Case Analysis: Dilemma at Devil’s Den Corly Fernandez National University MGT 602 Midterm Examination October 11, 2011 Situational Analysis Devil’s Den is a snack bar located on campus at Mt. Eagle College and is managed by contract with an external company, College Food Services (CFS). The snack bar itself is staffed with employees and managers that are mostly freshman and sophomore students of Mt. Eagle College. Susan was a business student in her junior year and was working at Devil’s Den part-time to earn some extra money. She was troubled by how business operations were being conducted by fellow employees and managers.
What she discovered was that there was a lack of business rules in place, employees were taking advantage of and stealing from the store, and the employees were not being held accountable, by anyone, for the illegal activity they were conducting. Employees were allowed free food while on duty, however many of them took advantage of it and extended that privilege to friends and other customers. It was commonplace for anyone to take items from the store for free and with no consequence. Most of the occurrences were happening on weekends and night shifts—the day shift manager was a store manager employed by CFS.
All other employees were picked by the student managers. Susan believed that these actions were occurring because of low wages, inconvenient hours, and unfavorable job-related duties. As a result, turnover was high and job qualifications for managers and employees were minimal. The dilemma that Susan faced was that she felt she needed to report this to CFS, but did not want her report to affect the possibility of being promoted to student manager. Strategic Management Issues Relating to Devil’s Den Issue 1: Devil’s Den does not have a clearly established or defined vision or mission statement.
What direction the company is headed in is decided by the CEO. By establishing a strategic vision, the CEO can set the course for the company and its employees to navigate into the future. As noted by Thompson, Peteraf, Gamble, and Strickland, “company personnel can’t be expected to unite behind managerial efforts to get the organization moving in the intended direction until they understand why the strategic course that management has charted is reasonable and beneficial” (2010, p. 71). Although the vision must be clearly understood by all members of the company, they also must understand the company’s current business and purpose.
Devising and implementing a mission statement for the company answers the basic question of why the organization exists and describes the needs the organization was created to fill (Grace, 2003). Suggestions and Recommendations: Create an Effective Vision and Mission Statement. CFS needs to establish clear and effective vision and mission statements for Devil’s Den so that all employees fully grasp why Devil’s Den exists, what future that its employees will make for the company, how their individual contributions will get them there, and why that is important.
Once a vision and mission statement is established, it must then be communicated to all employees. Once it is communicated to all, CFS needs to put business rules in place that will hold all employees accountable for living up to the vision and mission. In doing so, this should deter employee dishonesty and rebuild employee integrity. Issue 2: Devil’s Den does not have established core values. Core values are the beliefs, traits and behavioral norms that employees are expected to display while executing the company’s vision and mission (Thompson et al. , 2010).
These core values should clearly state the expectation of all employees and the company with regard to the conduct of company operations and behavior of company personnel. A company with no values for employees to live by invites them to create their own values and most likely will not be aligned with those of the company. As noted by Mackey, CEO of Whole Foods Market, core values are the soul of the company—these core values are why employees feel excited to work for a company (http://www. wholefoodsmarket. com). Suggestions and Recommendations: Create Company Core Values.
CFS needs to provide core values for all employees so they understand what is important for the company and its employees. Although CFS may have a set of core values in place for CFS, a set of core values tailored specific to the operation of Devil’s Den may need to be developed. Issue 3: Devil’s Den does not have established financial and strategic objectives. Devil’s Den should have near term and long term performance objectives. With no performance objectives in place, employees are not concerned with store sales, or lack thereof, and are not concerned about profitability of the store.
Financial objectives relate the financial performance targets management has established for the company to achieve and strategic objectives relate how a company compares in its market standing, competitiveness in the market, and future business prospects. Suggestions and Recommendations: Develop financial and strategic objectives. Establish a balance scorecard to balance the financial objectives with the strategic objectives. Publish the scorecard so that all employees can see what the objectives are and determine if the company is meeting the objectives.
If it is determined that the objectives are not being met, then the company and employees together can contribute productively to achieve the performance objectives. The scorecard also helps in showing the employees how their work ties back to the overall goal of the store. Issue 4: Devil’s Den experiences a high turn over rate and is not hiring quality employees. There is no sound hiring process in place. Currently, student managers pick people to come work for the company. Because there is not a set of standards that is expected in prospective employees, these employees are not meeting any specific job qualifications.
Additionally, once the employees are hired, there is no incentive for the employees to be productive for the company. The employees are offered a wage a slightly higher than minimum wage and currently the student managers are only paid $. 15 more. As discussed earlier, no performance targets have been established, thus no incentive program exists. Motivating employees through incentives and company culture is one several key elements of cost-efficient management of value chain activities (Thompson et al. , 2010). Incentives encourage greater worker output and could even result in cost-savings ideas as a result from employee suggestions.
Suggestions and Recommendations: Offer performance-based raises and develop an incentive program to all retained and future employees. CFS first needs to decide which employees are worthy of retaining and which should be terminated. Of the ones that are retained, letters of reprimand should be issued to those that were involved in the illegal activity and should be given a clean slate. The store manager that is hired by CFS should conduct all interviews with prospective employees and should make the final determination as to who is hired.
These two recommendations tie into the retention of all future employees. Starting entry level employees at slightly above minimum wage is perfectly acceptable for this type of work. However, Devil’s Den managers should start with a $. 025 raise as part of the promotion to student manager. All employee future raises should be evaluated every six months and should be performance based as discussed in issue three. Action Plan Devil’s Den lacks all the key ingredients required to develop a strategic plan.
Once CFS is able to develop these basic direction-setting tasks for Devil’s Den, they can then execute the strategic plan. CFS may have a vision and mission, but clearly these have not been established for Devil’s Den. The CEO of CFS should develop the vision for Devil’s Den and along with key senior management at CFS, develop a mission statement. The Den’s vision and mission need to be clearly communicated to the Den’s managers and ensure that these managers understand the CEO’s vision for the future of Devil’s Den and understand what the company’s current business and purpose is.
It is imperative that all managers not only understand the vision and mission, but must also enforce it. Managers will work with the employees so they also understand the company’s vision and mission and give them a sense of purpose. As noted by Thompson et al. , most companies identify four to eight core values to emphasize the expectation that these values are reflected in the conduct of the company and behavior of the employees (2010). CFS needs to develop core values that incorporate valuing the employees, the customer, integrity, and the service it provides to the school and its students.
These core values should be discussed with all employees and CFS should solicit input from the employees in structuring the details of each of these values and modify them as required through experience and operation. It is apparent that CFS does not have a good situational awareness on the financial status and operations at Devil’s Den. CFS needs to conduct a financial and accounting audit on Devil’s Den to realize actual business situation and its financial posture. Once this is clearly understood, CFS can then establish financial and strategic objectives.
CFS should establish a balanced scorecard in order to balance the financial objectives with the strategic objectives. CFS can then use this balance score card to develop and evaluate performance targets; this way, all employees can determine if they are exceeding expectations, are on track, or following below their performance targets. These financial and strategic objectives, along with the vision and mission statements and the core values, should be placed in Devil’s Den such that they are visible to all employees.
All managers should meet monthly with the store manager to assess if the Den is meeting the objectives and, as necessary, assign corrective actions. Similarly, this type of monthly meeting should be conducted with the employees—led by the student managers of each shift. CFS will need to terminate employees that willfully and knowingly conducted illegal activities. This may mean that there is not enough workers to staff the Den and may result in shutting down business until Devil’s Den is adequately staffed with quality employees.
CFS needs to provide training to the store manger on the expectations and qualifications of prospective employees. Of the student managers that are retained, give them a $. 025 raise above what they currently earn. For all employees that remain, CFS needs to explain to its employees the incentive package that it develops. Conclusion Susan has legitimate concerns about the current operations at Devil’s Den. Although she is concerned about her future with the company because of her intent to blow the whistle, she must inform CFS of what is occurring.
Like any good manger, she must be part of the solution, not part of the problem. She should identify the key issues that the company faces and provide her recommendations on how the company should move forward to recover. In the beginning, Devil’s Den could take on more financial loss due to temporarily ceasing business at the store, but CFS will quickly realize that in the long run, Devil’s Den will be more profitable and stable than it currently is. References Grace, K. S. 2003). The Nonprofit board’s role in setting and advancing the mission. Boardsouce. org. Retrieved on October 11, 2011 from http://www. boardsource. org/Knowledge. asp? ID=3. 56 Mackey, J. Values overview. Wholefoodsmarket. com website. Retrieved October 10, 2011 from http://www. wholefoodsmarket. com/company/corevalues. php Thompson, A. A. , Peteraf, M. A. , Gamble, J. E. , Stickland, A. J. (2010). Crafting and executing strategy. New York, NY: McGraw-Hill/Irwin Companies.