Slide 1

Wrap It Up

Developing a new Compensation Plan

BackgroundShawn Jackson and Simon SethiNorthern California, 2002Fresh, healthy, locally sourced ingredientsConsumer preference of quick meal alternatives30 restaurants by 2011Focus on freshness and special dietsAll stores company-ownedPassion for delivering fresh quality foodConcernsTight relationships with long term employeesCentralized social media activitiesDisorganized recruitingHigh turnoverDifficult to attract and retain top talentLack of motivation among managers

Frustration among employees at all levelsDeclining customer satisfactionNo change in menuRegular customers not given any discountsManager turnoverInconsistency in menu and service due to local sourcing

Compensation

It is what employee receive in exchange for their contribution to the organisation.

Nature of Compensation a. Base Pay b. Variable Pay c. Benefits

Dimensions of Equity in Compensation Planning

a. Internal Equity b. External Equity c. Individual Equity

Objective of Compensation Planning Attract Talent Retain Talent Ensure Equity New and Desired Behaviour Control Cost Comply with legal rules Ease of operation

ShareIt For Individual store profits Motivation for Managers Store Selection for Pilot Program

Comparative Analysis Store NameSanta MonicaCosta MesaLocationNew City CentreShopping MallExperienceOpened in 2004Opened in 2007Employee Enfranchisement Achieved through an integration of empowerment with methods of pay for performance . Participatory management : Encourage employee to participate in organizational decision making. Employees are encouraged to voice their opinions about their working conditions. Such combinations have the potential for producing extraordinary service. ShareIt InsightsExisting Pay StructureShareIt StructureBasic Pay: At Par with the IndustryProfit = Performance MetricVariable: Differs w.r.t. amount and qualifiersQuarterly AppraisalLinked to Profits not Revenue5 Bands : Revised on yearly basisStore Manager : 35% ProfitNo pay difference b/w top and low range of bandAssociate Manager : 15% ProfitNo incentive to improve after band is achievedWrapItUp :50% Profit Benefits were Paid one month after quarter end. WrapItUp Manager Compensation vs Industry Benchmark

Santa Monica Strategy Setup a Facebook Page and Twitter account. New Menu was designed RepeatIt Offered discount coupons Chef appearances and book Signing

Costa Mesa Strategy

Focused on Cost Reduction Renegotiated terms with suppliers Substituted with less expensive ingredients

Income Statement of Costa Mesa Store before ShareIt

Income Statement of Costa Mesa Store during ShareIt

Income Statement of Santa Monica Store before ShareIt

Income Statement of Santa Monica Store during ShareIt

Customer Surveys Report

Outcomes Of Steps TakenParametersSanta MonicaCosta MesaRevenuesIncreased by 10.2%Decreased by 1.45%ProfitabilityIncreased by 24.5%Increased by 21.8%Working hoursIncreased from 50hours to 70 hours a week-Customer surveysMixed resultsDowngraded customer satisfactionSolutions Based on these points we observe that the result of the programme showed improvement in profitability. Stores have been able to increase their profits and have been able to increase the incentives for managers.

However we opine that the cost containment approach adopted by the manager at Costa Mesa would not sustain in long run and would lead to customer dissatisfaction.

The employee turnover is bound to increase in this scenario. We recommend the customer centric approach adopted by Whitfield at Santa Monica.

The promotions and new menu items introduced would add value to customer satisfaction.The idea of taking orders through text messages would further help the store to retain its customers.Better customer relationship program should be introduced. There is no such mention in the case that how the employees should be motivated other than giving improved incentives.Rework on the compensation plan

There should be some metrics to measure the employee satisfaction level also. This can lead to have better satisfied pool of employees which in turn would yield high profitability with improved customer satisfaction.Reyes should roll out the programme in some other stores to evaluate how other store managers would react to the combination of freedom and pressure that ShareIt program offers.Include multiple parameters like revenue and size of the store

Thank You