Reference no: EM131636718

Case Study: Government Brings Reality Close to Home

As a manager of a fast food franchise, Franklin Hinton was concerned about the media reports he had been listening to about worker demands for wage increases that might soon become an economic reality. Even though Franklin's store was considered to be successful on every financial measure, doubling wages, without a doubt, would make a significant increase on menu prices which would result in financial disaster. Fast food employees in many parts of the country were picketing and getting lots of press to get their hourly wages significantly raised.

If Franklin was faced to raise menu prices to compensate for the increase in employee wages, he wondered how much customers would be willing to pay and whether his competition would follow with similar price increases. Franklin prided himself on hiring high school and college students from the local area and giving them a chance to learn valuable job skills. In recent years he had hired employees with developmental disabilities and some senior citizens who were having a hard time finding work. Some of these workers had stayed with him for years, and some had moved up into supervisory positions. If he was forced to pay more, would it still make sense to hire workers who had no previous experience or those who may take longer to train? His entry-level workers were currently making at least a dollar an hour above the federal minimum wage and any significant increase above that, if menu prices were not raised, would have to be made up through reduced hours or reduction in the number of employees.

More troubling was the thought of being forced to pay a higher minimum wage, which would also have an impact on supervisory salaries. Then there was the potential of increases in health care costs. Although Franklin was sure that his employees trusted him, some of the fast food restaurants in the area had been upset with their employees wanting to join a union. There was also the potential for losing business and getting unwanted negative publicity as many students at the local university seemed to always be willing to join in any type of social or political protest.

Franklin knew that he needed to plan and organize for the future as his current business model provided a comfortable living at a 9 percent profit margin for the owner, but all of that could change. He knew that outside groups would promise his employees more money, better benefits, and better working conditions, even though they often could not deliver on that promise. Franklin needed to plan and organize for the future success of his business and employees.

(This critical incident developed by Roy Cook and Ed Leonard for this edition of Supervision.)

Questions for Discussion ( Please answer all questions.)

1. What external forces could impact the future of Franklin Hinton's fast food business?

2. Franklin needs a plan for future success. Define planning as it relates to his business. How will an effective plan help him and his employees be more effective in providing quality service to customers?

3. Regardless of the situation, employees must understand fully the mission and vision of the company. What do you suggest that Franklin might do to help his employees be the best they can be?

4. In your opinion, if the minimum wage in your state is increased to $10, $12, or $15 an hour, what impact will it have on the fast food industry? Will an increase in the minimum wage have an impact on customer service or quality of product? Discuss.

5. What should Franklin do to prepare for the possibility of a union attempt to organize his employees?

6. If you were Franklin, how would you deal with the uncertainties that could impact the future success of his business and employees?