(SOLVED) Case Study Zhang’s pizza

Mr. Zhang was brought up in Malaysia, and basically always wanted to he in the pizza store business. As a youngster, he would sometimes spend hours at the local pizza store. watching the owner knead the pizza dough, flatten it into a large circular crust, fling it up, and then spread on tomato sauce in larger and larger loops. After graduating from college as a marketing major, he made a beeline back to Malaysia, where he opened his first Zheng’s Pizza store, emphasizing its clean, bright interior; its crisp green, red, and white sign; and his all-natural, fresh ingredients. Within five years. Zhang’s store was a success, and he had opened three other stores and was considering franchising his concept. Eager as he was to expand, his four years in business school had taught him the difference between being an entrepreneur and being a manager. As an entrepreneur! small business owner, he knew he had the distinct advantage of being able to personally run the whole operation himself. 1With just one store and a handful of employees, he could make every decision and watch the cash register, check in the new supplies. oversee the takeout, and personally supervise the service. ‘ When he expanded to three stores. things started getting challenging. He hired managers hot the two new stores (both of whom had worked for him at his first store for several years) and gave them only minimal “how to run a store"—type training, on the assumption that, having worked with him for several years, they already knew pretty much everything they needed to know about running a store. However, he was already experiencing human resource management problems, and he knew there was no way he could expand the number of stores he owned, or (certainly) contemplate franchising his idea, unless he had a system in place that he could clone in each new store to provide the managers (or the franchisees) with the necessary management knowledge and expertise to run their stores. Zhang had no training program in place for teaching his store managers how to run their stores. He simply (erroneously, as it turned out) assumed that by working with him they would learn how to do things on – the job. Since Zhang had no system in place, the new managers were, in a way,’ starting off below zero when it cameto how to manage a store. Show less

There were several issues that particularly concerned Zhang. Finding and hiring good employees was number one. He’d read the new National Small Business Poll from the National Federation of Independent Business Education Foundation. It found that 71% of small business owners believed that finding qualified employees was "hard." Furthermore, "the search for qualified employees will grow more difficult as demographic and education factors" continue to make it more difficult to find employees. Similarly, reading the Kiplinger Letter one day, he noticed that just about every type of business couldn’t find enough good employees to hire. Small firms were particularly in jeopardy; the Letter said that giant firms can outsource many (particularly entry-level) jobs abroad, and larger companies can also afford to pay better benefits and to train their employees. Small firms rarely have the resources or the economies of scale to allow outsourcing or to install the big training programs that would enable them to take untrained new employees and turn them into skilled ones. Show less

Although finding enough employees was his biggest problem, finding enough honest ones scared him even more. Zhang recalled from one of his business schools’ courses that companies in the United States are losing a total of well over $400 billion a year in employee thefl. As a rough approximation, that works out to about $9 per employee per day and about $12,000 lost annually for a typical company. Furthermore, it was small companies like Zhang’s that were particularly in the crosshairs, because companies with fewer than 100 employees are particularly prone to employee theft. Why are small firms particularly vulnerable? Perhaps they lack experience dealing with the problem. More importantly, small firms are more likely to have a single person doing several jobs, such as ordering supplies and paying 1he delivery person. This undercuts the checks and balances managers often strive for to control theft. Furthermore, the risk of stealing goes up dramatically when the business is largely based on cash. In a pizza store, many people come in and buy just one or two slices and a cola for lunch, and almost all pay with cash, not credit cards. Zhang was not just worried about someone stealing cash. They can steal your whole business idea, something he learned from palnfiil experience. He had been planning to open a store in what. he thought would be a particularly good location and was thinking of having one of his current employees manage the store. Instead, it turned out that this employee was, in a manner of speaking, stealing Zhang’s brain: what Zhang knew about customers, suppliers, where to buy pizza dough, where to buy tomato sauce, how much everything should cost, how to furnish the store, where to buy ovens, store layout—everything. This employee soon quit and opened up his own pizza store, not far from where Zhsng had planned to open his new store. That he was having trouble hiring good employees, there was no doubt. The restaurant business is particularly brutal when it comes to turnover. Many restaurants turn over their employees at a rate of 200% to 300% per yearwso every year, each position might have a series of two to three employees filling it. As Zhang said. “I was losing two to three employees a month,” adding, “We’re a high-volume store, and while we should have about six employees per store {to fill all the hours in a week}, we were down to only three or four, so my managers and I were really under the gun.” The problem was bad at the hourly employee level: “We were churning a lot at the hourly level,” said Zheng. “Applicants would come in, my managers or I would hire them and not spend much time training them, and the good one: would leave in frustration after a few weeks, while ofien it was the bad ones who’d stay behind." But in the last two years, Zhang’s three company-owned stores also went through a total of three store managers—Whey were just blowing through the door,” as Zhang not it, Show less

in part because, without good employees, their workday was brutal. As a rule, when a small business owner or manager can’t find enough employees (or an employee doesn’t show up for work), about 80% of the time the owner or manager does the job himself or herself. So, these managers often ended up working seven days a week, 10 to 12 hours a day, and many just burned out in the end. One night, working three jobs himself with customers leaving in anger, Zhang decided he’d never just hire someone because he was desperate again, but would start doing his hiring more rationally. Zhang knew he should have a more formal screening process. As he said, "If there’s been a lesson learned, it’s much better to spend time up front screening out candidates who don’t fit than to hire them and have to put up with their ineffectiveness." He also Show less

knew that he could identify many of the traits that his employees needed. For example, he knew that not everyone has the temperament to be a waiter (he has 1 small pizzafltalian restaurant in the back of his main store). As Zhang said, “I’ve seer personalities that were off the charts in mertiveness or overly introverted, traits that obviously don’t make a good fit for a waiter or waitress.” As a local business, Zhang recruits by placing help wanted ads in two loca newspapers, and he’s been "shocked” at some of the responses and experiences he’: had in response to the ads. Many of the applicants lefi voicernail messages (El-sang or the other workers in the store were too busy to answer), and some applicants Zhang “just axed" on the assumption that people without good telephone manners wooldn" have very good manners in the store, either. He also quickly learned that he had tr throw out a very wide net, even if hiring only one or two people. Many people, a. noted, he eliminated fi’om consideration because of the messages they left, and abou’ half the people he scheduled to come in for interviews didn’t show up. He’d taker courses in human resource management, so {as he said) “I should know hener,” but in hired people based almost exclusively on a single interview {he occasionally made I feeble attempt to check references}. In total, his HR approach was obviously no working. It wash ‘t producing enough good recruits, and the people he did hire wen often problematic. What was he looking for? Service-oriented courteous people, 2531′ one. For example he’d hired one employee who used profanity several times, including once in front 0: a customer. On that employee’s third day, Zhang had to tell her, “I think Zhang’s isn" the right place for you,” and he fired her. As Zhang said, “I felt bad, but also keen that everything I have is on the line for this business, so I wasn’t going to let anyon: run this business down." Zhang wants reliable people (who’ll shew up on time) honest people, and people who are flexible about switching jobs and hours a: requiled. He calls his management style “trust and track.” “i coach them and 3th them goals, and then carefully track results.” Zhang’s Pizza business has only the most rudimentary human resource managemem system. Zhang bought several application forms at a local Office Depot, and rural) uses other forms of any sort. He uses his personal accountant for reviewing tht company’s books. and Zhang himselfcomputes each employee’s paycheck at the ent’ of the week and writes the checks. Training is entirely on- the-job Zhang personally trained each of his employees For those employees who go on to be store managers he assumes that they are training their own employees the way that Zhang trainer them (for better or worse. as it turns out}. Zhaurt Dave "a bit above” prevailing wag: Show less

rates (judging by other help wanted ads), but probably not enough to make a significant difference in the quality of employees whom he attracts. If you asked Zhang what his reputation is as an employer, Zhang, being a candid and forthright person, would probably tell you that he is a supportive but hard-nosed employer who treats people fairly, but whose business reputation may suffer from disorganization stemming from inadequate organization and training. He approaches you to ask you several questions. Show less