones, like increasing the volume of units produced, to complex ones, like deciding which hedging strategy would yield the best results. In today’s highly competitive business environment, decisions that have long-term positive impacts are not only necessary but are also important. Regardless of the reasons, circumstances, and events, decisions organization make should be objective, thorough, and comprehensive in addressing both the issues and opportunities. Decisions that undergo objective evaluation and assessments of relevant elements, data, information, alternatives, and solutions are strategic in a sense that these decisions have long-term repercussions (Bhushan & Rai, 2004). The decisions made in organizations must always be aligned with the goals and objectives of the organization (Finkelstein, 2003). Setting goals and objectives would allow organizations to make series of interconnected decisions without getting lost in the process since the organization can easily refer to the framework of their decisions. For example, an organization that wishes to establish strong market presence must increase the budget of its marketing and promotions even though the rest of the organization has to cut cost. Doing otherwise will be counterproductive and counter-intuitive to the organization’s objectives. However, objective decisions are not very easy to achieve. Decision makers are bound to their subjectivities, personal preferences, and biases (Finkelstein, 2003). In some circumstances, the best options are not readily available and it requires enormous amount of skill, knowledge, experience, and trust to be able to unearth the series of steps leading to the successful decision (Eisenhardt et al, 1997). These elements imply that effective decision-making should be done objectively or at least with little or no subjectivities involved in the process. An objective decision-making process can be achieved by (a) creating a model to forecast future events, (b) developing learning environments for evolving strategies, (c) objective assessment techniques, and (d) methodology of choosing the best alternatives (Bhushan & Rai, 2004). Case Scenario and Objectives Charlie and Cameron from 24/7 are considering the feasibility of hiring a new permanent contractual employee that will report for 48 hours on a four 12- hour shifts per week. The shift schedule for this new employee will be 2 day- and 2 night-shifts. Charlie and Cameron have two salary schemes in mind for this new employee. In scheme A, the new employee will be paid $18 per hour or a total of $864 per week. In scheme B, the new employee will be paid 50% of the take for the shift. Charlie and Cameron are obliged to pay 9% for this new employee’s superannuation regardless of which scheme is chosen. Cameron submitted their daily take for both night and day shifts for the last three months for analysis. The main objectives of this report are: To critically analyze the daily take report to help Charlie and Cameron decide whether or not to hire another employee. This will be done by plotting the financial data of the business for the last three months. If the decision is to hire, what will be the most strategic pay scheme to choose? In order to determine the pay scheme, a comparative analysis between the two schemes is done to check which option yields more profitability to the business; If scheme B is chosen, what will be the shift distribution for this new employee? Ideally, the new employee should be assigned on days where the sales volume is the lowest. However, careful considerations must be made on this particular choice. To evaluate whether there are any more possible options to choose that would yield better outcomes. Proposed Course of Action The following are the proposed course of actions for 24/7 in the light of the case scenario and objectives: (1) Hire another employee to work four 12-hour shifts per week. (2) Choose to scheme B where the new employee will be paid 50% of the take for the shift he will be assigned. (3) Assign the new employee to work on Monday morning, Tuesday night, Thursday morning, and Friday night of each week. (4) Consider other options. Discussion According to Jordan (1986), it is necessary for employees to have their time off from work in order to keep or improve their productivity. Moreover, organizations that integrate employee-focused programs in the workplace such as health and wellness programs, family day celebration, or rest and recreation have low attrition rates compared to organizations that do not have these programs (Ford, 1992). From the perspective of workplace motivation, it is highly recommended that Charlie and Cameron hire another employee to take the four 12-hour shifts as their replacement. There are at least two advantages of this decision: first, hiring this new employee allows both Charlie and Cameron to rest and recharge for the week that follows. Charlie and Cameron can spend their time off from work with families and friends as well as attend to private matters which will have a positive impact to their performance in the long run; second, such decision would be beneficial to the business in the long run because such breaks from the monotony of the workplace encourages productivity, as previously discussed. In a similar fashion, opting not to hire another employee may result to low work performance and high dissatisfaction rates. Charlie and Cameron virtually spend most of their week at work, changing from one shift to another for 7 days a week without any break. It is easy to identify that they are overworked. Overworked individuals tend to become unfocused and unproductive (Ford, 1992). The possible unproductive behaviors that would develop in the long run may cost Charlie and Cameron the business. Hence, it is just logical for them to give themselves break from work and hire another employee to allow them to enjoy longer work breaks. Deciding to hire another employee introduces another element to the picture – the pay structure of the new employee. The business is earning modestly which means that there are days where the total take could not cover the cost of operations, that there are days where the take home is just enough to cover the cost of operations, and there are better days where the business has a positive take home. This further implies that 24/7 has a moderately serious management dilemma on which pay structure to follow for the following reasons: If Charlie and Cameron chooses scheme A which is to pay the new employee a flat rate of $864 per week, the business risk associated with this decision is the possibility of reduced profits. The average profit per week (for the last three months) of the business is $2,204 with a low range of -$593 and a high range of $2,569. This means that there is no guarantee that the weekly profits of the business can pay for the weekly wage of the new employee. If it occurs that the business could not afford to pay for the wages of the new client, then it is highly likely that the new employee will stop working and could move to destroy the reputation of the business by discouraging potential employees. In simple words, choosing scheme A is advantageous to the new employee but not to the business. If, however, Charlie and Cameron would choose the second scheme where the new employee takes 50% of the profit for the work shifts, a very similar scenario can also be expected. Undoubtedly, the second option would sound appealing since the new employee will have to take home a lot if the volume of the sales for that particular days and shifts has been many. But Charlie or Cameron would want to take these schedules in order to protect their financial interests so this means that days and shift schedules reflecting positive profits would never be assigned to the new hire. Moreover, there are shifts where there are no profits to take home. This means that after 12 hours of work (on a periodic basis), the new employee could not take anything with him which defeats the purpose of the job. In simple words, choosing scheme B is advantageous to the business but not to the employee. Again, this clearly is a management dilemma. But if the main focus of the decision is to increase the profitability of the company, then scheme B is more appropriate compared to scheme A since scheme B insures that the business has 50% of the profits left for the shift, regardless of how small and insignificant the profit is. It also suggests that the business will only lose 50% whenever it does not earn any profit during the shift assigned to the new employee because of the shared responsibility between the employee and the business. If all other factors can be neglected, like the welfare of the newly hired employee, then scheme 2 is the best choice to make. In order to determine which days should the new employee be assigned (if scheme B is chosen), it is necessary to plot the take of the employee from the profit table provided by the business. The table below shows the 50% of the profit of the business for the days and the shifts with low, high, and average profits. For example, the new employee will get an average of $44.74 if he is assigned on Tuesday night with a possible low of -$34.5 and a possible high of $61.73. Strategically, the employee should be assigned on the following days: Monday Morning, Tuesday Night, Thursday morning, and Friday night. This shift distribution ensures that the new employee can earn decently on good days without taking the best days from either Charlie or Cameron. Pay Scheme B Average Maximum Minimum Monday Day $87.39 $112.74 $27.07 Night $44.31 $61.52 $32.70 Tuesday Day $95.66 $113.07 $34.50 Night $44.74 $61.73 $34.50 Wednesday Day $61.64 $117.69 $135.70 Night $56.36 $72.68 $49.96 Thursday Day $10.94 $95.43 $60.55 Night $15.33 $112.74 $80.95 Friday Day $69.18 $112.89 $93.59 Night $135.22 $114.82 $135.70 Saturday Day $99.25 $101.61 $337.73 Night $183.96 $53.67 $45.78 Sunday Day $122.53 $72.68 $49.96 Night $138.04 $81.43 $60.55 Conclusion The paper identified a management dilemma when it comes to choosing which payment scheme is appropriate for the newly hired employee. Clearly, the business has to make a decision that would allow it to prosper and stabilize, since it was argued earlier that the decisions organizations made must be aligned with their goals and objectives. However, such decision may be strategic to the financial aspect of the business but it could be disastrous to its reputation. Moreover, the decisions that Charlie and Cameron are contemplating are highly restrictive and require deeper contextual analysis to be made. This means that the business has to look for alternative strategies to implement that takes into consideration various aspects of the business. Recommendation In light of the previous discussions, this paper highly recommends that: 24/7 should look for other salary/wage programs that would balance its interest with the interest of its prospect employees; Consider the possibility of reducing the number of hours per shift (from 12 hours to 8 hours) which reduces the weekly take of the new employee from $864 to $576 which is a significant reduction to cost; and Maintain decisions that are socially responsible to all the parties concerned. References Bhushan, N. & Rai, K. (2004). Strategic Decision Making: Applying the Analytic Hierarchy Process. Springer – Verlag. London. Eisenhardt, K. M., Jean L. Kahwajy, & Bourgeois, L .J. III (1997). How management teams can have a good fight. Harvard Business Review, 75(4), 77–85. Finkelstein, S. (2003). Why smart executives fail. New York: Portfolio. Ford, M. E. (1992). Motivating Humans: Goals, Emotions And Personal Agency Beliefs. Newberry Park, CA: Sage. Jordan, P. C. (1986). Effects Of An Extrinsic Reward On Intrinsic Motivation: AField Experiment. Academy Of Management Journal, 29(2), 405-412. Read More