Organizational Behavior: Domino's pizza - Research Paper Example

 Organizational Behavior: Domino's Pizza Domino’s Pizza is a private company that was opened in 1960 and has grown to become one of the largest pizza deliveries Company in the world (Wall street journal, 2005). The company has internationalized its operations, and its headquarters are located in Michigan. It was formed by Tom Monaghan but is currently managed by David Brandon who is the CEO. Dominion pizza is the second largest pizza chain in the USA but has opened 9000 stores in 60 nations. The company makes diverse products such as sandwiches, pasta, chicken wings and desserts although their main product is Pizza. The company has large economies of scale, and their average revenue over the past five years is $1.675 billion USD. The target of the organization is to be an exceptional franchisee and be the best pizza delivery company in the world. Dominion Pizza appreciates and respects the culture of its contributors, customers, employees and even suppliers and hence is committed to a culture inclusive mode of operation. Their market dominance is founded on ensuring that they meet all the customer needs, and every team member feels appreciated and valued. Their outstanding customer services have continually ensured that the shareholders make profits. In 2005, Domino Company was suffering an extremely high rate turnover which is a common problem to most fast food companies. The rate at which the store managers were being changing was alarming since a new store manager was being hired every six months. The constant flux of store managers was in turn contributing to a 300% employee turnover in every store (Wall street journal, 2005). The high rate of employee and manager turnover led to a reduction in production rates, and the company’s profitability was reducing drastically. The cost of hiring employees was very high and the period between the departures of an employee to the time a new employee was hired incurred a high cost to the company. The Dominos spent approximately $ 2500 when an hourly worker resigned and $20000 when the store manager left. Such expenses were incurring avoidable costs to the company and hence the CEO Mr. Brandon had to think about devising strategies on reduction of the dismaying turnover rate. During this period, the Domino was recruiting, appointing and coaching about 180,000 employees every year since the turnover rate was approximately 158%. The high rate of turnover was being caused by a number of problems although the main problem was employee wages. However, the manager did not believe that raising wages was the best option and solution and did not consider it as a long-term solution. The manager conducted an extensive research and found that a change in the type of store managers hired would lead a significant change in the rate at which employees were resigning and others being hired (Wall street journal, 2005). The store managers were very influential since they related directly with the employees and hence to impact a change on the employee’s turnover, the right kind of managers had to be hired. Apart from reducing the rate of turnover, the right kind of manager could ensure that the production rate of the employees would raise and hence boost the profitability of the branch and the company in general. Turnover rates not only incur unnecessary expenses since they also lead to subpar bar performance. The CEO of the organization made a decision to high new regional managers, and each of them was given a mission to slow down the turnover rate. Each regional manager was allocated sufficient funds to reduce the chronic problem of the fast food business. Manager-employee relationship is imperative for the success of any business, and research has shown that, a harsh and boring boss can cause a worker to quit the current job for another job with the same pay or even a slightly lower pay (Green, 1992). The working environment is, therefore, crucial in determining the how comfortable a worker is while working in any business (Conger, & Kanungo, 1997). Good work-mate relationship is fostered by good management, and an integration of good management and good employee relationships reduces turnover rates. The appointed regional managers had to ensure that all store managers related well with their employees and that every employee was happily working. These two factors would lead to a double gain to the company since other than a reduced turnover rate, the production levels would raise and hence profits would also increase (Staw, Sandelands & Dutton, 2001). Dominos competitors such as the Starbucks were offering higher wages to their employees and had used the salary strategy to solve their previous employee turnover problems. Apart from offering higher salaries, they had consistently improved on creation of friendly workplaces and employee friendly management. Despite such strategies having worked with competitor companies, the Domino Company had a different approach towards retaining their employees. The company was determined to employ any other strategy apart from paying high wages. The manager said that increasing the wages per hour of the employees was like buying loyalty and could not be a long-lasting solution. The manager believed that employee turnover was more related to bad organizational cultures than wages. He argued that although pay was a factor of consideration, focusing on store managers was a better approach and a long lasting solution. A good store manager would ensure that hiring of employees was selective, coaching was economical, and a favorable work environment was maintained (Philips, 2005). This would directly lead to employee motivation and hence reduce the turnover rate. In order to higher better and competitive managers, Mr. Brandon implemented an online evaluation of financial and management skills which was to be conducted for thirty minutes every week to every store manager. The online evaluation would ensure that the store manager’s skills were up to standards, and they were trained on their weak areas in order to promote high job performance. The CEO had direct contact with each branch manager and hence was in a position to train them on the necessary skills of management that would improve production and worker comfort at the work place (Wall street journal, 2005). Each store manager, on the other hand, implemented and managed a digital track performance system that was in each store. The track performance system would record the production rate of every employee, and this would trigger higher performance. The system displayed the number of Pizza every employee produced on an hourly basis and hence the workers competed against one another to record the highest production rate. The system motivated the workers since the promotion criteria was based on production levels. High production levels in turn led to better services to customers and hence customer loyalty and higher profits. The CEO set standards for the store managers who would determine their salaries and hence they worked hard to provide an excellent store performance. The store managers were promoted based on their store’s performance and this triggered creativity among the managers in a bid to outdo other store managers. On one occasion, the store manager in New Jersey implemented a discipline system where his employees were forced to wear big glasses if they made obvious errors. It acted like a joke to the employees, and they felt happy while working in the store. After the implementation of the strategies of MR Brandon, the turnover rate reduced from 300% to 107% that was a significant improvement. The good results on such a short period were based on setting performance standards, good employee selection, hiring and training techniques, and improving the attitude of the employees. The shareholders in the company enjoyed the benefit of the improved situation since the cost per share which has significantly reduced, increased from $14 to $ 17.25 raising the net income by 99%. Understanding the organization root problems is essential for every manager while devising methods of dealing with the problems. Mr. Brandon’s first approach to the problem was imparting a research in order to discover the cause of the problem. Most managers fail in problem-solving since they import solutions from other companies without understanding the nature of their problems. Different Organizations may suffer from similar problems but with different courses and hence each company should device its method of solving problems rather than adopt the solution being used by their competitors. Employees require motivation to work, and it does not necessarily come from higher wages. Working in a friendly environment where the employees are appreciated motivates them to work harder. Methods of promotion are crucial towards motivating the employees. An employee working in a fair workplace where promotion is solely based on performance will be actuated to work harder as opposed to an employee working in an environment where the promotion strategy is based on corruption and favors (Fox, 2006). A fair environment will make an employee want to stay and will gain job loyalty such that they will be reluctant to change the job since they feel comfortable. Most managers hire employees after only considering their academic or qualification levels (Knudsen & Tsoukas, 2005). These two elements are important, but the hired employee cannot work effectively if their interest and personalities do match the kind of person the organization needs. The cultures of the organization demand certain personal traits so that the hired employee can fit the organization and relate well with the management and other employees. Managers should, therefore, consider personalities of their prospect employees and ensure that they match the organizations cultures (Jackson & Carter, 2000). Mr. Brandon ensured that his branch managers had such skills through the weekly online interviews and it produced positive results. He also improved on his methods of hiring Store managers so that they would in turn hire better employees. An extroversive manager will relate will relate well with the employee and hence create a good manager-employee relationship (Covin & Slevin, 1998). Qualities such as agreeableness and emotional stability are required in a manager for him/her to work under work pressures and cooperate with the employees (Allen & Bryant, 2012). Mr. Brandon, therefore, ensured that the hired managers had such qualities so that the same qualities would be passed to the employees. The managers hired by the CEO were very open to experience and hence had intellectual, imaginative and broad minded characters. The branches, therefore, operated like teams whereby a strong leader determines the success of a team (Cole, 2004). The store managers ensured that all the workers were motivated, and each worker was highly involved. The managers were regularly trained on creating better working conditions and were motivated with rewards based on performance. Employee turnover is also controlled by relationships between the manager and the employees. Vertical relationship should be favorable to ensure that the workers work in good condition (Igbaria & Shayo, 2004). A social manager who minds the needs of his employees will create a good bond between the management and the employee and thus reduce turnover rate. Inter-employee communication and relationships are also a determining factor in the turnover rate (Kerr & Jermier, 2008). In a surrounding where all employees are treated fairly, they will have good relationships with one another and hence teamwork and cooperation will be easily attained. For a company to continue increasing their productivity, it is necessary that the organization keeps training them. Training employees is a corporate social responsibility (CSR) that the company has to achieve in order to reduce turnover rates (Phillips & Connell, 2002). An employee who is constantly trained will choose to remain in one organization since they are improving their career. The organization will benefit in two ways since the expenses incurred with high turnover rates will be voided and at the same time the employee will improve their performance and hence their production level will be higher (Daft, 2011). The remuneration an employee earns also motivates them to remain in one organization. Therefore, the organization should ensure that they maintain good salaries that are at par with those of their competitors so that their employees will not be tempted to move to other companies (Moshal, 2010). Good salaries ensure that the employees are motivated to work and their long experience in the organization boosts their performance level. Turnover rates are dependent on the operation systems within the organization. The computerized tracking system and the FAQ management style stimulated the reduced turnover rates (Wall street journal, 2005). A good system ensures that employee behaviors are monitored and hence each worker is focused on organizational success. Earn as you work systems can motivate employee performance since every additional effort counts to the employee (French, 2011). The system was introduced in one of the branches of Domino, and it provided good results. The workers were paid depending on the number of pizzas prepared, and it improved the production rates. Under such systems, the hardworking employees and the more skilled employee do not feel underpaid or overused since their effort and knowledge leads to better pay. However under such systems, the management should ensure that the concept of sustainable incentives is monitored to avoid chances of the organization making losses due to employee overpayment (Sheenhan, 2008). Employee appreciation fosters their job loyalty and improves their motivation to work. The Domino Company introduced a program that granted stock options to about 15% to store managers based on their sales growth and quality of customer service. Such grants ensured that the workers and the store manager earn a little more due to their hard work and good services (Allen & Bryant, 2012). Appreciating employees could be as simple as thanking them for their efforts, treating them with respect, or even holding organization dinners and lunches. An employee in an organization where they feel appreciated will be reluctant to change from one job to the other. Long term service in one organization makes the employee understand the systems and culture if the company and hence the employee provides better service. In conclusion, high turnover rate affects the organization in various ways and reducing the rates has many advantages to the organization. High turnover rate leads to low specialization levels among the employees, low production during the turnover and incurs high costs of training and hiring to the organization (Phillips & Connell, 2002). On the other hand, low turnover rates lead to better specialization among the employees, constant production rate and fewer expenses. However, it should be noted that a high turnover rate could be advantageous since it can create a room to hire more qualified employees (Mobley, 2007). From the research and analysis on Domino Company, one can conclude that turnover rates can be controlled by other methods other than raising salaries and wages. References Allen, D. G., & Bryant, P. C. (2012). Managing employee turnover: Dispelling myths and fostering evidence-based retention strategies. New York, N.Y.] (222 East 46th Street: Business Expert Press. Cole, G. A. (2004). Organizational behavior: Theory and practice. London: Thomson. Conger, J. A., & Kanungo, R. N. (1997). 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