Background

In the year 2017, Jack opened his first coin laundry shop in A town. The business model is relatively simple. After the initial investment in machinery and renting a shop, the shop can operate with just one unskilled staff. It has soon become a big hit. Armed with the profit made, Jack opened new coin laundry shops in B town and C town. He now owned four shops in total operating 24 hours and 7-days a week.

In 2018, Jack had decided to introduce wash and fold, dry cleaning, pressing, and cloth alteration services in each of his shops. He decided based on two reasons: there is plenty of unused space in his existing shop, and there is a high demand for those services from the community. There onwards, he renamed his laundry shop to PeopleLaundry (PL). The introduction of the new services provides Jack with great returns beyond expected. He saw an increase of 70 percent in the total revenue and 45 percent in total profit.

About Jack

The spirit of the entrepreneur is rooted in Jack. He put priority on business expansion and leave the monitoring and controlling of the operation to his shop managers. In one of the interviews with YAOFM, a very popular radio station covering the news of entrepreneur, Jack revealed that he is a firm believer of "do not use someone that you dont have trust on; do not doubt someone when you have decided to pass the task to him." "I will make sure that I interview each candidate for the position of my shop manager. I asked a lot of questions to know their background. Those who come from poor family will always be my first choice as I believe that they will work harder and appreciate the opportunity given. I came from a poor family too." When asked in during the interview if he has any standardized job descriptions and job specifications developed for his workers, Jack answered "My managers are capable enough to give proper instructions. We are small and we do not want to tie ourselves down with so many red tapes. These are theories. A waste of time." When asked about how Jack ensure the performance of his staff, Jack said "You can expect me to come hard on you when there is a complaint made on you. The customer is king. I want all my staff to remember this." The interview session ended with a question on how Jack rewards his staff " We practice the minimum wage set the government. On top of that, each shop has its own financial target to achieve. Upon receiving the targeted profit, 25 precent from the profit made will be shared to all the staff of the shop. According to Jack, the shop manager will enjoy 40 percent while the remaining 60 percent will be shared equally by the remaining staff. Every shop has in average 5 staff excluding the manager.

NOW

Currently, Jack owned 40 laundry shops. When everyone thought Jack is doing well, Emily, her daughter, knows that is not the case. Jack recently received many complaints about poor and inconsistent customer service from some of the shops. The staff attitudes are rude, and the shop managers seem to do nothing about it. Emily and Jack had tried to visit the shops more frequently and held several talks with the staff, but nothing seems to improve. Next, Jack notices that there is an unusual drop in revenue in some of his shops. While inventory usage, water, and electricity charges remain constant, the profit had reduced. From an exit interview, he found out that it is not uncommon for his staff to occasionally patrol and offer the similar services that PL offers to the neighborhood. Those who did so are the senior staff of PL. Upon receiving any orders, they will then be arrived at the shop earlier to use the company resources for their interest. The income made went into their pockets. Lastly, in Jack's plan, each shop manager is expected to help each other when one's shop receives job orders that exceed its capacity. One of Jack's business policies stated that no shop managers should reject any job orders before exhausting their options. For example, upon knowing that the shop has reached the maximum capacity, but the job orders keep coming in, the manager is expected to reach out to the nearest shops for support. The shops that have the excess capacity have to support it. Very few managers adhere to the policy, however. Upon an exit interview, the staff told Jack that no shop manager is willing to do so. "At times, the call can come in the morning. We can support the shop if we are free, but we have no idea if we will receive any job orders over the rest of the day. By committing ourselves too early will see us shooting our own feet. You realize that all the revenue goes to the shop that received the job order. There is nothing for us. We have our key performance indicator to meet as well. You can't blame us for not supporting the call for help until we are sure that we will be free. At times, the other shop calls us one or two hours before the operation ends and asks for support. The shop manager could have planned better. We do not want to ask our staff to go overtime as it is an additional cost to us."

Jack has no idea in mind on what he can do to solve all these issues. Emily knows PL needs to have new practices to solve all these human resource related issues. She turns to you for help.

Question 1

With what you have learned and the facts from the case, identify the root-causes to the THREE (3) main issues PL is currently facing.