HUMAN RESOURCE MANAGEMENT FINAL EXAMINATION CASE STUDY ANALYSIS HAPPY COFFEE

HUMAN RESOURCE MANAGEMENT FINAL EXAMINATION CASE STUDY ANALYSIS HAPPY COFFEE HAPPY COFFEE This case study is fictional The case is set in an environment without COVID 19 regulations or any problems re.

HUMAN RESOURCE MANAGEMENT FINAL EXAMINATION CASE STUDY ANALYSIS: HAPPY COFFEE HAPPY COFFEE This case study is fictional The case is set in an environment without COVID 19 regulations or any problems related to covid Happy Coffee was founded in 2006 in the capital city of Vietnam, Hanoi Its founder Ms Nguyen, started with one outlet in Hanoi and now owns 28 branches across the country 13 are located in Hanoi, in Danang and 12 in Ho Chi Minh City 195 employees are currently employed by Happy Coffee in the different coffee shops Today the success story of award-winning Entrepreneur Ms Nguyen has taken a bitter turn; For the first time in the history of the company, one of the Ho Chi Minh city branches had to be closed, as it had been operating at a loss for more than few months Drastic changes are urgently required to avoid having to close more branches across the country, as six other coffee shops are now no longer generating any profit and barely covering the operating costs In efforts to understand how things went so wrong, and in order to address those problems, Ms Nguyen met with Mr Tran, Manager of the now closed branch, to go back through the main reasons of the failure According to Mr Tran, the main reason for sales dropping month after month, and reaching a 40% loss in the final month of operations, was poor customer experience Looking for solutions, Mr Tran had surveyed the different online rating websites, and noticed many negative comments and feedback about the customer experience Mr Tran argued that although he was trying his best to improve customer satisfaction and train his staff as well as he could, it was impossible for him to so, as his team was constantly changing Many employees stayed just for a few weeks and then quit Mr Tran explained that he often found himself understaffed or having to deal with staff with very little experience He added that many of his team members often turn up late to their shifts, adopted poor attitude on the job and used excessive numbers of sick leaves He also felt overworked as all decisions, how insignificant may they be, had to be passed through him For instance, a simple mistake in an order had to be approved by him, for the staff member to be allowed to prepare a new drink and correct the mistake He found the following comment on an online platform from an upset customer: “After paying for my order, the wrong drink was given to me 10 minutes later… I complained to the waiter, and 20 minutes later nothing had been done to fix the problem, I had to leave for work, did not get my drink and did not get reimbursed… Avoid this coffee shop at all costs!” Later on, Ms Nguyen came across an ex-employee who was collecting her last paycheck She asked the waitress how she felt about the closing The woman confessed that she was not sad her employment was terminated with the closing of the shop, and that she was enjoying her new job at a competitor’s coffee shop, which she had found before being made redundant When she asked why, she explained that whatever her performance or the quality of a work, there were no ways for her to increase her income, as they were no bonuses or special rewards for high performing employees She also saw no career prospects as it seemed impossible for her to become branch manager Finally, she told Ms Nguyen that she did not enjoy coming to work, as she felt she had no connections with her colleagues and manager Analyze the case study using the following structure:  Case Analysis The situation of Happy Coffee: One of the Ho Chi Minh city branches had to be closed, as it had been operating at a loss for more than few months Drastic changes are urgently required to avoid having to close more branches across the country, as six other coffee shops are now no longer generating any profit and barely covering the operating costs Key issues Poor Customer Experience Creating superior customer experience seems to be one of the central objectives in today’s retailing environments Similarly, it has been argued that the success of Starbucks is based on creating a distinctive customer experience for their customers (Michelli 2007) For businesses like coffee shops, the customer experience is very important to retain customers (Verhoef et al., 2009) Building from these insights, recent definitions of customer experience include that “The customer experience originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction This experience is strictly personal and implies the customer’s involvement at different levels (rational, emotional, sensorial, physical, and spiritual)” (Gentile, Spiller, and Noci 2007, p 397)  Happy Coffee is a type of business that focuses primarily on customer experience But it was the poor customer experience that led to a month-over-month drop in sales and reaching a 40% loss in the final month of operations There are a variety of internet-based information sources such as online rating sites, blogs, and social networking sites These include eopinion.com, consumerreview.com, YouTube.com, company web sites (e.g., Amazon.com), and government/consumer advocacy sites which all offer opinions, reviews and ratings for products or services These internet- based information sites may influence consumers to make decisions to purchase a product online or perhaps move them towards a brick and mortar retail store In addition, the information presented on these sites are not just about product quality, but about customer care which encompasses how customers are treated and whether or not their problems are resolved to their satisfaction Previous research indicates that online rating systems are indeed important in consumer decision-making (Ba and Pavlou, 2002) Forman et al (2008) considered the value of knowing the identity of the online reviewer in virtual communities They conclude that identity-relevant information shapes judgment about products and reviews There is strong agreement that customer reviews are powerful influential sources Similarly, virtual community members have an impact on the members’ shopping choices and that social identification with the virtual communities is important in influencing this (Pentina et al., 2008)  The fact that online review sites have many negative comments and feedback about the customer's experience at the shop has made the choice of new customers for Happy Coffee very low, causing the revenue to go down High Employee Turnover Turnover is not only destructive to organisations, it is also costly Employee turnover occurs when employees leave their jobs and must be replaced Replacing exiting employees is costly to organisations and destructive to service delivery (Chaminade, 2007) Every time an employee quits, a replacement must be recruited, selected, trained and permitted time on the job to gain experience Apart from the costs that are directly associated with recruiting and training a new employee, other indirect costs exist Bliss (2007) and Sutherland (2004) contend that organisations lost productivity, social capital and suffer customer defection when a productive employee quits  The high turnover rate has caused a loss in training costs for Happy Coffee and caused the shop to face constant retraining of staff and staff with very little experience in serving customers, reducing customer satisfaction, causing loss of revenue of the Coffee shop Remuneration policy for employees and work environment Equity-based compensation influences employee behaviour positively thereby encouraging retention of employees Increment of employee salary enhances positive reactions of the employees thereby inducing loyalty.(Akhigbe & Ifeyinwa, 2017) Empirical studies (Kinnear and Sutherland, 2001; Meudell and Rodham, 1998; Maertz and Griffeth, 2004) have, however revealed that extrinsic factors such as competitive salary, good interpersonal relationships, friendly working environment, and job security were cited by employees as key motivational variables that influenced their retention in the organisations Herzberg argued that employees are motivated by internal values rather than values that are external to the work In other words, motivation is internally generated and is propelled by variables that are intrinsic to the work which Herzberg called “motivators” These intrinsic variables include achievement, recognition, the work itself, responsibility, advancement, and growth.(Samuel & Chipunza, 2009)  Happy Coffee has failed to motivate its employees through the salary and bonus regime as well as recognition and job promotion In addition, the working environment also does not make employees comfortable, as evidenced by the fact that when asked employees, Mr Tran received the answer that employees feel there is no connection between colleagues and their managers Linking theory and practice to the solution The core problem that Happy Coffee needs to solve comes from employee turnover Problems such as reduced revenue, poor customer experience all stem from the constant change of Happy Coffee's employees The store had to retrain new employees and the new staff had very little experience in bartending and serving customers Making customers uncomfortable, specifically as one customer complained is “ After paying for my order, the wrong drink was given to me 10 minutes later… I complained to the waiter, and 20 minutes later nothing had been done to fix the problem, I had to leave for work, did not get my drink and did not get reimbursed… Avoid this coffee shop at all costs!” Herzberg's two-factor theory suggests that there are two groups of factors affecting employee motivation in the workplace: retention factors and motivational factors The first category was associated with ‘the need for growth or self-actualisation, and became known as the motivation factors Motivation factors included achievement, recognition, the work itself, responsibility, advancement and the possibility for growth (Herzberg, 1966; Herzberg, 2003) The other category of factors was related to ‘the need to avoid unpleasantness’, and was known as hygiene factors Hygiene factors included company policies and administration, relationship with supervisors, interpersonal relations, working conditions and salary (Herzberg, 1966; Herzberg, 2003) According to Herzberg's theory, Happy Coffee can apply the following solutions to improve the situation:  Creating a cohesive work environment A research indicates that a high degree of commitment to colleagues is related to the perception of good cohesion among team members (Vandenberghe et al., 2004, Study 1) Complementary to this, cohesion within a workgroup increases the desire of its members to remain within the organization (Griffeth et al., 2000) Therefore, Happy Coffee need to create a friendly working environment, superiors (managers) must care, inquire as well as help employees when they need it It is necessary to organize teambuilding sessions to increase employee engagement as well as for employees and managers to understand each other better  Employee retention policy According to Herzberg's two-factor theory, employee motivation is related to recognition and promotion.Therefore, Happy Coffee needs to record the work results in each working session, whoever does well must have a bonus policy and must clearly outline a promotion path for employees Specifically, what goals are set to qualify to be a branch manager According to Maslow's theory of needs, people have a need for selfactualization, so companies need to empower employees to increase motivation and accountability  Attracting customers through membership policies and promotions Membership policies can increase customer loyalty to the brand (Dorotic et al., 2012)Happy Coffee needs a preferential policy to re-engage customers and increase the customer's experience at the shop through membership policy Specifically, giving gifts to guests on birthdays or holidays, dialing a winning number or giving priority to members who book a table in advance with a beautiful view Recommends specific strategies  Forming an HR team This team will research the market to find out competitive salary compared to competitors Set criteria for new hires Because Happy Coffee's employees often have a low level of commitment to the organization, it is necessary to recruit employees who match the criteria set forth by the shop to avoid employee turnover Specify the recruitment criteria, as well as the specific job description along with the salary on the recruitment post of the restaurant Set up reward and punishment policies for employees Employees at coffee shops often have a high turnover rate, so it is necessary to have specific incentives to retain employees - Need timekeeping at each working session - Inform the staff in detail about the reward for doing well and the penalty for breaking the restaurant's regulations - Organize periodic training and teambuilding to improve employee's experience and skills, create employee's cohesion with colleagues and superiors - Empower employees more and set promotion criteria to motivate employees to try harder Implement a Marketing campaign to refresh the image of Happy Coffee for customers In order to regain the trust of customers, Ms Nguyen needs to invest some money in promotional policies to make customers willing to visit the shop again Offer discounts to attract customers Offer membership policy with more incentives to improve the quality of customer experience Survey customers' opinions periodically to understand customer needs and have a timely improvement plan Organize activities for holidays of the year such as Christmas, New Year, decorate the shop according to the holidays In particular, being creative in the drink menu, each holiday will have new drinks suitable for each season References Al-Suraihi, W., Samikon, S., Al-Suraihi, A., & Ibrahim, I (2021) 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