Case Study Analysis of Human Resource Related Issues
Executive Summary
As a member of the ARISE Human Resource team, I prepared this report to address the company’s executive team. The report seeks to identify, assess, and discuss the human resources issues that affect the organization’s long-term objective. With the company’s vision of being one of the greatest, state-of-the-art spa in the US, the company needed to have creative, passionate, and employees with the ability to make a difference. Over the past few years, the ARISE spa company has witnessed a series of Human Resources related problems that have had direct impacts on the business operations of the company. The report will have a clear articulation of these human resource problems and state why it is of importance for them to be addressed. This report also analyzed the company’s decisions and the implications of these decisions for the Human Resource policies and practices. The report examined the risks involved in the company’s recruitment strategies, strategies to attract, motivate, and retain employees. After a critical analysis of these Human Resource related problems, the report provided solutions and recommendations that could help mitigate these problems and save the ARISE spa company. Furthermore, a clear justification has been developed as to why the report proposes each solution.
Introduction
Lawler and Boudreau (2009) stated that Human Resource acts as a strategic partner to the executive team through the provision of strategies, implementing affirmative working policies, and inducing employee productivity. However, Human resourcesresources, like any other department, may be faced with challenges, that if not solved, may cost a company its fortune. Solving of these Human Resources related problems could confirm the significance of Human Resource function in a company. It was noted the implementation of successful human resource practices does not particularly need a lot of finance or a bigger team. Best human resource practices are realized through the encompassing of creativity, the ability to make a difference, and the creativity of human resource employees. The report, therefore, identified, assessed, and addressed human resourcing issues that have affected the long-term mission and objectives of the company.
Issue 1: Disappointing Tips and Turnover
Ongori (2007) described employee turnover as the number of workers who quit their jobs and are replaced by new employees. Employee turnover is a critical aspect to employers in terms of estimating the cost-to-hire while budgeting. Turnover in the company was only at 17% in the first three quarters but at the end of the first year in operation, it had reached 31% (Beer and Clair, 2012). Although the percentage was low compared to the industry’s 75%, it compromised the ARISE strategy that was founded on a stable and committed workforce. The increased turnover was attributed to the staffing of employees as some were hired on an as needed basis to issue scheduling flexibility. The business and operational vice presidents of the company took advantage of the company’s CEO to recruit Personal Wellness Coaches (PWCs) who may not have been so passionate about the company, therefore, could easily quit their jobs.
Employee compensation from tips was 50% below the expected level. Some of the customers were used to “no tipping” policy from other spas. The impact of lower tipping was felt by skin care and massage employees. These low levels of tipping made some PWCs feel that the company had breached the mutual contract. As an effort to meet this tipping issue, printed copies of guidelines were placed at the front desk but customer’s comments were negative towards that measure, hence the copies were removed (Beer and Clair, 2012).
Issue 2: Problems with Schedules and Job Duties
It is reported that one PWC complained about staying on schedule as an issue they faced. Clients who ate lunch at the café were always not ready at the appointment time due to slow orders. Schedule conflicts occurred among PWCs because some took more time with the clients. The management had informed PWCs that they had a duty of helping keep the facilities clean and stocked. As a result, PWCs always found themselves between cleaning up and searching for supplies therefore making them late to pick up clients from the waiting area. This is a problem that the organizations structure causes. Specialization is not embraced in the company because PWCs need to focus on clients rather than cleaning up the facilities, a job set aside for facilities maintenance group. These system of operation undermines the company’s strategy of saving time that each PWC has with a single client. Ethically. The problem may cause wrangles between the PWCs as one of them had stated that she hates it when a client comes from a facial where they never get out on time.
Issue 3: Clients Reaction.
Human Resources is responsible for the creation of a better company image to the public as this plays a critical role towards employee and customer attraction, (Delorme and Arcand, 2010). At the end of the first year in operation, customer’s reaction in the company had plummeted, with only 34% of clients reporting that they loved the service. 60% indicated they were not interested while 6% indicated they disliked the services. Those who disliked the services had used several services and felt that they had received conflicting advice from different PWCs. The second year recorded a mixed client reaction towards the All-star team approach that was implemented. 27% of clients said they liked a “spa team” 17% disliked the team approach while 56% indicated lack of interest (Beer and Clair, 2012). The spa overall experience, however, received a 94% satisfaction rate from clients. As a strategy of retaining employees, the company was to be featured on the spaFinder hence attracting more customers. One of the strategy used by the company is that each employees output influences the pay they will get. Bonuses were put in place for PWC of the month. PWCs could also earn commissions if any of the clients purchased product that they recommended. As a way of attracting new employees and retaining current ones, the compensation package looked attractive, (Heneman et al, 2001).
Issue 4: employee Reaction and Turnover (year 2)
After rolling out the all-star team, the plan was well received because many PWCs were excited about working in teams and the advantages of specialization associated with teamwork, (Griffin et al, 2001). Despite the positive reaction, turnover continued to increase. Beer and Clair, (2012) alluded that by 2011, 63% of PWCs employed in the first two years were no longer with the company. Though tips were increased by 20%, PWCs were still disappointed that compensation was lower than the expected. The exit were mostly related to changes in personal situations while other PWCs moved due to the perception that they could make more money with other spas.
Issue 5: All-star Team Plan (year 2)
The operational and business vice presidents drafted a proposal of an all-star team that was not well reviewed by the CEO. Instead of being grouped by specialty, each PWC was placed in a team that was to include one member from each of the four departments. The idea was that, each team would be responsible for each client. The team would make a more complete experience for a client thus, improving the tips from the client. Working in a team would also increase peer pressure where no PWC would slack off on cleaning and restocking duties. The plan was generally received well but despite the positive reception, turnover continued to increase. Tips increased by 20% but many of the PWCs were still disappointed that the cash compensation was still lower than what was expected.
Solutions and Recommendations
The report suggested that the tipping culture should be promoted and advertised to loyal customers and potential customers. The company could attach the issue of tipping on the spaFinder which would help provide the information to customer around. The tipping should be given to PWCs who issue the services and recommend products to consumers. After the all-star plan was implemented, it was noted that the tips from the clients increased by 20%. This is a positive approach that the company should embrace. Working as a team would provide the client with a unified satisfying experience that will act as an incentive to them to issue the PWCs with a tip. However, the report recommended the use of a more client-based team approach where the client would meet the team at once. This would save time and create an opportunity for the client to get relevant recommendations and advice about the products they are supposed to use.
The high rate of employee turnover in an organization may be tackled by improved reward systems, increase of bonuses and creation of a conducive working environment in the organization (Allen, 2012). Turnover in ARISE spa company is majorly as a result of decrease in the compensation tips that PWCs received from clients. It was noted that some turnover was related to changes in personal situations. Additionally, PWCs were leaving because of the perception that they would earn more money in other spas. With the company’s financial constraints, increasing of bonuses and rewards to employees could be so costly. The cost of hiring new PWCs would hurt the bottom line and lead to loss of the company’s culture. The report proposes that the reward system by the company should be improved whereby bonuses that are given to the employees should be on monthly basis. The amount should be increased to $300 for each month as this will increase the productivity of employees and boost loyalty. Creating a conducive working environment for the PWCs is also a major contribution towards lowering the turnover. Employees should not be pressured by management but should be motivated to put in more efforts.
Schedules in the company should be well timed through the use of specific timetables. Each PWC should not take a lot of time dealing with a single client. The sessions in each specialty should be given a specific duration where PWCs take the recommended time to serve a client. It was noted that clients who ate lunch in the cafeteria were always not ready at the appointment time. This report suggest the use of special meal cards for clients that have appointments immediately. The meal cards are presented to the cashiers at the cafeteria for faster processing of their orders. This would help in saving the time that clients waste at the cafeteria and reporting for the spa services in time. The report also proposes that estheticians should only explain the products that are best suited for a client. The sessions should be brief and a detailed written description of the products should be put down on paper and be presented to a client who may need detailed explanation. This approach will save a lot of time taken to explain all the products.
The initial selection strategy used by the operation vice president was only advantageous in gaining of people who are well qualified and skilled in the sector. However, the employees who were taken up by this kind of recruitment were not passionate and creative enough to take the company to new levels. Employees of a company should be self-driven, creative and have the ability to bring the difference in a company (Grugulis and Vincent, 2005). The PWCs who were hired could not double up as facility maintenance experts and spa specialists. Most of them assumed that they could not clean and stock the facilities. The report opines that job specialization should be embraced where the facility maintenance group should be allowed to clean and stock the spa in the morning hours before the normal operations could begin. The report also recommends that the idea of operating a large state of the art spa as a single entity should be retreated. The size of the spa should be reduced into smaller separate specialties where each of them will have a PWC or a group of PWCs to serve clients. This separation would help in the reduction of time wasted when clients have to go through all the specialties. Some clients only seek a single service in the spa.
Conclusion
The report found out that there are a number of Human Resource related issues that were facing the company. A decrease in the tips offered to the PWCs was increasingly leading to high employee turnover in the company. The turnover was also attributed to changes in personal situation and the notion that the PWCs could get more money when working in other spas. Problems with schedule and job duties were also a problem in the company because time was being wasted between the PWCs, and they were required to carry out cleaning and stocking services. The client reaction was worsening basing on the survey that were carried out in the company. Finally, the all-star team plan that was proposed also became a problem as some clients actually did not like it, being served by a team of PWCs due to the confusing information that they received from the many PWCs in a team. The report has proposed a number of solutions that if taken seriously, could help return the ARISE spa company back to its level best.