CASE - 1: Fall 2013
Perfect Pizzeria Restaurants is a chain of 125 pizza establishments around the country with headquarters in Madison, Wisconsin. There are three locations in Bloomington, Indiana however they have financial and employee problems particularly at the location near the Indiana University campus.
Each location has one manager and two shift leaders. The employees are mostly college students, with a few high school students performing the less challenging jobs. Nearly all of the employees, with the exception of some managers, are employed part-time and most earned only the minimum wage or slightly above.
To address the financial problems, the Perfect Pizzeria manager’s compensation plan was changed to now being based on food and beverage costs and profit targets. If the percentage of food unsold or damaged is very low, the manager gets a bonus. If the percentage is high, the manager does not receive a bonus; rather he or she receives only his or her normal salary. Their compensation is also reflected in the restaurant’s profit figures which also must reach a certain level for the manager to receive a bonus. Thus the managers knew the criteria being used for their evaluation and therefore where to focus their efforts.
These profit and loss figures often fluctuate. Knowing the manager cannot be in the store 24 hours a day, some employees make up for their low paychecks by helping themselves to the food. When a friend comes in to order a pizza, extra ingredients are put on the friend’s pizza. An occasional slice or two of pizza by the 18 to 20 employees throughout the day/evening at the break table also raises the percentage figure. An occasional bucket of sauce may be spilled or a pizza accidentally burned. Sometimes the wrong size of pizza may be made.
In the event of an employee mistake or a burned pizza by the oven person, the expense is supposed to come from the individual employee. Because of...
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