The ARISE: A Destination-for-a-Day Spa case describes how a spa going through the business development stage is struggling with employee turnover as well as has been operating at a loss for the past two years. ARISE, the spa in question, was built on the business strategy of differentiation which emphasizes employee-customer relationships. Within these relationships, ARISE employees act as Personal Wellness Coaches (PWC) helping clients create “integrated health and happiness plans”. The key stakeholders in the case are the President and CEO: Kristen Chambers; Vice President of Business Operations: Sam Solti; Vice President of Spa Operations: Twyla Thompson; and Director of Spa Services: Danielle Dunn; who all offer differing opinions and proposed solutions for this dilemma. Included in these stakeholders are also the ARISE employees and their client base.
CRITICAL ISSUES The first critical issue ARISE is dealing with is that it has been operating at a loss for the past two years (since the time it was established). ARISE has a limited amount of funds put aside anticipating the breakeven point and cannot afford to pay out year after year in order to keep itself afloat. The risk of going under is apparent if this issue is not resolved in a timely manner.
ARISE’s second critical issue, which can assist the first issue of bringing up the bottom line, is that there an excessive amount of employee turnover. Chambers has allowed a three month period in which Thompson must figure out a solution to the employee turnover issue. This problem is especially important because it concerns ARISE’s overall business strategy. ARISE’s business strategy of differentiation through customer service requires having a strong and consistent workforce. Without the support of its employees, ARISE will crumble. There are also costs to cycling through a workforce. The hiring process and training of new staff are costly business procedures which greatly affect the bottom line when performing them as often as ARISE is currently.
RECCOMMENDATIONS First it is critical that ARISE is aware of their employees’ wants and needs. Exit interviews are not enough and are in no way proactive in catering to the wants and needs of employees. Give surveys to employees in order to determine whether or not current business operations are effective. Ask specific questions such as: What is your favorite aspect of working at ARISE? (Explain) What is your least favorite aspect at being an employee at ARISE? (Explain) In regards to your experience as an employee at ARISE, what are some improvements ARISE can make? (Explain) Do you value having benefits offered by ARISE? (Explain) Would you like more flexibility in your schedule? (Explain) Do you like being a part of an All-Star Team? (Explain) etc… With this information Thompson can make appropriate adjustments to the employee operations.
Because of comments made in exit interviews along with previous employee surveys, it is recommended that ARISE keep the All-Star Team organizational design, offer more flexible schedule options (new parent, sick time, etc.), a higher base pay (in return for cutting benefits), as well as give employees a more realistic job preview when they enter employment at ARISE, as to not create false expectations. Providing ARISE employees with a higher base pay would greatly improve the turnover rate. Employees have stated during previous exit interviews that they were leaving to look for a higher salary.
ARISE employees have also noted not valuing benefits as significant compensation. For that reason, it is a good idea to take the funds currently being put into benefits and redirect them to base salary in order to satisfy employees as well as not need to worry about the steeply climbing medical and dental rates year to year. Schedule flexibility is regarded as a benefit by employees as well as a reason to stay at a company. Employees may enjoy their job but find it impossible to meet a rigid schedule requirement; therefore, it would be beneficial for ARISE to offer more scheduling options. According to an article by the Boston College, “the main reason cited by employers for developing workplace flexibility…is the retention of employees in general (37%)…” (Cohen). Many employers recognize the importance of workplace flexibility and have seen it improve their turnover rate. Realistic job previews are important in relation to employee turnover.
As emphasized in MGMT 411, high turnover can occur when they are unpleasantly surprised by an aspect of their job. It undermines the psychological contract between an employer and their employee while causing a loss of trust. Better informed candidates who choose to continue on with the application process after learning more about the job are more likely to be a good fit with the position and therefore continue on in the position for a longer period of time. Also, in regards to the issue of employee responsibilities, job specifications should be more clearly defined so that employees know what is expected of them. This will help deter slacking. In addition, supervisors must write up employees who are not fulfilling their job duties.
All-Star teams are meant to keep employees responsible but if they aren’t someone else should step in. If nothing is done to reprimand slackers it encourages them as well as deters the hard working, responsible employees from continuing their correct actions. Hard working employees who pick up the slack from lazy teammates do not appreciate doing work without reward and may eventually move on from the organization. Which will overall lead stellar performers out of the organization and encourage less productive workers to continue poor business practices. Keep PWCs accountable.