Question

Question 5 (20 Marks) Anthony Warbrick owns three upscale hair salons: Hair Suite I, II, and III. Each of the salons has a manager and 10 stylists who rent space in the salons as independent contractors and who pay a fee of 10% of each week's revenue to the salon as rent. In exchange they get to use the facility and utilities but must bring their own equipment. The manager of each salon schedules each customer appointment to last an hour, and then allows the stylist 10 minutes between appointments to clean up, rest, and prepare for the next appointment. The salons are open from 10 A.M. to 6 P.M., so each stylist can serve seven customers per day. Stylists each work five days a week on a staggered schedule, so the salon ACCT6004_Assessment 2 Brief_Individual Case Study Page 7 of 10 is open seven days a week. Everyone works on Saturdays, but some stylists have Sunday and Monday off, some have Tuesday and Wednesday off, and some have Thursday and Friday off. Anthony Warbrick knows that utility costs are rising. Anthony wants to increase revenues to cover at least some part of rising utility costs, so Anthony tells each of the managers to find a way to increase productivity in the salons so that the stylists will pay more to the salons. Anthony does not want to increase the rental fee above 10% of revenue for fear the stylists will leave, and each salon has only 10 stations, so he feels each salon cannot hire more than 10 full-time stylists.

Answer 1

1.    The manager of Hair Suite III has the best style, because this manager is involving the workers in a decision that directly affects their work.  

2.   The workers will most likely be upset or even angry with the manager of Hair Suite I.  The manager is not a stylist, and yet is changing the schedule for the stylists, assuming they can work faster and need less rest between customers, without discussing this change with them or asking for input or suggestions.

To indicate displeasure, the stylists at Hair Suite I could quit, or they could perform a work slowdown.  This means that the manager will schedule a customer for a 40 minute appointment, but the stylist will spend more than 40 minutes with each customer anyway.  The result is that the appointments will get backed up, some customers may not get served, and overall the customers will be unhappy.

Most of the workers in Hair Suite II are not likely to volunteer to work an extra hour a day. Although it would mean additional revenue for each stylist, it will make each work day longer and the idea was not presented to the workers in a way that appears beneficial to the workers.  

To indicate displeasure with this plan, the stylist will simply not volunteer to work an extra hour a day.

3.   Of course the manager of Hair Suite III could implement one of the plans of the other salons.  That is, workers could shorten their appointment times per customer, or lengthen their work days, or a combination of both.  Alternately, workers could work six days per week rather than five.  However, in the case of salon III, the manager has invited the stylists to help solve the problem rather than the manager telling them what changes to make, so they will be more likely to agree to make changes since they are involved in the decision.

Other things they may do:

• The manager may let individual stylists set their own schedules. It is possible that not all customers need an hour each, and the stylists can individually book customers in a way that works in an extra customer per day.
• They could agree to shorter lunch breaks
• They could implement a monthly contest to see who can service the most customers (but still have satisfied customers) and earn rewards, including
• A name on a plaque for employee of the month (virtually no cost to the salon)
• Gift certificates to local businesses (low cost to the salon)
• Reduction in one month’s rental revenue (some cost to the salon, depending on the amount of the reduction)
• If the salon is in an area where parking is hard to find or costly, a month of free parking or an assigned parking space

4.   A stretch target is supposed to be challenging but achievable.  The manager of Hair Suite I is asking the stylists to reduce per customer service time by 20 minutes, or a 20/60 = 33% reduction in service time.  Even if this reduction is achievable, the other part of the issue is whether the customers will believe they are still getting the same quality service.  In a hair salon this is particularly important because the customers expect to look good when they come out, and they will not if the stylist has to rush or cut corners to meet the 40 minute deadline.  Also, as mentioned before, the stretch target should motivate employees but if the manager simply imposes the time constraint on the stylists without their input, this will have the opposite effect.