How large would you estimate the implied costs of fluctuations and other personnel-related issues? How would you address the difficulties of the employees (if at all)? Which programs would you implement? What would you do exactly and how? Estimate the cost implications of your planned programs/actions! Make assumptions and justify them! How would the operating profit/net income/EPS/etc. change? This case was researched byDavid Bollier and writtenby Laura Pochop, underthe supervision ofKathleen A. Meyer,executive director of TheBusiness Enterprise Trust.DONNA KLEIN ANDMARRIOTT INTERNATIONAL (A)One morning in early 1993, Donna Klein struggled to containher surprise and dismay at the report that had landed on her desk.As Director of Marriott International's Work-Life Program, Klein hadinstituted a number of child-care resource and referral programs thatwere producing admirable results - she thought. Klein was in charge ofa small group within Marriott's Human Resources department thatserved as consultants in helping Marriott managers best serve the needsof its Associates (employees). Klein had always viewed Marriott as an"employer of choice" in regards to benefits and respect for line workers.But the report that the Human Resources department had recentlycommissioned revealed a much less optimistic picture. The dependentcare resource and referral program that Klein had established was allbut ignored by Marriott's hourly workers, who made up more than three-quarters of the company's 180,000 person payroll. Usage data revealedthat fewer than .5 percent of hourly employees used the service. Theselower-wage Associates, who earned an average of $7.00 an hour, rarelycould afford the child care programs that Human Resourcesrecommended. Instead, they relied on friends, family members andolder siblings to take care of their small children, and missed work whentheir patchwork system failed.Klein's reports also revealed that the lower-wage workers weredepending on Marriott property managers for assistance with even moreserious and distracting personal issues: domestic abuse, lawsuits,immigration, homelessness, family finances and more. Some propertymanagers reported spending upwards of 50 percent of their time ontheir efforts to serve as "makeshift social workers" for their hourlyemployees. Klein recognized immediately that thiswas a very costly and inefficient solution - for themanagers and the lower-wage Associates. She alsoknew that the problems caused by these workers'personal issues, such as turnover, absenteeism,worker disputes and tardiness, threatened the highstandards of service that were Marriott'scompetitive advantage in the ultimate of serviceindustries. Klein knew that she and her group mustdevise a solution that would assist hourly workers.What's more, she needed to "sell" the solution tothe property managers who ultimately would haveto pay for any new employee benefit programs.Marriott InternationalBegun by J.W. Marriott in 1927 as a chain of rootbeer stands, Marriott International had grown toan enormous service-industry conglomerate(Exhibit 1: Marriott's 1993 income statement). Bythe early 1990s, the corporation operated threeseparate chains of hotels aimed at upscale businesstravelers, mid-range tourists and budget mindedtravelers. In 1994, Marriott operated nearly 4,000properties in all 50 United States and in 23 foreigncountries. It also owned Host International, thelargest airport concession operator, as well as fastfood chains, school cafeteria contractors and anational hotel management company.Workers in the Service IndustryService industries such as hospitality, restaurantand retail depended on large numbers of primarilyunskilled workers. Hotels, particularly, relied onhuge numbers of housekeepers, food servicepersonnel, customer service representatives andmaintenance workers who were generally paid nearthe minimum wage and provided with onlyrudimentary benefits. Turnover in these jobs washigh, and employers often complained about thelack of work skills these entry-level employeesbrought to the job market.Many of the workers in this wage class wererecent immigrants who brought to the job theirdifficulties with the language and customs of theUnited States. Marriott supervisors often werecalled upon to help workers navigate thecomplicated social service system set up to assistimmigrants. Other workers, while native-born, hadlimited formal education and struggled to providethemselves and family members with stablehousing and basic needs. Many were single parents.Nearly all felt the necessity to seek employment atthe highest possible wage they could attain, so theywould often leave a job with no notice if a higherpaying opportunity presented itself.The Consequences of Low-Wage EmploymentAs Donna Klein investigated the situation further,the stories of Marriott Associates she interviewedconvinced her to become their advocate:"I was so amazed at the stories they weretelling me, stories that should have beenintuitively obvious. Single mothers werecoming to work and leaving their childrenhome alone because they had no choice. Alot of sibling care issues.... eight year oldsJustcaring for four year olds.heartbreaking stuff. These were goodpeople who wanted to work, who wantedto perform, but, because of lifecircumstances, had difficulty doing it. Theywere making a tradeoff between taking careof their children and being loyal to the job.I was really moved by the stories I heard.[I talked to a] single mother who... was socommitted to her job, she took two busrides and a subway trip to leave herdaughter with a relative on Mondaymornings. But because of her evening workhours, she could not pick up her baby atnight and bring her home via mass transit,so she picked her daughter up Fridayevenings.You hear so many people talk about [lower-wage workers] being lazy, and not caring.It's just not true." Searching for a SolutionMulling over the report on her desk, Donna Kleinreflected that its contents, combined with theanecdotal information she had gathered fromtalking to Marriott's hourly employees andproperty managers, meant that the dependent carereferral program Marriott had established, whilewell received by professional employees, was allbut meaningless to the majority of its workforce."The data...explained to me why lower-wage workers weren't using [the resourceand referral service]. They had many moreissues that were more fundamental to theirdaily life... whether or not they could paytheir utility bills, whether or not they werebeing evicted from their home orapartment, why they were being evicted,whether or not they were able to pay forgroceries and handle their mother'sfuneral... countless daily kinds ofchallenges... The understanding of theimportance of, for instance, quality childcare, was not 'on the screen.' It became veryclear that in order to really support ourworking families we needed to be veryholistic about our response. So ourresponse and solution needed to be verycomprehensive and it needed to addressthe whole person or the whole family.We also recognized that based on theeducation level, the language difficulties,and the hours of work of the hourlypopulation, that we needed to havesomething that was extremely user-friendly, extremely easy to understand andsomething confidential."Klein insisted that she and her department finda solution. But how could one company tackle theenormous problems of lower-income workers?What could Marriott do to serve the highlyindividualized needs of thousands of employeeswho worked at thousands of widespreadproperties? And in the end, how would sheconvince senior management, and eventuallyproperty managers, that this was a problem worthinvesting in?CONSOLIDATED STATEMENT OF INCOMEMarriott International, Inc. and SubsidiariesFiscal years ended December 31, 1993, January 1, 1993 and January 3, 1992SalesLodgingRoomsFood and beverageOtherContract ServicesOperating Costs and ExpensesLodgingDepartmental direct costsRoomsFood and beverageOther operating expenses, including remittances to hotel ownersContract ServicesOperating ProfitLodgingContract ServicesOperating profit before corporate expenses and interestCorporate expenses, including restructuring charges of $5 million in 1992Interest expenseInterest incomeIncome before Income Taxes and Cumulative Effect of a Changein Accounting PrincipleProvision for income taxesIncome before Cumulative Effect of a Changein Accounting PrincipleCumulative effect of a change in accounting for income taxesNet IncomeEarnings Per Share:Income before cumulative effect of achange in accounting for income taxesCumulative effect of a change in accounting for income taxesNet income1993$2,4911,0635664,1203,3107,4305848142,4723,8703,2047,074250106356(63)(27)9275116159(33)$1261992(in millions, except per share amounts)$ 1.26(.26)$ 1.00$2,3151,0234793,8173,1546,9715467822,2533,5813,0646,64523690326(67)(25)3237103134$ 1341991$2,2081,0174493,6743,0336,7075097722,1603,4412,9446,38523389322(72)(24)423097133$ 133

Question

How large would you estimate the implied costs of fluctuations and other personnel-related issues? How would you address the difficulties of the employees (if at all)? Which programs would you implement? What would you do exactly and how? Estimate the cost implications of your planned programs/actions! Make assumptions and justify them! How would the operating profit/net income/EPS/etc. change? This case was researched byDavid Bollier and writtenby Laura Pochop, underthe supervision ofKathleen A. Meyer,executive director of TheBusiness Enterprise Trust.DONNA KLEIN ANDMARRIOTT INTERNATIONAL (A)One morning in early 1993, Donna Klein struggled to containher surprise and dismay at the report that had landed on her desk.As Director of Marriott International's Work-Life Program, Klein hadinstituted a number of child-care resource and referral programs thatwere producing admirable results - she thought. Klein was in charge ofa small group within Marriott's Human Resources department thatserved as consultants in helping Marriott managers best serve the needsof its Associates (employees). Klein had always viewed Marriott as an&#34;employer of choice&#34; in regards to benefits and respect for line workers.But the report that the Human Resources department had recentlycommissioned revealed a much less optimistic picture. The dependentcare resource and referral program that Klein had established was allbut ignored by Marriott's hourly workers, who made up more than three-quarters of the company's 180,000 person payroll. Usage data revealedthat fewer than .5 percent of hourly employees used the service. Theselower-wage Associates, who earned an average of $7.00 an hour, rarelycould afford the child care programs that Human Resourcesrecommended. Instead, they relied on friends, family members andolder siblings to take care of their small children, and missed work whentheir patchwork system failed.Klein's reports also revealed that the lower-wage workers weredepending on Marriott property managers for assistance with even moreserious and distracting personal issues: domestic abuse, lawsuits,immigration, homelessness, family finances and more. Some propertymanagers reported spending upwards of 50 percent of their time ontheir efforts to serve as &#34;makeshift social workers&#34; for their hourlyemployees. Klein recognized immediately that thiswas a very costly and inefficient solution - for themanagers and the lower-wage Associates. She alsoknew that the problems caused by these workers'personal issues, such as turnover, absenteeism,worker disputes and tardiness, threatened the highstandards of service that were Marriott'scompetitive advantage in the ultimate of serviceindustries. Klein knew that she and her group mustdevise a solution that would assist hourly workers.What's more, she needed to &#34;sell&#34; the solution tothe property managers who ultimately would haveto pay for any new employee benefit programs.Marriott InternationalBegun by J.W. Marriott in 1927 as a chain of rootbeer stands, Marriott International had grown toan enormous service-industry conglomerate(Exhibit 1: Marriott's 1993 income statement). Bythe early 1990s, the corporation operated threeseparate chains of hotels aimed at upscale businesstravelers, mid-range tourists and budget mindedtravelers. In 1994, Marriott operated nearly 4,000properties in all 50 United States and in 23 foreigncountries. It also owned Host International, thelargest airport concession operator, as well as fastfood chains, school cafeteria contractors and anational hotel management company.Workers in the Service IndustryService industries such as hospitality, restaurantand retail depended on large numbers of primarilyunskilled workers. Hotels, particularly, relied onhuge numbers of housekeepers, food servicepersonnel, customer service representatives andmaintenance workers who were generally paid nearthe minimum wage and provided with onlyrudimentary benefits. Turnover in these jobs washigh, and employers often complained about thelack of work skills these entry-level employeesbrought to the job market.Many of the workers in this wage class wererecent immigrants who brought to the job theirdifficulties with the language and customs of theUnited States. Marriott supervisors often werecalled upon to help workers navigate thecomplicated social service system set up to assistimmigrants. Other workers, while native-born, hadlimited formal education and struggled to providethemselves and family members with stablehousing and basic needs. Many were single parents.Nearly all felt the necessity to seek employment atthe highest possible wage they could attain, so theywould often leave a job with no notice if a higherpaying opportunity presented itself.The Consequences of Low-Wage EmploymentAs Donna Klein investigated the situation further,the stories of Marriott Associates she interviewedconvinced her to become their advocate:&#34;I was so amazed at the stories they weretelling me, stories that should have beenintuitively obvious. Single mothers werecoming to work and leaving their childrenhome alone because they had no choice. Alot of sibling care issues.... eight year oldsJustcaring for four year olds.heartbreaking stuff. These were goodpeople who wanted to work, who wantedto perform, but, because of lifecircumstances, had difficulty doing it. Theywere making a tradeoff between taking careof their children and being loyal to the job.I was really moved by the stories I heard.[I talked to a] single mother who... was socommitted to her job, she took two busrides and a subway trip to leave herdaughter with a relative on Mondaymornings. But because of her evening workhours, she could not pick up her baby atnight and bring her home via mass transit,so she picked her daughter up Fridayevenings.You hear so many people talk about [lower-wage workers] being lazy, and not caring.It's just not true.&#34; Searching for a SolutionMulling over the report on her desk, Donna Kleinreflected that its contents, combined with theanecdotal information she had gathered fromtalking to Marriott's hourly employees andproperty managers, meant that the dependent carereferral program Marriott had established, whilewell received by professional employees, was allbut meaningless to the majority of its workforce.&#34;The data...explained to me why lower-wage workers weren't using [the resourceand referral service]. They had many moreissues that were more fundamental to theirdaily life... whether or not they could paytheir utility bills, whether or not they werebeing evicted from their home orapartment, why they were being evicted,whether or not they were able to pay forgroceries and handle their mother'sfuneral... countless daily kinds ofchallenges... The understanding of theimportance of, for instance, quality childcare, was not 'on the screen.' It became veryclear that in order to really support ourworking families we needed to be veryholistic about our response. So ourresponse and solution needed to be verycomprehensive and it needed to addressthe whole person or the whole family.We also recognized that based on theeducation level, the language difficulties,and the hours of work of the hourlypopulation, that we needed to havesomething that was extremely user-friendly, extremely easy to understand andsomething confidential.&#34;Klein insisted that she and her department finda solution. But how could one company tackle theenormous problems of lower-income workers?What could Marriott do to serve the highlyindividualized needs of thousands of employeeswho worked at thousands of widespreadproperties? And in the end, how would sheconvince senior management, and eventuallyproperty managers, that this was a problem worthinvesting in?CONSOLIDATED STATEMENT OF INCOMEMarriott International, Inc. and SubsidiariesFiscal years ended December 31, 1993, January 1, 1993 and January 3, 1992SalesLodgingRoomsFood and beverageOtherContract ServicesOperating Costs and ExpensesLodgingDepartmental direct costsRoomsFood and beverageOther operating expenses, including remittances to hotel ownersContract ServicesOperating ProfitLodgingContract ServicesOperating profit before corporate expenses and interestCorporate expenses, including restructuring charges of $5 million in 1992Interest expenseInterest incomeIncome before Income Taxes and Cumulative Effect of a Changein Accounting PrincipleProvision for income taxesIncome before Cumulative Effect of a Changein Accounting PrincipleCumulative effect of a change in accounting for income taxesNet IncomeEarnings Per Share:Income before cumulative effect of achange in accounting for income taxesCumulative effect of a change in accounting for income taxesNet income1993$2,4911,0635664,1203,3107,4305848142,4723,8703,2047,074250106356(63)(27)9275116159(33)$1261992(in millions, except per share amounts)$ 1.26(.26)$ 1.00$2,3151,0234793,8173,1546,9715467822,2533,5813,0646,64523690326(67)(25)3237103134$ 1341991$2,2081,0174493,6743,0336,7075097722,1603,4412,9446,38523389322(72)(24)423097133$ 133

Accepted Answer

Note: The answer has been provided in a generalized manner.The Marriott International case…