Compile a summary of learning from the The Tanglewood Casebook (cases 2,3,6, and 7) Must be at least 2.5 – 3 page double spaced pages of comments. ? TANGLEWOOD CASEBOOK for use with STAFFING ORGANIZATIONS ? ? 7th Ed. Kammeyer-Mueller TANGLEWOOD CASEBOOK To accompany Staffing Organizations, seventh edition, 2012. Prepared by John Kammeyer-Mueller Warrington College of Business University of Florida Gainesville, Florida Telephone: 352-392-0108 E-mail: [email protected] Copyright ©2012 Mendota House, Inc. Herbert G. Heneman III President Telephone: 608-233-4417 E-mail: [email protected] INTRODUCTION TO THE CASE CONCEPT Rationale for the Tanglewood Case Many of the most important lessons in business education involve learning how to place academic concepts in a work setting. For applied topics, like staffing, learning how concepts are applied in the world of work also allow us see how the course is relevant to our own lives. The use of these cases will serve as a bridge between the major themes in the textbook Staffing Organizations and the problems faced by managers on a daily basis. The Tanglewood case is closely intertwined with textbook concepts. Most assignments in the case require reference to specific tables and examples in the book. After completing these cases, you will be much more able to understand and apply the material in the textbook. With this in mind, it should be noted that the cases are designed to correspond with the types of information found in work environments. This means that for many important decisions, the right answers will not always be easy to detect, there will be more than one correct solution, and often the very information that would make decisions easy is missing. Remember that ambiguity in any case corresponds to reality; although it may be frustrating at first, you should remember that business problems are themselves often confusing and require important judgment calls that don’t have any single “right” answer. Successful Case Performance Successful case performance involves several key concepts. Each case should be prepared in the form of a report to be given to the top management team at Tanglewood department stores. The following guidelines for successful case performance are useful for checking your work: 1. Is the report easy to read? a. Correct grammatical errors and eliminate confusing sentences. b. Break the text into subheadings so it is easy for the reader to find relevant information. c. Explain your statistics in a way that an intelligent reader who is not familiar with them could understand what is being reported. d. Present tables cleanly with relevant data highlighted for the reader and with minimal extraneous information. e. Explain why you chose to use information and data in the way that you did. 2. Are your final recommendations and answers sensible? a. The final recommendations should be presented in a clear, succinct manner. b. The recommendations should be feasible and directly related to the information provided to the information provided in the case. c. Recommendation should take potential problems into account. CASE ONE: TANGLEWOOD STORES AND STAFFING STRATEGY Case one principles: 1. You will first assess the current operating environment for Tanglewood in terms of it competitors, structure, employees, culture, values, and human resources function. 2. Then you will then develop recommendations for how the organization should staff its operations, focusing on strategic decisions pertaining to staffing levels and quality. Section Objectives The goal of this section is to help you learn more about the basic environmental concerns the Tanglewood Department Store chain is facing. This information will help you to understand how competition, strategy, and culture jointly inform the effective development of a selection plan. Organization Overview and Mission Tanglewood is a chain of general retail stores featuring items such as clothing, appliances, electronics, and home decor. The company operates in the moderate price niche, targeting middle- and upper-income customers. Tanglewood’s strategic distinction is an “outdoors” theme, with a large camping and outdoor living section in every store. The store also distinguishes itself by its simple, elegant, and uncluttered design concepts for the store and their in-house products. The company’s mission statement is: Tanglewood will be the best department store for customers seeking quality, durability, and value for all aspects of their active lives. We are committed as a company to providing maximum value to our customers, shareholders, and employees. We will accomplish this goal by adhering to the core values of responsible financial management, clear and honest communication, and always keeping performance and customer service in the forefront. Tanglewood was originally founded in 1975 by best friends Tanner Emerson and Thurston Wood. The initial concept was a single store in Spokane Washington, named TannerWood, which sold a combination of outdoor clothing and equipment that the pair had designed themselves. The employee handbook notes that, “Tanner and Thurston financed their early store plans with credit cards and personal loans from friends and family. They had so little money that they slept in sleeping bags in the back room and put every penny they made back into the stores.” The first store’s unique merchandise offering and personable sales staff made them successful quite rapidly, allowing Emerson and Wood to move out of the back room and add several more stores during the late 1970’s. The merchandise offerings expanded over time to incorporate more conventional retail items, while still retaining the elegant, yet outdoors look for the stores overall. Emerson and Wood eventually decided to rename their store chain Tanglewood in 1984. Much more rapid growth began around this time. As Emerson put it, “we worried for a long time that expanding would compromise our vision of a small, personable shopping experience. We had always wanted to run the type of store that we would love to work and shop at. Around 1984, after we had 10 stores, we realized we had developed a fairly successful blueprint for running stores with a strong base of employee participation, customer satisfaction, and profitability. So we decided to spread out to cover the northwest.” During the 1990’s the expansion strategy really took root. Most of the expansion occurred by purchasing other existing stores rather than building new stores. Emerson and Wood had been heavily involved in the management of the stores, but found that increasingly the corporate administration was a more pressing concern. The company arrived at a regional structure for its operations. Emerson and Wood took on the positions of CEO and President of the company, respectively, while a team of regional managers more directly oversee day to day operations. The company currently has a total of 243 stores open in the states of Washington, Oregon, Northern California, Idaho, Montana, Wyoming, Colorado, Utah, Nevada, New Mexico, and Arizona. Prior to any further expansion, however, the company needs to consolidate its current management strategy. The process of growth has been very quick in the last 5 years, and has involved buyouts of several smaller chains of department stores. While all the stores under the Tanglewood name have the same basic look, the management styles and human resource (HR) practices still reflect the historical differences between stores. Wood noted in a recent interview with Business Monthly, “Tanglewood really needs to slow down and take a hard look at our corporate culture. Right now, we need to consolidate and make sure we’re as close to the company’s original mission as we can be. Our success is due entirely to our strong culture—this is something we need to hold on to.” These concerns have lead Tanglewood to bring in external human resources consultants like you to help centralize the organization’s practices. Another major concern for Tanglewood has been the westward expansion of companies like Kohl’s and Target. The possibility of more direct competition has lead Tanglewood to critically examine their HR policies and practices. For staffing, in particular, the organization feels there absolutely must be a workforce of committed, qualified individuals who will help carry the Tanglewood philosophy into the future. Competition and Industry The Tanglewood Department Store chain operates in the nondurable general retail industry, which fits into industry 45211 as classified by the North American Industry Classification System (NAICS). This industry engages in the sale of consumer goods including clothing, small appliances, electronics, and other housewares. The retail industry accounts for over $4 trillion in annual sales. Recent estimates indicate that the retail industry employs approximately 15 million people. A comparison of several top retail stores is presented below. The operating revenues indicate total sales for these organizations, and the compound growth rate tracks changes in the sales for each retail chain. The financials show that Tanglewood is a moderately sized organization with strong growth potential. Operating Revenues (in millions) Revenue Growth (1 yr) Employment (in 1,000s) Employment Growth (1 yr) Number of Stores Dillard’s 6,250 0.4% 41 -5.81% 310 J.C. Penny 17,759 1.2% 154 4.80% 1,100 Kohl’s 9,120 4.8% 133 2.26% 1,050 Macy’s 25,003 6.4% 161 -3.59% 850 REI 1,460 2.1% 10 0.00% 110 Sears Holding Corp. 43,426 -1.6% 312 -3.11% 3,900 Tanglewood 7,200 4.2% 53 3.75% 243 Target 67,390 3.10% 351 1.14% 1,750 WalMart 421,849 3.30% 2,100 0.00% 8,400 Profit ratios PM (%) ROA (%) ROE (%) Dillard’s 2.87% 4.72% 8.18% J.C. Penny 2.19% 4.06% 7.38% Kohl’s 6.06% 8.95% 13.96% Macy’s 3.39% 5.72% 16.56% REI 1.82% 2.85% 5.66% Sears Holding Corp. 0.31% 1.43% 1.66% Tanglewood 3.54% 5.36% 14.97% Target 4.33% 7.44% 18.94% WalMart 3.89% 9.09% 22.03% All three profit ratio figures indicate corporate profitability. PM is profit margin = (net income for the past year)/(revenue) ROA is return on assets = (net income for the past year) / (average assets) ROE is return on equity = (net income for the past year) / (shareholder equity) Competitive Response and Strategy The company’s specific niche is similar to that occupied by Kohl’s or Target, appealing to middle- and upper-income consumers looking for convenience and reasonable prices. This means that Tanglewood uses a layout and provides the same products offered of general merchandise retailers. Tanglewood also focuses on stocking quality products, providing customer service, and a more designer appearance than discount stores. This strategy is further supplemented by the company’s trademark “look” which involves an outdoors theme, complete with real wood décor and use of natural colors. Like its competitors, Tanglewood has developed several proprietary brands of merchandise which are designed to complement its look. While the actual products are made by subcontractors, Emerson and Wood have personal responsibility for all products that are produced. Their own brands include Burford Kitchen, which includes wood-accented, rustic, sturdy kitchen utensils, and Wilderness Outfitter clothing and camping goods lines. The stores also have emphasized small home electronics, housewares, and bedding accessories. Despite the company’s effort to emphasize its western appearance and theme, there is no shortage of high-technology innovations in the way that Tanglewood operates. They have worked hard to ensure that their web portals provide a clear guide to merchandise available in the stores. Through their “County Store” concept they have also made their stores a pick-up location for items ordered online. This allows them to utilize their low-cost shipping arrangements to the benefit of customers. Emerson notes, “We have a lot of consumers in places like rural Idaho, who don’t want to drive an hour to one of our stores and then find out what they wanted isn’t available. The online County Store makes sure that if they want something, we will have it in stock.” In addition, online shoppers who visit bricks-and-mortar locations also often buy other merchandise in the stores. Organizational Structure The structure of most retail stores is relatively similar, and Tanglewood has essentially evolved to have a structure that looks something like the familiar organizational hierarchy. This appearance is deceptive, because employees at all levels of the corporation are encouraged to make suggestions regarding operations. More than one major operational change has come from an employee suggestion. Each store is managed by a single individual who has three assistant store managers working beneath him or her. The Assistant Manager for Softlines is in charge of all areas related to clothing and jewelry. The Assistant Manager for Hardlines is in charge of all non-clothing merchandise, including sporting goods, bath, bedding, and home decor. Another way to think of the distinction is that Softlines consists only of things that are worn, while Hardlines consists of nothing that is worn. The Assistant Manager for Operations and Human Resources is primarily responsible for activities, including security, clerical work, merchandise loading and warehousing, cashiers, and human resources management. Although the Assistant Manager for Operations is technically in charge of the smallest number of employees, this tends to be a more powerful position because it includes more managerial responsibilities, including staffing the store and training new hires. Department managers are in charge of specific product groups such as electronics, women’s clothing, or shoes. For each shift there is also a designated shift leader who completes most of the same tasks as store associates, but also has some administrative responsibility. Overall, with 1 store manager, 3 assistant managers, 17 department managers, approximately 24 shift leaders, and approximately 170 associates, there are around 215 employees per store. All employees, full or part time, are members of the core work force. Tanglewood does not extensively use a flexible workforce, such as temporary employees. A core workforce is viewed as essential for the organizational values and culture, described below, that Tanglewood seeks to develop and maintain. Stores are organized into 12 geographical regions, with approximately 20 stores per region. Each region has a regional manager who oversees operations of the stores. The store managers report directly to the regional managers. There is considerable variation between regional managers in how they run their HR practices. The tendency for some regional managers to encourage human resources practices which are counter to the Tanglewood philosophy is a major reason that an external consulting firm was brought in to centralize human resources. The breakdown of stores and employment by division is as follows: Division Area Covered Stores PCs PCs/S Employees 1 Eastern Washington 25 3,120,000 124,800 5,400 2 Western Washington 25 3,011,000 120,440 5,400 3 Northern Oregon 18 1,850,000 102,778 3,900 4 Southern Oregon 16 1,710,000 106,875 3,400 5 Northern California 23 3,000,000 130,435 4,900 6 Idaho 17 1,366,000 80,353 3,700 7 Montana and Wyoming 18 1,418,000 78,778 3,900 8 Colorado 23 4,550,000 197,826 4,900 9 Utah 19 2,351,000 123,737 4,100 10 Nevada 19 2,241,000 117,947 4,100 11 New Mexico 18 1,875,000 104,167 3,900 12 Arizona 22 5,580,000 253,636 4,700 Total 243 52,300 Note: PCs is the population of the area covered; the abbreviation PC for Tanglewood means “potential customers.” The PCs/S is the number of potential customers per store. Employee figures are rounded to the nearest hundred. Organizational Culture and Values Whereas many elements of the Tanglewood operational plan have been based on other firms within the retail industry, the company’s culture and values are distinct from most of its major competitors. From its inception, this company has emphasized employee participation and teams. At orientation, every employee hears the philosophy that Wood and Emerson proclaimed as their vision for employee relations, “If you tell someone exactly what to do, you’re only getting half an employee. If you give someone the space to make their own decisions, you’re getting a whole person.” Most retail stores have a strict hierarchy with assistant store managers providing directives to their subordinates, and most associates’ primarily follow orders. Tanglewood, on the other hand, has allowed each department manager to formulate distinct methods for running their departments in coordination with the employees they supervise. There is still a well-defined ordering of job responsibilities, but efforts are made to involve employees in the decision process when possible. One of the most important cultural elements of the organization is an emphasis on “straight talk” in all areas of the business. The company provides employees with information on the company’s share price and overall profitability for each quarter, along with other details about company activities. Profit-sharing for all employees is part of the company’s push to encourage employees to think like managers. In addition, mandatory weekly store meetings (one meeting for each shift) give employees a specific time to voice their suggestions for in-store improvements. Associates who make suggestions that are implemented by management receive financial bonuses. Department managers are also given financial incentives for successfully developing and implementing new policies and procedures, further reinforcing the participatory management style of the company. Every shift is run based on a team concept. While the most senior associate is designated as a shift leader, the other members of the team are encouraged to provide ongoing suggestions. All employees share all tasks, so there are no designated “customer contact” or “display” employees. It is also expected that associates will make themselves available to help the other members of the team. Quarterly performance evaluations include several items specifically reflecting the associates’ interactions with other team members and initiative to improve the department. Because of the heavy emphasis on employee suggestions, Tanglewood’s upper managers have ample opportunity to observe the leadership and decision making qualities of their associates. This is one of the main portals through which promotion and advancement are achieved. All new employees without retail experience, even those with college degrees who are targeted as having management potential, spend a period of time working in the store as an associate. This is seen as a way of preserving the company’s unique culture and values over time. Human Resources at Tanglewood The basic structure for human resources at Tanglewood involves both corporate and store-level components. The corporate Staffing Services function, shown above, is a division of the Human Resources Department. The Staffing Services Director supervises three managers (for the areas of retention, recruiting, and selection), plus an Equal Employment Opportunity Coordinator. The corporate Staffing Services function performs data analysis and design of staffing policies and programs. Data regarding recruiting practices, methods for interviewing, testing and selecting employees, and employee turnover are sent from the individual store to the corporate headquarters. At headquarters, the data are collected and statistically analyzed. Based on these analyses, specific recommendations are provided to the stores. For example, after data suggested that newspaper advertising for new recruits was becoming less and less cost effective, all stores were given a strong recommendation to switch to an internet-based strategy. As another example, the employee selection specialists in the corporate staffing function developed a format for interviews that is now used as a part of the hiring process for nearly all stores. Each store is responsible for implementing recommendations provided by corporate. The store operations and human resources manager is responsible for overseeing each store’s staffing, training, performance management, and equal employment opportunity practices. As pertains to staffing, the manager of operations and human resources is responsible for planning, recruitment, and initial screening. Department managers interview finalists, then hiring decisions are made in conjunction with the assistant store managers. Promotion decisions up to the department manager level are made within the stores. Regional managers conduct the hiring for store managers, and work with each store’s managers to determine promotions to the assistant store manager. Historically, the corporate staffing function has not been strong. Because of the participatory philosophy of the stores, the role of corporate HR was primarily to act as an advisor to each regional manager. The company’s plans for expansion have led to a change in this philosophy of late. Emerson’s directive to HR for this year is, “help us to develop a plan, a way of using all our human assets in the service of our philosophy, our customers, and our employees.” As the company expands, the need for a central planning body in staffing is seen as an important way to maintain the distinctive “flavor” of the Tanglewood experience. In addition, the sheer number of stores means that local leadership is becoming inefficient. Centralization will also serve to create staffing operations efficiencies. Your role Your role within Tanglewood is as an external consultant for staffing services. You will report directly to Daryl Perrone, who is the Staffing Services Director, with final oversight for your work coming from Marilyn Gonzalez, who is the Vice President for Human Resources. Both of these individuals were recently hired personally by Emerson and Wood as part of their plan to centralize and improve the human resources function. Perrone has extensive experience in managing staffing for department stores in New Jersey and New York, while Gonzalez has worked in a variety of corporate positions in the Pacific Northwest. The reports that you produce will be given to Perrone and Gonzalez, who will disseminate them throughout the organization. As such, although Perrone, Gonzalez, and other members of the human resources team are generally well versed in the terminology of staffing, the other individuals who read you reports will not be so familiar with the specific staffing terminology. This means that your reports should not contain excessive staffing terminology, and that when you do use specific staffing terms you should provide a brief explanation. Specific Assignment Details In this assignment you will be concentrating on staffing quantity and staffing quality strategies for Tanglewood. To begin the assignment, refer to Exhibit 1.7 in the textbook. You will see that the Exhibit indicates a series of strategic staffing decisions: nine pertaining to staffing levels and four pertaining to staffing quality. Daryl Perrone, the Director of Staffing Services, is interested in your opinions about each of these decisions as each pertains to Tanglewood. Review the textbook material that discusses these thirteen decisions, and the material you have read about Tanglewood. Then consider each of the decisions and briefly indicate which way you think Tanglewood should position itself along the continuum and why. For example, the first decision is to develop or acquire talent. Indicate whether you think it is best for Tanglewood to focus more on acquiring talent internally or externally, and why? Repeat this process for each of the staffing level and staffing quality dimensions. CASE TWO: PLANNING Case requirements: 1. Conduct an analysis of Tanglewood’s staffing data and determine if their current staffing practices are sufficient to meet their ongoing needs, or if there will be problems in adequately staffing the organization in the near future. 2. Recommend how Tanglewood should design its overall staffing mission and strategy based on their upcoming needs. 3. Calculate representation statistics for various jobs within a single Tanglewood department store to determine where the most critical problems exist. 4. Recommend what you would do in light of the information you obtain in the calculation of various demographic statistics both for this specific store and for the chain as a whole. Section Objectives The planning process in staffing involves making forecasts of an organization’s future hiring needs and developing methods the organization can use to meet these needs. The process of planning involves a combination of forecasting labor needs, comparing these needs to the labor availabilities, and determining where gaps exist. After these gaps are identified, general plans for filling these gaps are enacted. Beyond the process of developing objectives for the number of individuals to be hired, planning activities often take the demographic composition of the workforce into consideration. Attending to the demographic breakdown of the workforce is important for a number of reasons. One is to ensure that the company has employees who can understand the perspective of the populations the company serves. The second reason is to minimize concerns about Equal Employment Opportunity violations . For both purposes, the current workforce can be compared to the demographic characteristics of other individuals who work in similar jobs. Planning for the State of Washington: Forecasting Requirements and Availabilities The Staffing Services Director, Daryl Perrone, has requested your assistance in the completion of an HR planning analysis for the 50 stores in two regional divisions in the state of Washington. After these overall goals are developed for the state, the policy will be disseminated across all 50 individual stores. Data from the individual stores will then be sent to the corporate offices for analysis and re-evaluation. The basic model for planning includes (1) forecasting labor requirements, (2) forecasting labor availabilities, (3) conducting environmental scans, (4) determining gaps, and (5) developing action plans. These steps are described in your textbook. Conducting an adequate human resources selection plan will require you to take all of these steps. Historical data from these two divisions have been presented in the transition probability matrix. Information on how to read transition matrices is provided in your textbook. The transition probability matrix was developed based on the historical staffing pattern for Washington over the past five years. A first stage of investigating staffing is to use the previous years’ staffing patterns as a preliminary forecast of labor requirements, the internal availability based on retention, internal promotions, transfers and demotions, and a determination of gaps by subtracting forecasted availabilities from future requirements. Table 1.1 Markov Analysis Information Transition probability matrix Current year (1) (2) (3) (4) (5) Exit Previous year (1) Store associate 0.53 0.06 0.00 0.00 0.00 0.41 (2) Shift leader 0.00 0.50 0.16 0.00 0.00 0.34 (3) Department manager 0.00 0.00 0.58 0.12 0.00 0.30 (4) Assistant store manager 0.00 0.00 0.06 0.46 0.08 0.40 (5) Store manager 0.00 0.00 0.00 0.00 0.66 0.34 Forecast of availabilities Next year (projected) (1) (2) (3) (4) (5) Exit Current Workforce Previous year (1) Store associate 8,500 4505 510 0 0 0 3485 (2) Shift leader 1,200 0 (3) Department manager 850 0 (4) Assistant store manager 150 0 (5) Store manager 50 0 Gap analysis Next year (projected) (1) (2) (3) (4) (5) Year end total (column sum) 4505 External hires needed (current workforce-total) 3995 Forecasting Labor Requirements The Washington market is very stable for Tanglewood. Most stores have been in existence for 10 or more years, and were indirectly managed by either Emerson or Wood when they were first established. Because of this stability, the estimate for the coming year’s labor requirements is identical to the current year. So, for example, they currently have 1,200 individuals working as shift leader, and expect to need 1,200 individuals to work as shift leaders for the coming year as well. Forecasting Labor Availabilities One primary source of information for immediate labor availability at Tanglewood is their internal labor market. Table 1.1 shows that Tanglewood has used internal promotions to fill many openings for the department manager, assistant store manager, and store manager positions. For example, it is projected that 16% of shift leaders will be promoted to the rank of department manager, 12% of department managers will be promoted to be assistant store managers, and 8% of assistant store managers will be promoted to be store managers. However, it also appears that there will need to be considerable external hiring as well, since only 46%-66% of employees stay in the same position over a one year period. To estimate a labor forecast, the proportion (percentage) of individuals for the next year is multiplied by the current workforce number. For the shift leader, there are 1,200 individuals in the position, of which, 50% will remain for the next year. This means that the projected availability is 1,200 × 50% = 600. Similarly, 16% of the shift leaders will be promoted to be department managers, so 1,200 × 16% = 192. Conducting Environmental Scans The environment for staffing managerial employees at Tanglewood in the state of Washington is fairly complex. Externally, there is a consistent supply of qualified individuals in the urban markets of Seattle and Spokane. Individuals from these urban areas often are transferred to small towns as they move up the promotion chain. However, retail is often seen as an undesirable market for recent college graduates. Many know of retail work experience, and see it (partially correctly) as requiring long hours, low pay, and frequent conflict with lower-level employees. While these factors lessen as individuals move up the hierarchy, many individuals are reluctant to put in several years in the shift leader and department manager positions to be promoted. The labor market in the Pacific Northwest has been relatively “soft” in recent years, meaning that unemployment rates are high and it is usually difficult for individuals to find new jobs. This weakness in the labor market has made it somewhat easier for Tanglewood to find new candidates for the managerial positions, but recent forecasts suggest that expansion in the professional and managerial sectors of the labor market may reduce the number of individuals available for these jobs. Internally, Tanglewood has relied on its experienced employees as a major source of talent. As noted earlier, the company promotes extensively from within. As a result, managerial employees often have significant experience with the company’s social environment and culture. This internal staffing strategy is seen as a real strength for the company, because the possibility of being promoted is believed to increase retention of lower level employees. Determining Gaps The current focus of staffing is to fill the vacant positions, although the organization would like to take steps to reduce the turnover rate for many of these jobs as well. During the planning phase targets are set for the number of individuals who need to be hired. The process of turning these estimates into actual employees will be covered in the recruiting phase. There are 1,200 shift leaders currently, so if 600 individuals stay, Tanglewood will need to hire 600 more. The calculation of gaps is demonstrated in Exhibit 3.9 in the textbook; refer to this when you are determining gaps for Tanglewood. Developing Action Plans Having developed a picture of the number of individuals Tanglewood will need to fill their positions in the coming year, there are several important decisions to be made regarding how to fill these gaps. The company’s philosophy for filling vacancies is a combination of tactics. Tanglewood has one managerial track that promotes sales associates to be shift leaders, then promotes shift leaders to be department managers, and so on up the managerial hierarchy. An alternative managerial track is bringing in either recent college graduates or individuals who have extensive experience in another store chain directly into the assistant store managerial position. Regardless of where employees come from, the corporate staffing function endorses a strong commitment to developing long-range relationships with its workers. Many employees initially have difficulty adapting to the unique culture of Tanglewood, so the company is not happy to see experienced employees who have been socialized leave. There are also concerns that having too many employees come and go will dilute the company’s strong culture. There are reasons why the company may consider alternative perspectives on the employment relationship in the near future. First, fluctuations in the economy have meant that the company carries excess employees during some periods of the year, and has a deficit of employees during other periods. There is some seasonal hiring for store associates (e.g., hiring temporary employees for the holiday season in December), but the managerial workforce numbers are typically fixed. Second, to preserve the company’s culture, some have suggested having all new managerial employees spend at least a little time in the Washington stores to get a sense of how the stores originally worked. These assignments would be short term in nature and would probably require a more contingent outlook for the employees they supervise. Representation Concerns for the Flagship Store in Spokane The problem of selection planning is made considerably more complex because of Equal Employment Opportunity (EEO) requirements that fall on organizations that do business with the federal government. Because several Tanglewood locations are near military bases or government offices which have expense accounts for general merchandise items at Tanglewood, all staffing must be done consistent with the OFCCP affirmative action requirements. In the current case, Tanglewood needs to use information from their staffing records to examine whether the company has a disparity in outcomes for different groups of employees. When the proportion of protected classes being hired or currently employed falls below the proportion in the labor market, this may indicate intentional or unintentional discrimination in hiring and promotions that will need to be addressed through affirmative action planning. There are also growing concerns within the organization that a combination of rapid growth and high turnover threaten to create real problems in terms of the demographic breakdown of employees at the organization. Acting as part of a team of staffing professionals, you have been asked to analyze the hiring and promotion activities of Tanglewood as they relate to the issue of disparate impact. The first level of disparate impact analyses for the purposes of OFCCP reporting and affirmative action planning are always done at the establishment level. An establishment, for Tanglewood, is a single store. This analysis will concern the corporate flagship store in Spokane, Washington. This is the largest location within the Tanglewood chain and serves as an example for all other locations. The store has approximately 75% more employees than an average location, making for a total of 30 department managers, 42 shift leaders, and 300 store associates. There are five assistant store managers and one store manager. The primary concern for representation data is in the groups of department managers, shift leaders, and store associates. To assess the problem of discrimination, data from the previous year’s employees stocks in Spokane were assembled. The data on the next page are broken into two tables. The first shows the company’s current employee availability data, and the second provides a template for comparing incumbency to availability. Analyzing utilization of protected classes from the labor market requires comparing the availability of protected classes (i.e., the proportion of the available work force who are members of protected classes) to the utilization of protected classes (i.e., the proportion of those hired or employed who are members of protected classes) for each job. You can find additional information on this topic in your textbook. In a stock analysis, data from the Census are used to determine how many people in a certain region are available to do the job (including those currently employed in similar jobs). The census data for the current analysis comes from the Bureau of the Census EEO data tool (http://www.census.gov/eeo2000/index.html), which was specifically designed by the government for the purpose of conducting EEO analyses. The appropriate data can be found through the following steps: 1) Go to the website above 2) Indicate that you want data from census occupation codes and click “next” 3) Indicate that you want data for metropolitan areas and click “next” 4) Indicate that you want data for Spokane, WA and click “next” 5) Find the appropriate occupation codes as described below, and “Show Detailed Race/Ethnicity Categories” 6) The appropriate table should be displayed. Store associates and shift leaders are considered for the present analysis, as retail salespersons, while department managers are direct supervisors of retail salespersons. The Procedure for Developing an Affirmative Action Plan Tanglewood’s internal staffing policy as recently articulated from central management is to retain as close a correspondence between their current representation and the available workforce. The primary goal for this year is to focus attention on achieving better numbers for gender representation, but they would like to examine other demographic groups in the future. The source for the external data in all cases is from the Census data described earlier. The source for internal data is the current workforce of the flagship store. To determine the availability for each job category, the raw statistics for percentage of female and minority employees are multiplied by the value weight, and then these weighted statistics are added together within each job category. Table 1.2 Determining Availability Raw Statistics Value weight Weighted Statistics Female Minority Female Minority Store associates External 53.1% 7.9% 100% 53.1% 7.9% Shift Internal 44.3% 6.7% 92.4% 41.0% 6.2% Leaders External 53.1% 7.9% 7.6% 4.0% 0.6% Total 45.0% 6.8% Department Internal 31.0% 4.8% 65.7% 20.4% 3.2% Manager External 39.4% 6.7% 34.3% 13.5% 2.3% Total 33.9% 5.5% The availability data are taken from Table 1.2 and then used for determining if some demographic groups are underrepresented in the workforce of the flagship store, and also for developing placement goals. A shortage exists if there is a discrepancy between the current workforce and the available workforce as calculated by the ratio of the current workforce divided by the current workforce. As shown in Exhibit 3.18 in your textbook, if the incumbency percent is below 80%, the organization will want to establish a goal of moving their demographic representation in line with the available workforce. To estimate this proportion, the incumbency for females is divided by the availability for females, and the incumbency for minorities is divided by the availability for minorities. Table 1.3 Comparing Incumbency to Availability and Annual Placement Goals Female Incumbency Female Availability Incumbency percent? Establish goal? If Yes, Goal for Females Minority Incumbency Minority Availability Incumbency percent? Establish goal? If Yes, Goal for Minorities Store associates 41.6% 53.1% 78.3% Set goal 53.1 5.2% 7.9% 65.8% No goal 6.7% Shift leaders 37.0% 45.0% 82.0% No goal 4.8% 6.8% 70.6% Set goal 6.8% Department manager 24.3% 33.9% 71.7% Set goal 33.9% 5.0% 5.5% 90.9% No goal Specific Assignment Details For the store manager group, you will analyze the information and prepare a report showing the results of the Markov analysis and the EEO investigation. The Director asked you to address these questions in your written report: 1. Currently the organization expects that their forecast for labor requirements is essentially constant from the previous year. Based on this assumption complete the five stages of the planning process: a. Currently the organization expects that their forecast for labor requirements is essentially constant from the previous year. This means the forecast for next year will be taken as given. b. Fill in the empty cells in the forecast of labor availabilities in Table 1.1. c. Conduct an environmental scan. Based on the environmental data, what factors in the environment suggest Tanglewood might have difficulty filling their vacancies in the future? d. Compute year end totals for each job in Table 1.1 and do a gap analysis to determine where shortages will occur in the next year. e. Develop a preliminary statement of the action plan for hiring for Washington next year. This should be an overview of the number of individuals needed to meet projected staffing levels for various positions that can be given to store managers. Make sure that your recommendations take the strategic staffing levels issues from the introductory case into account. 2. Examine the percentages of employee representation across demographic categories for Tanglewood and the available labor market for Table 1.3. Are there any particular classes or jobs where the representation within Tanglewood appears to be out of line with the available workforce? What does the pattern suggest to you? 3. Based on your analysis and the affirmative action plan, do you think the company should engage in a specific strategy to change their recruiting and promotion practices? Do you think it is realistic for the company to try to meet their affirmative action goals in this process in a single year? What are the pros and cons of using internal promotions vs. external hiring to rectify the problems with gender and ethnicity representation in supervisory positions? 4. In addition to the specific targets for employee representation for the Spokane flagship location, Tanglewood wants to use this opportunity to establish estimates for the entire chain’s staffing policy regarding demographic representation of the workforce. How do you think individual stores can respond to overarching organizational objectives? Prepare a memo to be disseminated to the individual stores that gives a sense of your targets for the organization as a whole, and also gives the stores advice on how they can assist in narrowing any representation gaps you find through their recruiting, hiring, and promotion practices. CASE THREE: RECRUITING Case requirements: 1. Generate a recruiting guide for the store associate job. 2. Describe the relative advantages of open versus targeted recruiting for Tanglewood. 3. Evaluate data related to Tanglewood’s historical recruiting methods to determine the effectiveness for each method. 4. Using the information obtained from steps one and two, provide recommendations for how Tanglewood should recruit employees in the future. Case Objectives Recruiting is the first stage in which organizational plans for staffing come into contact with the labor market for employees. Before making any new recruiting effort, an organization needs to carefully consider the methods available and balance out the costs of each method with the organization’s needs. The recruiting case provides an opportunity to see how staffing managers develop plans for recruiting efforts. You will develop a recruiting strategy and a recruiting guide for the store associate job. The case also demonstrates how you can use organizational data to determine what the best methods for recruiting are. Finally, you will have an opportunity to develop various forms of recruiting messages that will encourage individuals to apply for jobs as sales associates at Tanglewood. Primary Concerns Regarding Recruiting Like any retail organization, there is a constant need for new employees at Tanglewood because of turnover. In a typical year, approximately 50% of the sales associates will turnover. The process of recruiting is therefore of great concern for managers in the field. However, up to this point, the organization has not had any centralized method for recruiting new employees. As part of the consolidation across stores, Tanglewood is now encouraging a systematic review of their recruiting policies that will ultimately result in a better recruiting system for store associates. Staffing services has made very few decisions regarding how recruiting should proceed. Each store has been encouraged to ensure that their recruiting methods attract a culturally diverse group of applicants. Beyond this general directive from the corporate offices, however, there is not very much direction for stores regarding how they should be recruiting new store associates. Regional managers occasionally discuss ideas for how to recruit new employees, but as you will see, they have some very distinct methods for recruiting in practice. Methods of Recruiting Available There are five primary methods of recruiting store associates used at Tanglewood in Washington and Oregon. For additional information regarding these sources of recruiting check your textbook, where advantages and disadvantages of each method are described in greater detail. Media The most traditional method for recruiting used by Tanglewood is media advertising, such as print, radio, and television advertising sources, coupled with respondents filling out a standardized job application. This process is accessible through either the internet or an automated telephone application process. This allows interested individuals to apply without actually having to go into the stores. Paper applications are still available at stores. Media expenses are a combination of initially setting up a contact with a media outlet, developing an advertisement, and the price of processing materials and interviews for each applicant. Referrals Employees are encouraged to refer their friends to apply for work at Tanglewood as well. The referral process is enhanced by providing current employees with $100 for each friend they refer who is hired. Referral expenses are a combination of creating and maintaining records, the price of processing materials and interviews for each applicant, and the payment for each individual who is hired. Kiosk An alternative method of recruiting that minimizes processing costs is to have a computerized kiosk in the main entrance to the stores. The kiosks look somewhat like ATM machines, and feature a fully functioning keyboard and touch-screens. Unlike media advertisements and internet applications (which are limited by the speed of internet connections and the fact that not all potential applicants have ready internet access), the kiosks provide opportunities for applicants to watch short videos explaining what the job entails. Because the entire application process is completed electronically and scored automatically, there is no material cost, although there is still an initial processing and interview cost. Each kiosk costs approximately $40,000. State Job Services In urban markets with higher pools of availability of unemployed individuals, state job services have also been used occasionally to find new applicants. The employment service is provided with a set of qualifications required for work, and the employment services agency assists in providing initial screening and hiring recommendations. Training is partially subsidized through tax incentives. In areas which have less centralized population, the job service option is less feasible. Essentially, the cost of the job service is for creating and maintaining an initial contact, with other costs being roughly half of those for traditional media sites. Staffing Agency One method that has been explored recently is the use of an external staffing agency. Essentially, this is outsourcing the actual selection of candidates to StoreStaff, which is a large organization that specializes in locating workers for the retail industry. Many organizations use StoreStaff to find temporary employees, or provide trial employment to StoreStaff employees as part of a temporary-to-permanent arrangement, but for Tanglewood, individuals recruited through StoreStaff are directly hired as part of the core workforce. Because StoreStaff provides some training to their pool of candidates, they are less expensive to train, but the overhead costs of providing money to StoreStaff for locating and screening these candidates does make this method quite costly. The Situation at Tanglewood – Four Regions, Four Recruitment Policies As noted in the introduction, decision making for staffing activities has recently become centralized within the staffing services division. A major question that arises as a result of this consolidation is how to determine which HR policies should be left in the hands of each individual location, and how much should be taken over by corporate HR. The recruiting function is of particular interest since there is such wide dispersion in how individuals are recruited. Data is available from the divisions in the form of numerical estimates of costs per individual processed, employee retention, performance on a pre-hire work-sample test which is given to all employees, and some informal interview data. Tanglewood Department stores were first established in the western area of Washington and then moved southwards into Oregon, then spread eastwards into the Rocky Mountain States. Many of the policies implemented in the Western Washington locations were applied directly in the Rocky Mountain States. However, because the initial expansion was less well-coordinated, there is substantial variety in the staffing policies being followed in the stores in Washington and Oregon. Western Washington (Region 1) It has historically been the largest and most profitable area, with a total of 25 stores in the region centered around Seattle. In fitting with the organization’s founding philosophy, the stores in Western Washington are run largely autonomously. The current head of the Western Washington division advocates a philosophy of individual autonomy and empowerment. Generally this division has been viewed as highly committed to the core corporate culture, although this passion for the mission has sometimes meant paying less attention to careful management of financial concerns. Because of its size and the large amounts of financial resources available, leadership of this division has been one of the most powerful positions within the organization. Western Washington uses a variety of recruiting methods. The primary methods of recruiting are referrals from current employees. In the Seattle area, the division also makes heavy use of job services. Over time traditional media methods of recruiting have been reduced, but are still used occasionally. Finally, to fill in those positions that are not met with the other three methods, the kiosk method is used. Eastern Washington (Region 2) This was where the company began. The split of Washington into Eastern and Western divisions came early in the store’s history, but their physical proximity and high overlap between management across the areas has lead to very similar management styles. The Eastern Washington division is approximately the same size as Western Washington, with 25 total stores. However, with the exception of the area around Spokane, the majority of this area is much more rural. To a large extent, the Eastern Washington division pioneered all the policies used by Western Washington, although the overall policies have been tempered by geographical differences. The job service method has not been successfully implemented on a wide scale. Instead of using this method, this division uses more traditional media advertising. Northern Oregon (Region 3) Unlike Western Washington, there is a very different philosophy of operations in Northern Oregon. Northern Oregon has been run very “professionally” for years, with most decisions carefully weighted against their financial consequences. Administrative decision making is hierarchical, with specific tasks assigned at each level of the organization’s structure. The current top administrator for this area, Steven McDougal, has a reputation for being a technocrat, and has largely worked to maintain the system he inherited when he first took over five years ago. There are 18 stores in this region. The recruiting methods of the Northern Oregon division fall into three major categories. The main methods are media and in-store kiosks. This division has also used staffing agencies lately. The division explicitly rejects the use of employee referrals, claiming that the use of signing bonuses leads to the hiring of unqualified individuals who are selected without sufficient qualifications due to favoritism. Southern Oregon (Region 4) Southern Oregon is unique among the areas within the Pacific Northwest in that it has remained relatively small, with only 16 stores in the division mostly concentrated in the Eugene area. However, there is also a growing push to increase concentration in Southern Oregon as a first step to establishing more stores in Northern California. This area is very innovative across the board in its human resources practices. The innovative character of Southern Oregon is reflected in their recruiting practices. They have relied primarily on a combination of staffing agencies, referrals, and kiosk advertising. All three of these methods were first tried in this region. Quantitative data Data are available from the four divisions of the organization on the number of individuals who applied for work, the number of individuals who are qualified for the position, the number who actually receive job offers and accept them, and the number of number of individuals who remain with the organization at the 6 and 12 month point after hire. Complete data on the recruiting yields for the four divisions is contained in Appendix B. Table 2.1 Estimated costs for recruiting methods Fixed costs Media Referrals Kiosk Job service Agency Cost of setup (per site) $ 20,000.00 $ 30,000.00 $ 20,000.00 $ 40,000.00 $ 70,000 Variable costs Materials cost per applicant $ 5.00 $ 10.00 $ 1.00 $ 5.00 $ 10 Processing cost per applicant $ 30.00 $ 30.00 $ 15.00 $ 15.00 $ 30 Additional pre-hire costs $ 20.00 $ 200.00 $ 20.00 $ - $ 20.00 Orientation and training $ 2,000.00 $ 2,000.00 $ 2,000.00 $ 1,000 $ 1,000.00 Another Angle on Recruitment: Manager Focus Groups As part of the information gathering process, large scale focus groups have been conducted with department managers. Tanglewood contacted a market research firm to conduct the focus groups, and Tanglewood provided a detailed summary of the major findings. While managers differed considerably in their perceptions of the effectiveness of the different methods, their core concerns were generally quite similar, and can be grouped into four major categories: 1. The most pressing concern for many managers is reducing employee turnover. Although Tanglewood has typical retention rates for a retail chain, the importance of culture and cooperation in the Tanglewood philosophy means that new employees often are not fully integrated into the company’s culture until several months have passed. In short, typical retail turnover is not acceptable for Tanglewood. This is seen as an especially dangerous situation as the company expands, since it threatens to undermine the unique elements of the company’s approach to retail. 2. There is an excessive lag between the initial contact between many applicants and the actual hiring decision, leading many qualified individuals to drop out of the process. A few managers have suggested that finding a way to concentrate on methods that do not have this problem would be beneficial. The issue of lags in initial contacts and hiring is discussed in your textbook. 3. The recruiting process is administratively cumbersome. Managers want to find ways to reduce the amount of time they have to spend with assessing new candidates. This was partially a point of contention between managers, because some argued that using more computerized applications would be a good idea, while others felt this might give applicants the wrong impression about the organization and its methods. 4. Many new hires without retail work experience do not recognize the importance of positive customer service for sales, and training is often does not solve the problem. Several managers noted that they had discharged new hires for providing inappropriate customer service. A particularly frequent problem is new employees becoming frustrated with customers and refusing to assist them or behaving in a hostile manner. Some managers specifically suggested that new employees needed a more realistic introduction to the difficulties of the customer service role. Other managers suggest that a more positive message would be helpful, since it will draw in more qualified individuals. 5. Many managers also report that they would like to see messages more specifically targeted to the types of people who are likely to fit in with the Tanglewood stores culture. Managers note several elements of the organization’s culture (which you read about in the introductory case) that they think should be part of the recruiting strategy. Specific Assignment Details Analyze the information from the recruiting data and prepare a report showing the results of the analysis for your director. 1. Start by developing a recruitment guide like that shown in Exhibit 5.3 in the textbook. Note that the current situation differs from the example provided in the book because there is no specific timeline for hiring; this is a continuous recruiting effort because even as positions are being filled, new positions are becoming available. It is also different because Tanglewood does not have a specific list of minimal educational requirements as qualifications. 2. Describe the best “targets” for your recruiting efforts by considering the job and organizational context. Evaluate the various methods of recruiting in terms of whether they seem more like “open” or “targeted” recruiting, using the information in the book to help you make this decision. If some methods seem more “targeted,” whom do you think they target? 3. For each division use the data tables provided in Appendix B to estimate how each method fares in terms of yields and costs. Provide a one-page summary of the essential results of the various data tables you have been provided. 4. Northern Oregon has suggested that the other divisions of the company use a policy of using kiosks and staffing agencies rather than using the more “touchy-feely” method of relying on referrals. Does this division have a point? What would the effect of other regions increasing their use of external hiring be? 5. Tanglewood’s top management is highly committed to improving customer service quality, and proposes that simply finding the cheapest way to hire is not sufficient. Besides costs and retention, what other measures of employee performance would be good “bottom line” metrics for the quality of a recruiting method? How might the managerial focus groups’ concerns fit with these alternative considerations? 6. The question of realism in the recruitment policy has been raised in focus groups. Write one paragraph proposals for targeted, realistic, and branded recruiting messages for Tanglewood’s customer store associate positions. What are the traditional arguments for and against using realistic recruiting policies? CASE FOUR: MEASUREMENT AND VALIDATION Case requirements: 1. Assess the practical and statistical significance of a proposed set of hiring tools, and make recommendations regarding how adopting these new hiring methods might benefit stores. 2. Make suggestions to Tanglewood regarding which subset of predictors is most likely to improve the effectiveness of selection without creating an administrative burden. 3. Assess the content validity of various proposed selection techniques by determining how well they match the general requirements of the job. 4. Estimate how well the test sample results will generalize to other locations. Case Objectives Once concrete goals for hiring have been established and applicants have been generated, the most important part of the staffing process is developing methods to identify individuals who will be the best performers on the job. Anything that identifies good potential performers is a “predictor.” This includes interviews, standardized tests of knowledge, personality measures, job trials, and so on. Although finding good predictors requires intuition about the job, the organization, and the type of people who are going to apply, demonstrating which predictors are most effective requires clear quantitative skills as well. In this instance, you will review several types of evidence related to predictors and job performance and select a mix of predictors you think will work well. Developing a good selection strategy also means thinking of the process from the applicant’s point of view. The greatest selection system in the world is not effective if it scares the best applicants away. This case is an opportunity to look at the types of measures (found in Appendix C) that are often used in the selection process and determine how applicants might react to them. Hiring for the Store Associate Position Two years ago, Marilyn Gonzalez instigated a thorough assessment of the hiring practices in the Tanglewood stores following complaints from many store managers regarding the quality of employees. Results were not encouraging. The current methods for selection received negative reports from managers. Many have noted that their current employees deliver suboptimal work, fail to appreciate the organization’s culture, and have difficulty working in teams. This sometimes means that they have to fire poor performers, which is not good for morale in a team-based organization. There are few selection methods traditionally used at all Tanglewood stores. The first method for selection is an application blank as shown in Appendix C. Applicants provide some basic information regarding their employment history and education, along with other simple contact information. Ideally, Tanglewood would prefer to contact former employers to get job performance history information, but in practice, very few former employers give much more than dates worked and job titles because of concerns about being sued for disseminating damaging information about their former employees. In practice, then, the only useful information Tanglewood obtains from the application blank is the number of years of work experience a person has and the highest degree they have completed. The process of selection begins when the applicants turn in their application blanks. These forms are reviewed by the Assistant Store Manager for Operations and HR, who will also conduct brief interviews. The initial application interview is generally brief and consists mostly of efforts to confirm and clarify information in the application blank. Those who make it past this stage of the process are termed “candidates.” A more substantial interview occurs with the candidates who are referred to the department manager. There is a relatively loose protocol for how managers should conduct the interviews. Tanglewood provides a list of suggested interview topics, including, “tell me about your previous work performance,” “explain your philosophy of customer service,” and “describe a time when you worked on a team.” Managers are encouraged to develop a warm atmosphere for the interview to send a positive message about the company culture as well. Questions are formalized, although there are no keys for managers regarding what the “right” answers are. The form used for interviews is also supplied in Appendix C. Approximately 30% of candidates who make it to this interview phase go on to become finalists. Final approval for hires also must come from each store’s manager for operations and human resources. The last stage before job offers are provided includes a background check and some paperwork. Ne
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