Question:
“Sara’s Food Services” (Sara’s), is a leading Food Services Provider for the hotel and restaurants high value market, offering high quality food products and services using well-established and local food brands.
Sara’s has been in business for about 15 years and has grown to revenues of $50M annually from a small mom and pop kitchen that Barb and her husband Bob started in Ontario, they now operate their own commercial kitchen and have built successful and productive relationships with local food producers in the that area. Their main products are pies, cakes and pre-made sandwiches and deli items. They are recognized amongst lower mainland hotels and restaurants for consistent quality, value for money and unwavering reliability.
They are a busy affair, with over two thousand food items prepared each day, although in the summer months, November and December, that number can increase by four times. Their very busiest time is just before Mother’s Day, when demand for cakes and pies is huge.
Sara’s Food Services prides itself on its culture of innovation, product quality, customer orientation, employee diversity and most importantly, employee safety. In this competitive culture, Sara’s recognizes that it must maintain a culture that encourages a fresh and competitive approach to providing customers products and services and recognizes that customers are increasingly looking for quality, convenience and value.
The company has been growing successfully from its launch in Ontario, Canada in 2004, when it sold only fresh baked fruit pies to local restaurants. They now have a staff of 45 employees plus an operations manager as well as Barb and Bob who are hands-on managers. Barb holds the official title of President and Bob helps out with operations management. Neither of them has ever had a formal job description or even title for that matter. Everyone just sort of knows their own job as they have grown organically through the years.
Until 2017, the company had always had a flat organization structure with almost all staff reporting to Dan Topaz, the Operations Manager. Dan has been with the Sara’s since its early days and used his giant ledger to keep track of everything, including employee hours and payroll. In 2017, Barb decided they needed some more management, since Dan was complaining that he was being overworked. They always assumed that Dan was ok, since he never grumbled and therefore took immediate action when he voiced his concerns. Now, Dan seemed to be complaining that he didn’t like the new Manager of Payroll, Alice Sprint and the new Customer Service Manager, Tom Chou. Dan thought that Alice and Tom should report directly to him, but they seemed to discuss everything with Barb or the Manager of Accounting, Sally Ring.
Barb and Bob had recently been talking about opening a store front and online store to sell directly to customers, since they were always bombarded with requests. Corporately, Sara’s Food Services was very profitable and was growing at a rate of about 20% per year in revenue. Of the recent $50 million in earnings, about $3 million was for labour, well below the expected $12 million that would be normal in the food industry. Barb attributed this to the low cost of living in Ontario and she and Bob were happy to set aside almost $9 million per year in recent years as profits. “That profit is for all of our hard work, especially in the early years”, she would say.
Recently, Alice had prodded Barb to conduct an employee survey and Barb had hired a company to do one. It was the first ever and Barb was shocked to find such low employee satisfaction. When asked, “How happy are you working at Sara’s”, the mean was 2 out of 5, where 5 was “very happy” and 1 was “extremely unhappy”. Forty employees had answered the survey and Barb was dismayed that so many employees would be unhappy working at Sara’s. She had always left matters in Dan’s hands and assumed that since production was good, that employees must be happy. With no major health and safety incidents and profits that kept rolling in, Barb assumed the company was being well-managed. It was important to her that employees be satisfied and enjoy working at Sara’s.
At the commercial kitchen, the majority of positions were food handling positions and utility staff for preparation and clean-up. There were two supervisors for these positions and also two customer sales positions in addition to Dan and Sally and now the two new managers. At the moment, all food handling and preparation staff are paid $14.00 per hour with modest benefits of about 12% of salary. The supervisors earn $16.50 per hour. The Managers earn about $65,000 per year, plus benefits and the sales people earn $40,000 per year, plus benefits. Typical employee turnover is 25%, and the average age of employees is nearing 45 years of age. Sara’s has a large pool of on-call employees, mainly university students, but the pool has been dwindling in recent years and sometimes it is difficult to hire enough additional food handling staff in the busy months.
“It was time for a meeting”, thought Barb. She assembled the manager team, the supervisors and Bob for a Saturday morning breakfast meeting.
“Look Team”, she began, “Some of us have been here for decades and others for months, but I know that we all believe in innovation, product quality, customer service, employee diversity and employee safety. Our customers count on our quality, value and reliability. Recently, I have come to understand that many of our employees are not happy to work here. We need to find balance between our profits and employee needs. I need your help to fix this.” Barb explained that she would be hiring an HRM Consulting team to come up with a plan that takes into account the need for expansion and growth as well as a turnaround of employee satisfaction.
She has set aside a substantial budget to even increase wages if needed. She wants realistic, cost effective and sustainable solutions that would allow Sara’s to be an employer of choice in the coming years. The company has previously considered automation as well as outsourcing and may consider those again, should they be viable strategies to ensure a successful future. The consulting team is to also recommend an organizational structure that supports production operations at all levels and the culture needs of the organization.
Critical Thinking Questions:
1. The organization structure and how it supports the culture at Sara’s Food Services. This should include a discussion of whether a job analysis or job re-design should be considered for any of key positions.
2. The approximate number of employees to be hired in the coming year, including any new positions, as well as strategies that will be used to attract, recruit, select and retain high performers.
3. A discussion of the general HRM needs of the organization and who will be responsible for the HR function in the coming year.
4. An explanation of how employee satisfaction could be improved, including the role of training and compensation as a strategic incentive.
5. An explanation of how these strategies will support the cultural and diversity needs at Sara’s Food Services and position the company for future success.
