Case Study Of Hawthorne Corporation Limited
3. Evaluate the proposed control system. What recommendations would you give to Bachand regarding his proposed control system for corporate-owned stores? (See the corporate store model)
Under the proposed …show more content…
The managers are compensated $50,000 salary, same as a franchisee, plus a 10% of the salary in benefit. Instead of the large drowns a franchisee can do, a bonus system based on meeting and exceeding budgeted profitability is designed for the managers. Such bonus system would direct the managers’ attention towards the store’s bottom line. According to Bachand, the stores need to be retail friendly and service oriented as demanded by both the targeted customer groups of PK. Hence, the bonus system could potentially lose track of the objectives of PK – to be the most recommended auto part store in Canada. For example, if a customer had a bad experience with on the store because of bad customer services, he/she is unlikely to recommend the store to anyone. In fact, a study has shown that people talk about their bad customer experiences more often than the good ones. This could hurt what PK is trying to achieve.
To better represent the amount of work a manager is doing instead of a franchisee, a bonus system is definitely needed. However, we would recommend Bachand to modify the bonus system, to better motivate and direct the managers towards the overall objective of PK.
The bonus system should not only based on meeting and exceeding budgeted profitability, but also based on the evaluation of mystery shoppers on subjective goals, such as good customer service and experience