Identify ten (10) HR elements in the case – These HR elements refer to any HR
concepts, theories, terms, topics etc that you can identify. Each HR element must contain a direct reference
from the case (using quotation marks) that relate to that HR element.
Transcribed Image Text:Within 5 years, Paolo's store was a success, and he had opened three other stores and was considering franchising his concept. Eager as he was to expand, his 4 years in business school had taught him the difference between being an entrepreneur and being a manager. As an entrepreneur/ small-business owner, he knew he had the distinct advantage of being able to personally run the whole operation himself. With just one store and a handful of employees, he could make every decision and watch the cash register, check in the new supplies, oversee the takeout, and personally supervise the service. When he expanded to three stores, things started getting challenging. He hired managers for the two new stores (both of whom had worked for him at his first store for several years) and gave them only minimal "how to run a store" type training, on the assumption that, having worked with him for several years, they already knew pretty much everything they needed to know about running a store. However, he was already experiencing human resource management problems, and he knew there was no way he could expand the number of stores he owned, or (certainly) contemplate franchising his idea, unless he had systems in place to address these problems. There were several issues that particularly concerned Paolo. He'd read the new National Small Business Poll from the National Federation of Independent Business Education Foundation. It found that 71% of small-business owners believed that finding qualified employees was "hard." Furthermore, "the search for qualified employees will grow more difficult as demographic and education factors" continue to make it more difficult to find employees. Similarly, reading the Kiplinger Letter one day, he noticed that just about every type of business couldn't find enough good employees to hire. In addition to not finding enough employees, not finding enough honest ones scared him even more. Paolo recalled from one of his business school courses that companies in the United States are losing a total of well over $400 billion annually in employee theft. As a rough approximation, that works out to about $9 per employee per day and about $12,000 a year lost for a typical company. Furthermore, it was small companies like Paolo's that were particularly in the crosshairs, because companies with fewer than 100 employees are particularly prone to employee theft. Why are small firms particularly vulnerable? Perhaps they lack experience dealing with the problem. More importantly: Small firms are more likely to have a single person doing several jobs, such as ordering supplies and paying the delivery person. This undercuts the checks and balances managers often strive for to control theft. Furthermore, the risk of stealing goes up dramatically when the business is largely based on cash. In a pizza store, many people come in and just buy one or two slices and a cola for lunch, and almost all pay with cash, not credit cards. And, Paolo was not just worried about employees stealing cash. They can steal your whole business idea, something he learned from painful experience. He had been planning to open a store in what he thought would be a particularly good location, and was thinking of having one of his current employees manage the store. Instead, it turned out that this employee was, in a matter of speaking, stealing Paolo's brain - what Paolo knew about customers and suppliers, where to buy pizza dough, where to buy tomato sauce, how much everything should cost, how to furnish the store, where to buy ovens, store layout - everything. This employee soon quit and opened up his own pizza store, not far from where Paolo had planned to open his new store. That he was having trouble hiring good employees, there was no doubt. The restaurant business is particularly brutal when it comes to turnover. Many restaurants turn over their employees at a rate of 200% to 300% per year - so every year, each position might have a series of two to three
Transcribed Image Text:employees filling it. As Paolo said, "I was losing two to three employees a month." He also said, "We're a high-volume store, and while we should have [to fill all the hours in a week] about six employees per store, we were down to only three of four, so my managers and I were really under the gun" The problem was bad at the hourly employee level: "We were churning a lot at the hourly level," said Paolo. "Applicants would come in, my managers or I would hire them and not spend much time preparing them for the roles and responsibilities associated with her new position, and the good ones would leave in frustration after a few weeks, while often it was the bad ones who'd stay behind." But in the last 2 years, Paolo's three company-owned stores also went through a total of three store managers - "they were just blowing through the door," as Paolo put it, in part because, without good employees, their workday was brutal. As a rule, when a small-business owner or manager can't find enough employees (or an employee doesn't show up for work), about 80% of the time the owner or manager does the job him or herself. So, these managers often ended up working 7 days a week, 10 to 12 hours a day, and many just burned out in the end. One night, working three jobs himself with customers leaving in anger, Paolo decided he'd never just hire someone because he was desperate again, but would start doing his hiring more rationally. As a local business, Paolo recruits by placing help-wanted ads in two local newspapers, and he's been "shocked" at some of the responses and experiences he's had in response to his help- wanted ads. Many of the applicants left voice mail messages (Paolo or the other workers in the store were too busy to answer), and some applicants Paolo "just axed" on the assumption that people without good telephone manners wouldn't have very good manners in the store, either. He also quickly learned that he had to throw out a very wide net, even if only hiring one or two people. Many people, as noted, he just deleted because of the messages they left, and about half of the people he scheduled to come in for interviews didn't show up. He'd taken courses in human resource management, so (as he said) "I should know better," but he hired people based almost exclusively on a single interview (he occasionally made a feeble attempt to check references). In total, his HR approach was obviously not working. It wasn't producing enough good recruits, and the people he did hire were often problematical. Paolo knew that that he could identify many of the traits that his employees needed. As he said, "It's much better to spend time up-front screening out candidates that don't fit than to hire them and have to put up with their ineffectiveness." For example, he knew that not everyone has the temperament to be a server (he has a small pizza/ Italian restaurant at the back of his main store). As Paolo said, "I've seen personalities that were off the charts in assertiveness or overly introverted, traits that obviously don't make a good fit for a waiter or waitress." What was he looking for? Service-oriented courteous people, for one. For example, he'd hired one employee who used profanity several times, including once in front of a customer. On that employee's third day, Paolo had to tell her, "I think Paolo's isn't the right place for you," and he fired her. As Paolo said, "I felt bad, but also knew that everything I have is on the line for this business, so I wasn't going to let anyone run this business down." Paolo wants reliable people (who'll show up on time), honest people, and people who are flexible about switching jobs and hours as required. Paolo's pizza business has only the most rudimentary human resource management system. Paolo bought several application forms at a local Office Depot, and rarely uses other forms of any sort. He uses his personal accountant for reviewing the company's books, and Paolo himself computes each employee's paycheck at the end of the week and writes the checks. Training is entirely on-the-job. Paolo personally trained each of his employees. For those employees who go on to be store managers, he assumes that they are training their own employees the way Paolo trained them (for better or worse, as it turns out). Paolo pays "a bit above prevailing wage rates (judging by other help-wanted ads), but he thinks it's not enough to make a significant difference in the quality of employees that he attracts. If you asked Paolo what his reputation is as an employer, Paolo, being a candid and forthright person, would probably tell you that he is a supportive but hard-nosed employer who treats people fairly, but whose business reputation may suffer from disorganization stemming from his HR issues. He approaches you to ask for advice.

Question

Identify ten (10) HR elements in the case – These HR elements refer to any HR
concepts, theories, terms, topics etc that you can identify. Each HR element must contain a direct reference
from the case (using quotation marks) that relate to that HR element.

Within 5 years, Paolo's store was a success, and he had opened three other stores and was
considering franchising his concept.
Eager as he was to expand, his 4 years in business school had taught him the difference between
being an entrepreneur and being a manager. As an entrepreneur/ small-business owner, he knew
he had the distinct advantage of being able to personally run the whole operation himself. With
just one store and a handful of employees, he could make every decision and watch the cash
register, check in the new supplies, oversee the takeout, and personally supervise the service.
When he expanded to three stores, things started getting challenging. He hired managers for the
two new stores (both of whom had worked for him at his first store for several years) and gave
them only minimal "how to run a store" type training, on the assumption that, having worked with
him for several years, they already knew pretty much everything they needed to know about
running a store. However, he was already experiencing human resource management problems,
and he knew there was no way he could expand the number of stores he owned, or (certainly)
contemplate franchising his idea, unless he had systems in place to address these problems.
There were several issues that particularly concerned Paolo. He'd read the new National Small
Business Poll from the National Federation of Independent Business Education Foundation. It
found that 71% of small-business owners believed that finding qualified employees was "hard."
Furthermore, "the search for qualified employees will grow more difficult as demographic and
education factors" continue to make it more difficult to find employees. Similarly, reading the
Kiplinger Letter one day, he noticed that just about every type of business couldn't find enough
good employees to hire.
In addition to not finding enough employees, not finding enough honest ones scared him even
more. Paolo recalled from one of his business school courses that companies in the United States
are losing a total of well over $400 billion annually in employee theft. As a rough approximation,
that works out to about $9 per employee per day and about $12,000 a year lost for a typical
company. Furthermore, it was small companies like Paolo's that were particularly in the
crosshairs, because companies with fewer than 100 employees are particularly prone to
employee theft. Why are small firms particularly vulnerable? Perhaps they lack experience dealing
with the problem. More importantly: Small firms are more likely to have a single person doing
several jobs, such as ordering supplies and paying the delivery person. This undercuts the checks
and balances managers often strive for to control theft. Furthermore, the risk of stealing goes up
dramatically when the business is largely based on cash. In a pizza store, many people come in
and just buy one or two slices and a cola for lunch, and almost all pay with cash, not credit cards.
And, Paolo was not just worried about employees stealing cash. They can steal your whole
business idea, something he learned from painful experience. He had been planning to open a
store in what he thought would be a particularly good location, and was thinking of having one of
his current employees manage the store. Instead, it turned out that this employee was, in a matter
of speaking, stealing Paolo's brain - what Paolo knew about customers and suppliers, where to
buy pizza dough, where to buy tomato sauce, how much everything should cost, how to furnish
the store, where to buy ovens, store layout - everything. This employee soon quit and opened up
his own pizza store, not far from where Paolo had planned to open his new store.
That he was having trouble hiring good employees, there was no doubt. The restaurant business
is particularly brutal when it comes to turnover. Many restaurants turn over their employees at a
rate of 200% to 300% per year - so every year, each position might have a series of two to three

employees filling it. As Paolo said, "I was losing two to three employees a month." He also said,
"We're a high-volume store, and while we should have [to fill all the hours in a week] about six
employees per store, we were down to only three of four, so my managers and I were really under
the gun"
The problem was bad at the hourly employee level: "We were churning a lot at the hourly level,"
said Paolo. "Applicants would come in, my managers or I would hire them and not spend much
time preparing them for the roles and responsibilities associated with her new position, and the
good ones would leave in frustration after a few weeks, while often it was the bad ones who'd
stay behind." But in the last 2 years, Paolo's three company-owned stores also went through a
total of three store managers - "they were just blowing through the door," as Paolo put it, in part
because, without good employees, their workday was brutal. As a rule, when a small-business
owner or manager can't find enough employees (or an employee doesn't show up for work), about
80% of the time the owner or manager does the job him or herself. So, these managers often
ended up working 7 days a week, 10 to 12 hours a day, and many just burned out in the end. One
night, working three jobs himself with customers leaving in anger, Paolo decided he'd never just
hire someone because he was desperate again, but would start doing his hiring more rationally.
As a local business, Paolo recruits by placing help-wanted ads in two local newspapers, and he's
been "shocked" at some of the responses and experiences he's had in response to his help-
wanted ads. Many of the applicants left voice mail messages (Paolo or the other workers in the
store were too busy to answer), and some applicants Paolo "just axed" on the assumption that
people without good telephone manners wouldn't have very good manners in the store, either.
He also quickly learned that he had to throw out a very wide net, even if only hiring one or two
people. Many people, as noted, he just deleted because of the messages they left, and about half
of the people he scheduled to come in for interviews didn't show up. He'd taken courses in human
resource management, so (as he said) "I should know better," but he hired people based almost
exclusively on a single interview (he occasionally made a feeble attempt to check references). In
total, his HR approach was obviously not working. It wasn't producing enough good recruits, and
the people he did hire were often problematical.
Paolo knew that that he could identify many of the traits that his employees needed. As he said,
"It's much better to spend time up-front screening out candidates that don't fit than to hire them
and have to put up with their ineffectiveness." For example, he knew that not everyone has the
temperament to be a server (he has a small pizza/ Italian restaurant at the back of his main store).
As Paolo said, "I've seen personalities that were off the charts in assertiveness or overly
introverted, traits that obviously don't make a good fit for a waiter or waitress." What was he
looking for? Service-oriented courteous people, for one. For example, he'd hired one employee
who used profanity several times, including once in front of a customer. On that employee's third
day, Paolo had to tell her, "I think Paolo's isn't the right place for you," and he fired her. As Paolo
said, "I felt bad, but also knew that everything I have is on the line for this business, so I wasn't
going to let anyone run this business down." Paolo wants reliable people (who'll show up on time),
honest people, and people who are flexible about switching jobs and hours as required.
Paolo's pizza business has only the most rudimentary human resource management system.
Paolo bought several application forms at a local Office Depot, and rarely uses other forms of any
sort. He uses his personal accountant for reviewing the company's books, and Paolo himself
computes each employee's paycheck at the end of the week and writes the checks. Training is
entirely on-the-job. Paolo personally trained each of his employees. For those employees who go
on to be store managers, he assumes that they are training their own employees the way Paolo
trained them (for better or worse, as it turns out). Paolo pays "a bit above prevailing wage rates
(judging by other help-wanted ads), but he thinks it's not enough to make a significant difference
in the quality of employees that he attracts. If you asked Paolo what his reputation is as an
employer, Paolo, being a candid and forthright person, would probably tell you that he is a
supportive but hard-nosed employer who treats people fairly, but whose business reputation may
suffer from disorganization stemming from his HR issues. He approaches you to ask for advice.

Accepted Answer

Human resources (HR) is a critical function within an organisation that deals with employee…

Identify ten (10) HR elements in the case – These HR elements refer to any HR concepts, theories, terms, topics etc that you can identify. Each HR element must contain a direct reference from the case (using quotation marks) that relate to that HR element.