Challenges in Organizational Design at Peppercorn

It is likely that this task will occupy most of the class time, as the consultants' perception of the organizational issues will help shape the design of the feedback process.

Selecting a diagnostic/analytic model is a significant decision as there is no indication that a particular model is influencing the data collection process, which could be problematic. There are at least two potential models to consider. One option is to utilize an individual based model, similar to the one outlined in Chapter 6.

This approach involves evaluating each job at Peppercorn in terms of task identity, skill variety, task significance, autonomy, and feedback within the organization's structure. However, this perspective is more narrow and may not be the best choice.

Another option that may be more applicable in this situation is an organizational-level diagnostic model like the one described in Chapter 5.

Based on their initial discussion with Drew and data from interviews, it is evident that the labor market has become increasingly tight, making it challenging to find workers, especially student workers.

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As a result, both the dining services unit and Peppercorn have had to raise pay rates twice, with minimal impact. Additionally, it is known that a union represents full-time employees, highlighting the labor shortage as a key driver of the case's dynamics.

The primary customer, students with meal plans, indicates that increasing prices may not be effective in addressing labor shortages. Overall, interviews show that the food-service industry commonly offers low wages and requires employees to work long and irregular hours.

The observation and interview data offers insights into various components of organizational design, with some aspects having substantial and reliable information while others lack sufficient data and credibility.

Strategy: The university dining unit's mission and goals outline their purpose and operating objectives. They show a strong interest in offering healthy food, fostering a welcoming social environment, and meeting the university's financial needs. The goals encompass customer satisfaction, facility excellence, effective management, financial oversight, alignment with the university’s mission, and industry leadership. The case indicates that Peppercorn's strategy aligns with these goals.

According to Drew, Peppercorn is attempting to tackle the challenges of the labor market by creating a pleasant work environment. However, consultants have observed a discrepancy between the company's stated values (decentralized and participative) and its actual practices (more centralized and less participative) during their interviews and observations.

Technology plays a crucial role in the overall transformation process at Peppercorn, with the supply system being a key source of issues. Food, aprons, cookware, and other supplies are ordered through a computer system that frequently experiences outages, causing disruptions in the kitchen and service staff's workflow. The ineffectiveness of this system is a significant challenge for the entire organization.

Once the raw materials are received, food is prepared – sometimes up to a day in advance – based on well-understood meal plans and recipes. While some cooks may take pride in their recipes and enjoy creating new ones, it may not be ideal for them to be too innovative in this situation, which could present conflicts. The prepared meals are then moved to the serving line where customers (students) receive their food. A consultant observes that portion control is lacking at this stage, with a significant amount of "customization" happening as workers give students extra of certain items or accommodate specific requests. After the meal, leftovers, utensils, plates, and trash are taken to the dish room where plates and utensils are washed and reused.

Other processes, such as order taking, cash exchange, hiring and staffing, and grievance handling, also exhibit low levels of interdependence and uncertainty.

The case contains formal organization charts for both the university dining services and Peppercorn. Drew, who leads Peppercorn and the Salt Mill, has a professional supervisor named Larry assigned from the university dining organization. Consultants note the negative perception of Larry and his relationship with employees.

The case highlights a complex array of employee relationships. It involves full-time employees represented by a union, full-time temporary employees (a non-union position created to address issues stemming from decreasing student workers), and student labor. The students manage themselves and oversee both the full-time temporary employees (who receive training from permanent staff) and have their own management structure. This setup has sparked disagreement, potentially leading to differing standards of work performance and resentment over perceived preferential treatment.

Measurement Systems: The lack of information on how employee work is measured (such as goals, performance monitoring, and feedback), the absence of portion control on food served, and the lack of financial information creates a significant gap in sophistication. There is a mention of a grievance process, however, no indication of grievance activity levels. If the computer system problems are factored in, it further highlights the deficiencies in this system.

Human Resource Systems: The interview findings show various challenges in the payment structure based on the union agreement and its impact on employee motivation. During the first meeting with the consultants, Drew explains a situation where employees might be motivated to take advantage of sick days. The case further notes that wages have been raised twice recently to resolve issues related to student shortages.

Alignment and Effectiveness: According to Roger, customer satisfaction remains high overall at the facility, despite one notable complaint regarding excessive heat due to the dining room being built over the heating plant. Financial data is lacking, preventing any assessment of profitability. However, there is ample information on employee satisfaction, showing a general decline among many employees despite a strong tenure among full-time staff. Additionally, tensions between different employee groups are consistently reported.

Can we draw any conclusions about the alignment of organizational design features within the effectiveness assessment? The initial conversation between Drew and the consultants identified a "hiring problem," which has been confirmed. The question now is, why is this problem occurring?

The strategy for Peppercorn is not clearly defined. There are no specific goals for the restaurant, and it is unclear why people choose to dine there other than having a meal plan. With a fairly captive audience and little competition, there appears to be a lack of external pressure, leading to a relaxed atmosphere at Peppercorn.

The computer system is likely not under Peppercorn's control, with the University dining unit likely handling its programming and maintenance. This lack of transparency regarding how the system operates poses a significant risk. It remains to be confirmed whether the issue lies with the system or potentially with Larry.

Third, the amount of tension in the restaurant may be attributed to the setup where students are in charge of supervising adults. Exploring the reasons behind this decision and discussing possible alternatives would be a beneficial discussion.

Fourthly, tied to the strategy, there seems to be a lack of measurement systems in place. This raises the question of how employees can gauge their performance effectively.