Reference no: EM131373906

Perfect Pizzeria
Perfect Pizzeria in Southville, a town in southern Illinois, is the secondlargest franchise of the chain in the United States. The headquarters is locted in Phoenix, Arizona. Although the business is prospering, it has employee and managerial problems. Each operation has one manager, an assistant manager, and from two to five night managers. The managers of each pizzeria work under an area supervisor. There are no systematic criteria for being a manager or becoming a manager trainee. The franchise has no formalized training period for the manager. No college education is required. The managers for whom the case observer worked during a 4-year period were relatively young (ages 24 to 27), and only one had completed college.

They came from the ranks of night managers, assistant managers, or both. The night managers were chosen for their ability to perform the duties of the regular employees. The assistant managers worked a 2-hour shift during the lunch period 5 days per week to gain knowledge about bookkeeping and management. Those becoming managers remained at that level unless they expressed interest in investing in the business. The employees were mostly college students, with a few high-school students performing the less challenging jobs. Because Perfect Pizzeria was located in an area with few job opportunities, it had a relatively easy task of filling its employee quotas.

All the employees, with the exception of the manager, were employed part time. Consequently, they worked for less than the minimum wage. The Perfect Pizzeria system is devised so that food and beverage costs and profits are set up according to a percentage. If the percentage of food unsold or damaged in any way is very low, the manager gets a bonus. If the percentage is high, the manager does not receive a bonus; rather, he or she receives only his or her normal salary. There are many ways in which the percentage can fluctuate.

Because the manager cannot be in the store 24 hours per day, some employees make up for their paychecks by helping themselves to the food. When a friend comes in to order a pizza, extra ingredients are put on the friend's pizza. Occasional nibbles by 18 to 20 employees throughout the day at the meal table also raise the percentage figure. An occasional bucket of sauce may be spilled or a pizza accidentally burned. Sometimes the wrong size of pizza may be made. In the event of an employee mistake or a pizza burned by the oven operator, the expense is supposed to come from the individual.

Because of peer pressure, the night manager seldom writes up a bill for the erring employee. Instead, the establishment takes the loss and the error goes unnoticed until the end of the month, when the inventory is taken. That's when the manager finds out that the percentage is high and that there will be no bonus. In the present instance, the manager took retaliatory measures. Previously, each employee had been entitled to a free pizza and salad, and all the soft drinks he or she could drink for every 6 hours of work. The manager raised this figure from 6 to 12 hours of work. However, the employees had received these 6-hour benefits for a long time. Therefore, they simply took advantage of the situation whenever the manager or the assistant was not in the building.

Though the night manager theoretically had complete control of the operation in the evenings, he did not command the respect that the manager or assistant manager did. This was because he received the same pay as the regular employees, he could not reprimand other employees, and he was basically the same age as or younger than the other employees. Thus, apathy grew within the pizzeria. There seemed to be a further separation between the manager and the workers, who had started out as a closely knit group. The manager made no attempt to alleviate the problem because he felt it would iron itself out. Either the employees who were dissatisfied would quit or they would be content to put up with the new regulations.

As it turned out, there was a rash of employee dismissals. The manager had no problem filling the vacancies with new workers, but the loss of key personnel was costly to the business. With the large turnover, the manager found that he had to spend more time in the building, supervising and sometimes taking the place of inexperienced workers. This was in direct violation of the franchise regulation, which stated that a manager would act as a supervisor and at no time take part in the actual food preparation. Employees could not be strictly supervised if the manager was working alongside them. The operation no longer worked smoothly because of differences between the remaining experienced workers and the manager concerning the way a particular function should be performed.

Within a 2-month period, the manager was again free to go back to his office and leave his subordinates in charge of the entire operation. During this 2-month period, the percentage had returned to the previous low level and the manager had received a bonus each month. The manager felt that his problems had been resolved and that conditions would remain good because the new personnel had been properly trained. It didn't take long for the new employees to become influenced by the other employees. Immediately after the manager had returned to his supervisory role, the percentage began to rise. This time the manager took a bolder step. He cut out any benefits that the employees had-no free pizzas, salads, or drinks. With the job market at an even lower ebb than usual, most employees were forced to stay. The appointment of a new area supervisor made it impossible for the manager to "work behind the counter," because the supervisor was centrally located in Southville.

The manager tried still another approach to alleviate the rising percentage problem and maintain his bonus. He placed a notice on the bulletin board, stating that if the percentage remained at a high level, a lie-detector test would be given to all employees. All those found guilty of taking or purposefully wasting food or drinks would be immediately terminated. This did not have the desired effect on the employees, because they knew if they were all subjected to the test, all would be found guilty and the manager would have to dismiss all of them. This would leave him in a worse situation than ever. Even before the following month's percentage was calculated, the manager knew it would be high. He had evidently received information from one of the night managers about the employees' feelings toward the notice. What he did not expect was that the percentage would reach an all-time high. That is the state of affairs at the present time.

QUESTIONS FOR DISCUSSION
1. How would you characterize the compensation plan for managers and student workers at Perfect Pizzeria? Would you want to work there?

2. What kinds of group dynamics are at work at Perfect Pizzeria during the case?

3. What do you think of the manager's at tempts to solve the problems at Perfect Pizzeria? What would you suggest he do instead?