MGMT 663 Organizational Audit The Red White & Brew

05 April 2012

Maile Mosley

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he Red White & Brew (The Brew) has been in business for over 15 years, serving the community of Hammond and southern Tangipahoa Parish. The company offers fine wines, liquors, specialty beers, gourmet food items, and specialty accessories to accentuate the product assortment. The Brew offers the widest selections of fine wines and beers in the area and caters to anyone interested in learning and experiencing all the of products they have to offer in a comfortable, non-smoking, non-threatening environment. They also offer wine tastings and a beer club called Been There, Done That: 100 Beers in 100 Days. The Brew is located in historic downtown Hammond on the corner of Cypress and East Thomas Street. Their clientele ranges from young (21 years of age) to old. Since 1996 they have grown from a small wine store to a mainstay in the Hammond community. When asked to describe the methods of motivation and compensation employed at The Red White & Brew, Leisa DeBlieux, The Brew is a great place for the owner, said motivation through example [is key], showing them an evening drink, a place you can go and just relax after a [employees] how product knowledge can help with customer long days work. We love the decisions and buying success is one way. A satisfied customer atmosphere there. Leisa and usually leads to attractive tipping (L. DeBlieux, personal Deek [her husband] really communication, February 10, 2012). The Brew embraces tipping as brought the downtown lagniappe compensation and lets employees know that each shift is community together and an opportunity to make extra money through great service and have been successful at recommendations. However, studies have shown that although maintaining a loyal customer base. Not only do they employees may be motivated through tips and bonuses, this extra provide great service and money doesnt necessarily lead to performance. Red White & Brew product selection, they come also offers a quarterly bonus plan to the full-time manager based on to know you as more than increasing sales over the previous years quarters. Centering the just another sale. quarterly bonuses on sales alone may run the risk of low motivation. Gennipher & Wayne R. If you measure and reward sales, you get sales. If you measure sales plus customer retention plus customer satisfaction plus working with other sales people as a team and then fashion a reward based on those factors, you might actually get the behavior you want (Filipczak, 1996). Companies dont just pay their employees to sell; they pay them to create long-lasting customer relationships, to maintain a clean and safe environment, and to control the companys bottom line, among many other responsibilities. One of the myths of motivation is money is a good motivator. To fully understand how to motivate employees, one must look at intrinsic and extrinsic motivation. Intrinsic motivators are inner influences that cause a person to act a certain way and satisfy higher-order needs such as esteem, competence, and self-actualization (Mehta, Anderson, & Dubinsky, 2000). The employee has to express a desire to do something before they will be motivated to do it. Extrinsic motivators are external influences that cause a person to act (this

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includes both rewards and punishments), and essentially satisfy lower-order needs (Walkers study as cited by Mehta, Anderson, & Dubinsky, 2000). Extrinsic motivators can include tips and bonuses. However, Kuvaas found that a higher base pay fosters better performance and can be explained through higher intrinsic work motivation (as cited in Gagn & Forest, 2008). Also, according to Bnabou and Tirole (2003), extrinsic motivation (contingent rewards) can sometimes conflict with intrinsic motivation (the individuals desire to perform the task for its own sake). When surveyed, most employees dont rate money as a The selection is great for motivator high on the list. Good managers, control over people who dont even like to their work, good co-workers, recognition, and a variety of drink. As someone that never other environmental factors always rank higher than money drinks beer or wine after years (Filipczak, 1996). Herzberg similarly proposed that money in of tasting and searching, I the form of compensation prevents them [employees] from found an impressive German being demotivated (as cited in Filipczak, 1996). Money can beer that I not only tolerated, but very much enjoyed. help you not dislike your job, but it wont always motivate you to do a worthy job. A successful manager should tap Antonia W. into the employees needs and motives to drive the employees intrinsic motivation. McClellands Needs Theory has three components: the need for achievement, the need for power, and the need for affiliation. These three needs are shown to be especially important in organizational life. It is imperative to match the employees needs and wants to the companys needs and wants. If the employee doesnt feel they are a fit within the company, it can be very demotivating and may lead to deviant behaviors. To further understand what is likely to motivate your employees, you should examine both your needs and your employees needs as they relate to the company (McConnell, 1998). Studies also show that employees with a high need for achievement are driven by merit-based pay systems. This suggests that upper level managers who receive bonuses should have a higher need for achievement, an intrinsic motivator for them. Research supports the importance of need satisfaction in organizations, as it has been related to better performance, engagement, well-being, and retention (Gagn & Forest, 2008). Vrooms Expectancy Theory has also been shown to explain motivation. This theory states that an individuals effort is determined predominantly by his or her belief in three key areas: expectancy, instrumentality, and valence. An employee must believe that their effort will lead to an acceptable level of performance, the performance they achieve will result in a positive and/or negative outcome, and the outcome attained will be personally valued. If an employees belief in any one of these areas is low, their motivation will be low. Customers are more likely to feel they have received superior service if an employee who is motivated serves them (Paswan, Pelton, & True, 2005). An employee must also personally value the rewards.

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High proportions of variable pay in the form of performance-contingent rewards have been positively related to turnover (Harrison, Virick, & Williams study as cited in Gagn & Forest, 2008). Commission heavy pay and tips can lead to competition and foster dissatisfied employees. However, studies show that group incentives have the ability to increase the satisfaction of the need for relatedness and can foster a cooperative culture (Gagn & Forest, 2008). Based on the research its suggested that in lieu of tips for employees, their base pay should be increased. This may spark intrinsic motivation within an employee from day one. Paying an employee a higher rate than competitors and other businesses in the area should increase their self-efficacy, which may lead to persistent high levels of performance, even in the face of failure. Likewise, when more than one employee is working, there will be reduced tension or the need to fight for tips amongst the employees. The Brew currently has a policy of splitting tips evenly amongst employees working. This may create tension if one employee believes the other has not done their fair share and should not merit receiving half of the tips. Eliminating daily tip payout may reduce the likelihood of internal conflict amongst employees. Another recommendation is to use scheduling as a motivator. If The Brew does more business on a Thursday than a Monday, giving someone the Thursday shift may motivate them to work harder, since its a more demanding shift. Contests can also be implemented to encourage healthy competition amongst employees and motivate them to push the wine tasting events or the beer club. The benefit from this is two-fold: employee motivation and increased customer base. The Red White & Brew currently employs only one full time manager and three part time workers. The part time employees are typically students at Southeastern Louisiana University, so Stephanie, the full time manger, takes heed to work around class and test schedules. While the employees typically work only a few hours a week, they are a major part The Brews friendly and of the overall atmosphere of The Brew so it is imperative personal service is the best in that morale is high and the workers are enthusiastic about downtown Hammond. the business. Part time employees that usually consist of Harrison B. young adults or students may struggle to find a connection to their company. They may view their job as just a part time temporary job and their commitment and dedication may be lacking. Self-management is a term often used in the service industry and states that non-management employees should assume authority and responsibility to manage themselves in the absence of their manager (Griffin, 1994). Although The Red White & Brew currently fosters a healthy and successful environment for their employees, Leisa and Stephanie cannot be there all of the time. When the employees are working without management supervision, they need to be able to self-manage and uphold their responsibilities. Although Leisa stated there is no

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opportunity for development with part time employees who arent long term, there is always an opportunity (L. DeBlieux, personal communication, February 10, 2012). Feedback is imperative to an employees development, no matter how short the employees tenure may be. Research shows that the sooner positive reinforcement occurs after the praiseworthy action, the stronger the effect of that reinforcement (McConnell, 1998). One suggestion is to ensure all employees are receiving frequent and timely feedback during their training process and after. Likewise, a specified time should be designated as post-training Its my favorite place to get development. Employees, especially part time staff, need to my favorite beer. know they arent just thrown to the wolves. Continuous and frequent feedback after the designated training period is Chuck R. vital. As part of the new employee training process, Stephanie spends at least one week training the new hires on operations. The new employee also works evening shifts with fellow part time employees to learn aspects of tending the bar, stocking, and closing the shift. A positive for The Red White & Brew is that employees train continually and with new products. Every employee should be knowledgeable of signature drinks and make them consistently. Consistency is not only important for professionalism, but is also important for eliminating extra costs incurred from incorrect pouring and measuring. It is recommended that even the part time employees get semiannual or annual performance appraisals. These appraisals will aid in giving employees feedback and to also discuss additional rewards or consequences based on the appraisal results (Andre, 2008). These performance appraisals should be done at random and unannounced. Another recommendation is to transform the way the part time employees view their job. By creating new job titles and assigning specific duties, the part time employees may begin to feel the positive weight of responsibility and show more ownership. Leisa could appoint an employee to be head bartender or shift manager. The other employees may be motivated to work their way up to that position as a goal. By making this change, Leisa would give her employees the intrinsic reward of recognition for their hard work.

Research has shown that the leadership style of a manager is directly related to an employees satisfaction. Leisa describes the leadership style that her full time manager Stephanie practices as open, honest, and directthat promote[s] a healthy and successful environment for our employees (L. DeBlieux, personal communication, February 10, 2012). This description is consistent with the transformational leadership style. Bass suggests that by applying the behavioral characteristics of transformational leadership, leaders can guide their employees toward performance beyond expectations (as cited in Humphreys & Einstein, 2003). Transformational leaders are invested in employee development for the good of the company, and are associated with the higher order needs of individuals (Medley & Larochelle, 1995).

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Transformational leaders also have a direct effect on employees motivation and empowerment (Dvir, Eden, Avolio, & Shamirs study as cited in Walumbwa, Wang, Lawler, & Shi, 2004). However, because tipping and bonuses are involved, Stephanie and Leisa also exhibit transactional leadership behaviors. Transactional leaders reinforce the employees based on whether or not they meet specific organizational goals. Transactional leadership behavior is the style that is most exhibited in businesses today and has been positively correlated to follower attitudes and performance (Yammarino & Basss study as cited in Humphreys & Einstein, 2003). Since The Red White & Brew has been successful with low turnover, the leadership styles appear effective. However, a suggestion is to ensure management is promoting the transformational leadership My favorite place for after style more than transactional. Continue to foster the work drinks! companys goal of openness, honesty, and directness with Amanda B. less emphasis on monetary reward.

Ethics and social responsibility within an alcoholcentric business is of foremost importance. Some businesses have had issues regarding employees drinking on the job. This is a concern in the bar service industry, especially when most of the employees are part time and are younger in age. Its imperative that employees know there are strict procedures for measuring and monitoring alcohol consumption. Measuring alcohol sales can be a challenge. Over-pouring and employee theft is the main cause of alcohol waste in the alcohol industry. Workers may not ring up the proper amounts of alcohol and may not charge customers the correct amount, in order to entice higher tips. To curb this problem, managers may run liquor sales contests that would encourage employees to ring up drinks correctly and up-sell higher-end liquors. Leisa should furthermore invest in automatic pour spouts for all liquors. These distribute exactly one ounce of liquid then stop, and must be stood up vertically in order to pour another ounce. This is a great investment and will help to vastly eliminate waste. Frequent designated liquor inventory counts should likewise be done in a timely fashion. Businesses rely on effective communication to build solid internal relationships while developing a strong customer base. Whether asking permission to proceed with a sale, or seeking an alliance to move a business agenda forward, the way business professionals express their ideas can impact how their audiences perceive these concepts. Poorly communicated ideas, even when they are fundamentally sound, often fail to interest their intended targets. Leisa mentioned that communication among the staff has been a challenge in the past (L. DeBlieux, personal communication, February 10, 2012). They now use social media, texting, and cell calls to provide seamless communication in various situations. The most widely used

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forms of mass communication in the 21st century are technology-based, such as email and the internet. Digital media or electronic media are very powerful tools and can provide huge benefits. However, you run the risk of someone never getting your text, email, or voicemail, or just saying they never got it. By adopting a centralized location on the work computer that is designated for employee communication, frequent miscommunication can be avoided. It should be the daily duty of everyone working to check the computer as soon as they clock in to see if there are any notes or to-do lists. Likewise, since The Brew has part time employees on staff who are also students, schedule requests may become a hassle. All messages and schedule requests should be submitted through the computer communication program. Students often have random schedules that can change frequently depending on their school workload. If an employee is overscheduled or under scheduled, morale may be affected. When teams develop tight communication, they can complete tasks more quickly, especially when they receive clear goals from leadership. The Brew should also utilize advanced technology to build ongoing communication and relationships with their customers. Launching a new online service as part of their website, www.redwhitebrew.com where customers can design their own gift baskets may also increase their The Red White & Brew. customer base and revenue. Where you can drink good

The Red White & Brew provides a warm, personal for exams. environment with knowledgeable staff to assist in product Rhea L. selections. To align with The Brews organizational culture, it is imperative their staff is customer and service oriented. Research has shown that some of the main causes of less than excellent service include: lack of basic knowledge of the system and its constraints, inability to provide logical explanations to the customers, poorly designed procedures, and lack of authority to do anything (Paswan, Pelton, & True 2005). Its imperative that the employees are educated on the company and their systems. Secret shoppers are often utilized to evaluate employee performance. The secret shoppers report on company knowledge, employee attitude and communication, bar knowledge, cleanliness and overall appearance, timeliness, and atmosphere. The Brew should utilize frequent secret shoppers to report information to Leisa and Stephanie. This information can in turn be used in employee feedback and performance meetings.

wine, microbrews, and study

Leisa mentioned that some of the biggest challenges they are recently being faced with are the downturn of the economy and losing business to other venues such as grocery stores that are now offering a larger selection than in the past (L. DeBlieux, personal communication, February 10, 2012). Her customers are still buying but usually buying less quantity. With less

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money to spend, customers may no longer have the luxury to purchase superfluous items such as alcoholic beverages or accessories. Meanwhile, in a trend thats being mirrored in both the wine and liquor industries, higher-income consumers less affected by the economy are spending their money on better quality options. It has been two years since Walgreens has emerged back into the beer and wine business. According to Bush (2011), drug store beer sales rose 6.9% from June 2010 to June 2011. The drugstore channel is a serious threat anytime it pushes a core convenience store item because of its strong locations, hours of operation, and their Whenever I want to relax appeal to women and older consumers. However, convenience with friends in a smoke free stores remain a much stronger choice than drug stores and were atmosphere, Im so relieved the fourth most popular channel for those surveyed who bought to know The Red White & beer in the past 30 days, behind supermarkets, liquor stores, and Brew isnt far. Its a great Wal-Mart (Bush, 2011). So what can The Red White & Brew do place to find specialty beer, about this? If The Brew stays abreast of the prices the other wine, and liquor that I wouldnt be able to find in competitors in the area (Walgreens, Wal-Mart, convenience many other local bars, and all stores, grocery stores) are offering, they could give discounts or without smoke! offer better prices for their frequent patrons. A trend that will most directly influence the liquor business is the continued Kristen F. demand for more choices by the consumer. Since drug stores dont sell single beers, The Red White & Brew has a chance to make a higher margin on their single sales. The need for promotions in the bar industry is at an all-time high. With the drop in sales, liquor companies should concentrate on special events to generate customers. Wellorchestrated promotions can increase business without resorting to drink specials and other reduced charges to entice patrons. Good promotions help establish an identity for a business by enabling it to project its own personality and develop an image that will catch on with a target audience. The Brew has succeeded with aspects of promotions through their beer club and wine tastings. Nonetheless, a recommendation is to use loyalty programs to entice and keep customers. Loyalty programs are structured marketing efforts that reward, and encourage, loyal buying behavior behavior which is potentially beneficial to the business (Loyalty Program, 2006). Another recommendation is to designate certain activities for certain nights of the week such as ladies night or bring-your-dog day to compete with local venues and to continue to offer a distinct point of difference. Promotional items from alcoholic beverage companies (t-shirts, shot glasses, key chains, hats, etc.) may also enable The Brew to retain customers as well as attract new ones. An additional suggestion is to host beer or wine dinners and partner with local restaurants to serve food and alcohol pairings and discuss why each beverage goes with each food. Likewise, put more advertising behind the beers and wines around the world. Since Hammond is home to Southeastern Louisiana University, there

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is opportunity to attract foreign customers from Southeasterns large student body. In the fall of 2011, there were about 225 international students from about 50 countries enrolled in Southeastern Louisiana University, and this number will continue to grow. If the beer or wine the consumers are looking for is not in stock, offer to order for the customer and call them when it comes in. This may increase the business with customers who may have never patronized The Red White & Brew and will help build a stronger customer contact base. In less than 20 years, The Red White & Brew has grown from a small wine store to a large liquor business that is a staple in the Hammond community. The Brew also continues to grow their client base every month. Hopefully, these suggestions paired with their Been There, Done That: 100 Beers in 100 Days and their wine tastings will help them thrive for at least 20 more years!

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http://en.wikipedia.org/wiki/Loyalty_program