Retention: Deciding to Act

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Wallys Wonder Wash (WWW) is a full-service, high-tech, high-touch car wash company owned solely by Wally Wheelspoke. Located in a midwestern city of 200,000 people (with another 100,000 in suburbs and more rural towns throughout the county), WWW currently has four facilities within the city. Wally plans to add four more facilities within the city in the next two years, and later on he plans to begin placing facilities in suburban locations and rural towns. Major competitors in the city include two other full-service car washes (different owners), plus three touchless automatic facilities (same owner).
Wallys critical strategy is to provide the very best to customers who want and relish extremely clean and spiffy vehicles and to ensure they have a positive experience each time they come to WWW. To do this, WWW seeks to provide high-quality car washes and car detailing and to generate considerable repeat business through competitive prices combined with attention to customers. To make itself accessible to customers, WWW is open seven days a week, 8:00 a.m. to 8:00 p.m. Peak periods, volume-wise, are after 1:00 p.m. on weekdays and from 10:00 a.m. to 5:00 p.m. on weekends. In addition, Wally uses his workforce to drive his strategy. Though untrained in HR, Wally knows that he must recruit and retain a stable, high-quality workforce if his current facilities, let alone his ambitious expansion plans, are to succeed.
WWW has a strong preference for full-time employees, who work either 7:30 a.m. to 4:00 p.m. or 11:00 a.m. to 8:00 p.m. Part-timers are used occasionally during page 736peak demand times and during the summer when full-timers are on vacation. There are two major jobs at WWW: attendant (washer) and custom service specialist (detailer). Practicing promotion from within, WWW promotes all specialists from the attendant ranks. There are currently 70 attendants and 20 custom service specialists at WWW. In addition, each facility has a manager. Wally has filled the manager jobs by promotion from within (from either the attendant or custom service specialist ranks), but he is unsure if he will be able to continue doing this as he expands.
The job of attendant is a demanding one. Attendants vacuum vehicles from front to rear (and trunk if requested by the customer), wash and dry windows and mirrors, dry vehicles with hand towels, apply special cleaning compounds to tires, wipe down the vehicles interior, and wash or vacuum floor mats. In addition, attendants wash and fold towels, lift heavy barrels of cleaning compounds and waxes, and perform light maintenance and repair work on the machinery. Finally, and very important, attendants consistently provide customer service by asking customers if they have special requests and by making small talk with them. A unique feature of customer service at WWW is that the attendant must ask the customer to personally inspect the vehicle before leaving to ensure that the vehicle has been satisfactorily cleaned (attendants also correct any mistakes pointed out by the customer). The attendants work as a team, with each attendant expected to be able to perform all of the above tasks.
Attendants start at a base wage of $8.00/hour, with automatic $.50 raises at six months and one year. They receive brief training from the manager before starting work. Custom service specialists start at $9.00/hour, with $.50 raises after six months and one year. Neither attendants nor custom service specialists receive performance reviews. Managers receive a salary of $27,000, plus an annual merit raise based on a very casual performance review conducted by Wally (whenever he gets around to it). All attendants share equally in a customer tip pool; custom service specialists receive individual tips. The benefits package is composed of the following: (1) major medical health insurance with a 20% employee co-pay on the premium, (2) paid holidays for Christmas, Easter, July 4, and Martin Luther King Jr.s birthday, and (3) a generous paid sick-pay plan of two days per month (in recognition of high illness rates due to extreme working conditions).
In terms of turnover, Wally has spotty and general data only. In the past year WWW experienced an overall turnover rate of 65% for attendants and 20% for custom service specialists; no managers left the company. Though lacking data further back, Wally thinks the turnover rate for attendants has been increasing. WWWs managers constantly complain to Wally about the high level of turnover among attendants and the problems it creates, especially in fulfilling the strong customer service orientation for WWW. Though the managers have not conducted exit interviews, the major complaints they hear from attendants are (1) the pay is not competitive relative to the other full-service car washes and many other entry-level jobs in the area, (2) the training is hit-or-miss at best, (3) promotion page 737opportunities are limited, (4) managers provide no feedback or coaching, and (5) customer complaints and mistreatment of attendants by customers are on the rise.
Wally is frustrated by attendant turnover and its threat to his customer service and expansion strategies. He calls on you for assistance in figuring out what to do about the problem. Use the decision process shown in Exhibit 14.11 to help develop a retention initiative for WWW. Address each of the questions in the process:”

Do we think turnover is a problem?

How might we attack the problem?

What do we need to decide?

How should we evaluate the initiatives?

Deciding Whether to Use Flexible Staffing

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The Kaiser Manufacturing Company (KMC) has been in existence for over 50 years. Its main products are specialty implements for use in both the crop and the dairy herd sides of the agricultural business. Products include special attachments for page 146tractors, combines, and discers and add-on devices for milking and feeding equipment that enhance the performance and safety of the equipment.
KMC has a small corporate office and four manufacturing plants (two in the Midwest and two in the South). It has a core workforce of 725 production workers, 30 clerical workers, 32 engineers and professional workers, and 41 managers. All employees are full time, and KMC has never used either part-time or temporary workers. Those in charge of staffing feel very strongly that the strategy of using only a core workforce has paid big dividends over the years in attracting and retaining a committed and highly productive workforce.
Sales have been virtually flat at $175 million annually since 2012. At the same time, KMC has begun to experience more erratic placement of orders for its products, making sales less predictable. This appears to be a reflection of more turbulent weather patterns, large swings in interest rates, new entrants into the specialty markets, and general uncertainty about the future direction and growth of the agricultural industry. Increased unpredictability in sales has been accompanied by steadily rising labor costs. This is due to KMCs increasingly older workforce, as well as shortages of all types of workers (particularly production workers) in the immediate labor markets surrounding the plants.
Assume you are the HR manager responsible for staffing and training at KMC. You have just been contacted by a representative of the Flexible Staffing Services (FSS) Company, Mr. Tom Jacoby. Mr. Jacoby has proposed meeting with you and the president of KMC, Mr. Herman Kaiser, to talk about FSS and how it might be of service to KMC. You and Mr. Kaiser agree to meet with Mr. Jacoby. At that meeting, Mr. Jacoby makes a formal presentation to you in which he describes the services, operation, and fees of FSS and highlights the advantages of using a more flexible workforce. During that meeting, you learn the following from Mr. Jacoby.
FSS is a recent entrant into what is called the staffing industry. Its general purpose is to furnish qualified employees to companies (customers) on an as-needed basis, thus helping the customer implement a flexible staffing strategy. It furnishes employees in four major groups: production, clerical, technical, and professional/managerial. Both full-time and part-time employees are available in each of these groups. Employees may be furnished to the customer on a strictly temporary basis (temps) or on a temp-to-perm basis, in which the employees convert from being temporary employees of FSS to being permanent employees of the customer after a 90-day probationary period.
For both the temp and the temp-to-perm arrangements, FSS offers the following services. In each of the four employee groups it will recruit, select, and hire people to work for FSS, which will in turn lease them to the customer. FSS performs all recruitment, selection, and employment activities. It uses a standard selection system for all applicants, composed of an application blank, reference checks, drug testing, and a medical exam (given after making a job offer). It also offers customized selection plans in which the customer chooses from among a set of special skill tests, a personality test, an honesty test, and background investigations. Based page 147on the standard and/or custom assessments, FSS refers to the customer what it views as the top candidates. FSS tries to furnish two people for every vacancy, and the customer chooses from between the two.
New hires at FSS receive a base wage that is similar to the market wage, as well as close to the wage of the customers employees with whom they will be directly working. In addition, new hires receive a paid vacation (one week for every six months of employment, up to four weeks), health insurance (with a 25% employee co-pay), and optional participation in a 401(k) plan. FSS performs and pays for all payroll functions and deductions. It also pays the premiums for workers compensation and unemployment compensation.
FSS charges the customer as follows. There is a standard fee per employee furnished of 1.55 base wage hours worked per week. The 1.55 is labeled markup; it covers all of FSSs costs (staffing, insurance, benefits, and administration) plus a profit margin. On top of the standard fee is an additional fee for customized selection services. This fee ranges from .50 to .90 base wage hours worked per week. Finally, there is a special one-time fee for temp-to-perm employees (a finders fee of one months pay), payable after the employee successfully completes the 90-day probationary period and becomes an employee of the customer.
Mr. Jacoby concludes his presentation by stressing three advantages of flexible staffing as provided by FSS. First, use of FSS employees on an as-needed basis will give KMC greater flexibility in its staffing to match fluctuating product demand, as well as movement from completely fixed labor costs to more variable labor costs. Second, FSS provides considerable administrative convenience, relieving KMC of most of the burden of recruitment, selection, and payrolling. Finally, KMC will experience considerable freedom from litigation (workers comp, EEO, torts) since FSS and not KMC will be the employer.
After Mr. Jacobys presentation, Mr. Kaiser tells you he is favorably impressed, but that the organization clearly needs to do some more thinking before it embarks on the path of flexible staffing and the use of FSS as its provider. He asks you to prepare a brief preliminary report including the following:”

A summary of the possible advantages and disadvantages of flexible staffing

A summary of the advantages and disadvantages of using FSS as a service provider

A summary of the type of additional information you recommend gathering and using as part of the decision-making process

Evaluating Staffing Process Results

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“The Keepon Trucking Company (KTC) is a manufacturer of custom-built trucks. It does not manufacture any particular truck lines, styles, or models. Rather, it builds trucks to customers specifications; these trucks are used for specialty purposes such as snow removal, log hauling, and military cargo hauling. One year ago, KTC received a new, large order that would take three years to complete and required the external hiring of 100 new assemblers. To staff this particular job, the HR department manager of nonexempt employment hurriedly developed and implemented a special staffing process for filling these new vacancies. Applicants were recruited from three sources: newspaper ads, employee referrals, and a local employment agency. All applicants generated by these methods were subjected to a common selection and decision-making process. All offer receivers were given the same terms and conditions in their job offer letters and were told there was no room for any negotiation. All vacancies were eventually filled.
After the first year of the contract, the manager of nonexempt employment, Dexter Williams, decided to pull together some data to determine how well the staffing process for the assembler jobs had worked. Since he had not originally planned on doing any evaluation, Dexter was able to retrieve only the following data to help him with his evaluation:”

Determine the yield ratios (offer receivers / applicants, new hires / applicants), elapsed time or cycle times (days to offer, days to start), and retention rates associated with each recruitment source.

What is the relative effectiveness of the three sources in terms of yield ratios, cycle times, and retention rates?

What are some possible reasons for the fact that the three sources differ in their relative effectiveness?

What would you recommend Dexter do differently in the future to improve his evaluation of the staffing process?

Evaluation of Two New Assessment Methods for Selecting Telephone Customer Service Representatives

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“The Phonemin Company is a distributor of mens and womens casual clothing. It sells exclusively through its merchandise catalog, which is published four times per year to coincide with seasonal changes in customers apparel tastes. Customers may order merchandise from the catalog via mail or over the phone. Currently, 70% of orders are phone orders, and the organization expects this to increase to 85% within the next few years.
page 362The success of the organization is obviously very dependent on the success of the telephone ordering system and the customer service representatives (CSRs) who staff the system. There are currently 185 CSRs; that number should increase to about 225 CSRs to handle the anticipated growth in phone order sales. Though the CSRs are trained to use standardized methods and procedures for handling phone orders, there are still seemingly large differences among them in their job performance. CSR performance is routinely measured in terms of error rate, speed of order taking, and customer complaints. The top 25% and lowest 25% of performers on each of these measures differ by a factor of at least three (i.e., the error rate of the bottom group is three times as high as that of the top group). Strategically, the organization knows that it could substantially enhance CSR performance (and ultimately sales) if it could improve its staffing batting average by more accurately identifying and hiring new CSRs who are likely to be top performers.
The current staffing system for CSRs is straightforward. Applicants are recruited through a combination of employee referrals and newspaper ads. Because turnover among CSRs is so high (50% annually), recruitment is a continuous process at the organization. Applicants complete a standard application blank, which asks for information about education and previous work experience. The information is reviewed by the staffing specialist in the HR department. Only obvious misfits are rejected at this point; the others (95%) are asked to have an interview with the specialist. The interview lasts 2030 minutes, and at the conclusion the applicant is either rejected or offered a job. Due to the tightness of the labor market and the constant presence of vacancies to be filled, 90% of the interviewees receive job offers. Most of those offers (95%) are accepted, and the new hires attend a one-week training program before being placed on the job.
The organization has decided to investigate the possibilities of increasing CSR effectiveness through sounder staffing practices. In particular, it is not pleased with its current methods of assessing job applicants; it feels that neither the application blank nor the interview provides an accurate and in-depth assessment of the applicant KSAOs that are truly needed to be an effective CSR. Consequently, it engaged the services of a consulting firm that offers various methods of KSAO assessment, along with validation and installation services. In cooperation with the HR staffing specialist, the consulting firm conducted the following study for the organization.
A special job analysis led to the identification of several specific KSAOs likely to be necessary for successful performance as a CSR. Three of these (clerical speed, clerical accuracy, and interpersonal skills) were singled out for further consideration because of their seemingly high impact on job performance. Two new methods of assessment provided by the consulting firm were chosen for experimentation. The first is a paper-and-pencil clerical test assessing clerical speed and accuracy. It contains 50 items and has a 30-minute time limit. The second is a brief work sample that could be administered as part of the interview process. In the work page 363sample, the applicant must respond to four different phone calls: a customer who is irate about an out-of-stock item, a customer who wants more product information about an item than was provided in the catalog, a customer who wants to change an order placed yesterday, and a customer who has a routine order to place. Using a 15 rating scale, the interviewer rates the applicant on tactfulness (T) and concern for customers (C). The interviewer is provided with a rating manual containing examples of exceptional (5), average (3), and unacceptable (1) responses by the applicant.
A random sample of 50 current CSRs were chosen to participate in the study. At Time 1 they were administered the clerical test and the work sample; performance data were also gathered from company records for error rate (number of errors per 100 orders), speed (number of orders filled per hour), and customer complaints (number of complaints per week). At Time 2, one week later, the clerical test and the work sample were re-administered to the CSRs. A member of the consulting firm sat in on all the interviews and served as a second rater of performance on the work sample at Time 1 and Time 2. It is expected that the clerical test and work sample will have positive correlations with speed and negative correlations with error rate and customer complaints.”

After reading the description of the study and observing the results above,

How do you interpret the reliability results for the clerical test and work sample? Are they favorable enough for Phonemin to consider using them for keeps in selecting new job applicants?

How do you interpret the validity results for the clerical test and work sample? Are they favorable enough for Phonemin to consider using them for keeps in selecting new job applicants?

What limitations in the above study should be kept in mind when interpreting the results and deciding whether to use the clerical test and work sample?