Case Study Ob - Domino's Pizza (job Satisfaction)

Meishkafadiah Alkaff Mohammad Fardani Dzulhikam Sandy Renaldy Permada Wirapranata

• • • •

• • • •

Type :Public (NYSE: DPZ) Founded :1960 Headquarters Ann Arbor, Michigan Key people : Tom Monaghan, Founder David Brandon, Chairman & CEO Industry Restaurants Products Pizza  · sandwiches  · pasta  · chicken wings · desserts Revenue ▲ $1.462 billion USD (2007) Employees 145,000 Website www.dominos.com

• Low Pay • Part Time • Closely Supervised • “High Turnover” • In the case of Domino’s Pizza – Multitasking

• Main Problems – Domino’s is Facing employee high employee turn over rate • Store Manager leave every 3 – 6 months • Lower level employee turnover rate 300 %

– Company Policies avoid increasing basic wage • How they Handle the Problems – Recruit better store manager by implementing new test – Improving employee skills by training the weak points

• How they Handle the Problems (Cont.) – Providing facilities for store to see their records – Better financial incentive – Better improvement training

• Why is Domino’s Facing High Turnover Rate ? • What is the Impact of high turnover rate to Domino’s • Is it really effective not to increase the basic wage oppositely like starbucks does? • What is really needed to reduce employee turnover rate?

• Compatibility with they work reviewed from their basic education, interest, experience, compensation and any others. • The Amount of salary and fringe benefits with any others benefit (career, training & management development) • Relationship between human either vertical and horizontal (superior treatment and relationship with subordinate and colleagues).

• Low Pay (obvious) • Lack of relationship between boss and worker. • Mean colleague + boring days • Lack of leadership element (note that store manager leave ever 3-6 months) • Main Problems is : “Store Manager”

• Opportunitis to get employee who’s have better experience and ability • Company can employ new employee who’s got new idea’s yang memiliki ide-ide baru which can create inovation in exist governace work • Can decrease the average of employee work period which can reduce the cost of salary that must be paid. • Can give a chance to talented and high performance. • If the employee who’s quit the job has a poor performance or employee of a gadfly for the same team working in the organization

• Employee Repo cost • Learning cost • What they out for worker are more less than they get from new worker. • Level accident new employees, usually tend to be higher • There is a production that has lost during turnover • Production equipment that cannot full operate • A lot of waste because of the new employees

Impact On Domino’s • It’s cost money to recruit, hire, and train people, and undercuts service when inexperienced employees don’t work as efficiently • The Financial Cost is estimated as : – $20.000 for each store manager leave – $2.500 for each hourly worker leave

• Distinct characteristic of fast food business were, high dependable on low-paid workers. Small problem could trigger worker to seek another job in another company. • Some company using approach of giving high initial salary.

• Domino using different approach, where they didn’t raise salary • They believe working environment and quality of store manager play important role in turnover rate • They believe when store manager position turnover is high, it will has ripple effect to the layer below

• So they try to focus on recruit high quality store managers • Domino’s is selectively hiring store managers, train them, and motivating them with rewards • They coach and demand store managers to create better working environment

– Recruit Better Store Manager – Give Store Manager Better Tools – More Meaningfully Incentify Store manager

• The Role of a Store Manager : • better working environment • To motivate other workers or subordinate • Increase job involvement among workers

• The Role of a Store Manager : • To create better working environment • To motivate other workers or subordinate • To Increase job involvement among workers

• Dimension • 1. Extraversion : Outgoing, talkative, sociable, assertive • 2. Agreeableness : Trusting, good‐ natured, cooperative, softhearted • 3. Emotional Stability : Dependable, responsible, achievement oriented, persistent • 4. Emotional : Stability Relaxed, secure, unworried • 5. Openness to Experience : Intellectual, imaginative, curious, broad‐minded

• Recruitment – Managerial and Financial Skill is needed – People Management

• Development – To enhance managers weakness which assessed during recruiting process – Continuous Development guided by franchise owner or headquarters

Supporting Tools for Manager • Managers need to be equipped and weaponized with better tools to provide easier managerial handling on their subordinate • The weapon include : – – – –

Better IT system Better FAQ system Better managerial control system Better business process/operational efficiency

Supporting Tools for Manager • • • •

Computerized Tracking System FAQ Management Domino’s Pulse System Domino’s Next Generation Store System • New Domino Next Generation Store System developed by Microsoft

Key Benefit of The system • Total cost of ownership. The solution is designed to lower the total cost of ownership by delivering superior price performance and reducing administration cost • Lower Risks. The solution is designed to help address industry mandates and avoid unnecessary risk and related costs • Security. The solution is designed to minimize risks, Microsoft is optimizing and better securing solutions that reduce complexity while supporting rigorous service levels. The solution also monitors fraudulent activity

Sustainable Incentive Programs • formal scheme used to promote or encourage specific actions or behavior by worker. • The scientific literature also refers to this concept as Pay for Performance. • Domino’s is using the concept of sustainable incentive to improve worker’s job involvement

Incentive program Type – – – –

of Incentive : Employee Incentive Consumer Incentive Dealer / Channel Incentive Sales Incentive

Type – – –

of Reward : Cash Reward Non Cash Reward Non Monetary Reward

Rewards for Managers & Employee • Employee Stock Option Plans Company introduced program that grants stock options to about 15% of store managers based on criteria such as sales growth and customer services

• Suggestion Rewards : – – – – –

A simple ‘Thank You’ appreciation of good work Treat your employee with respects Start birthday program Have employee field trips Casual lunch with staff

• The result is significant: employee turnover rate declined to 107%. • Far below previous, and average industry

• In case you haven’t figure it out : IT IS GROWING

Framework • How they handle the problems – Recruit Better Store Manager • Explain the importance of store manager • Role model of store managers

– Give Store Manager Better Tools • What effective tools • How can the Tools Help

– More Meaningfully Incentify Store manager • Stock Option etc.