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Essay: Effectiveness of the Human Capital Function: Mugg & Bean and Burger King

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  • Effectiveness of the Human Capital Function: Mugg & Bean and Burger King
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Research Topic

The evaluation of the effectiveness of the Human Capital Function and / or activities by comparing two organisations: Mugg & Bean and Burger King both located at the Pietermaritzburg Liberty Mall.

Introduction

The research topic that the grade twelve Business Studies girls were asked to do was a primary research task looking at the different food franchises in the food industry, and evaluating the effectiveness of each other. By doing this, it will enable us to see a comparison in management styles, Human Capital activities, furthermore a general evaluation to see how employees are treated in the business.

The aim of this primary research task is to see a difference in the Human Capital Departments Function at the Mugg & Bean franchise, and Burger King Franchise at the Pietermaritzburg Liberty Mall. As Burger King is a new franchise that has recently arrived into the South African food industry market, mainly based in the United Stated of America. Their Human Capital Department may differ from Mugg & Bean, which is a franchise based in South Africa, as it has been in South Africa for a number of years, and has adapted their franchise to make provision for different tastes people have. Furthermore Mugg& Bean has gained the loyalty, and trust from its clients making it a house hold brand among individual in the public eye. A franchise known for its food, cultural environment, its good reputation among social media and the general public, in addition to their hospitality making it a go-to restaurant among families, youth and businessmen and women for meetings with clients or business deals. Burger King has not yet gained a reputation for itself, but is rapidly becoming popular making it a big contender in the food industry which sees Nando’s, MacDonald’s, Spur, KFC and Mugg Bean as massive competitors in the food industry.

The research methodologies conducted in this primary research task are questionnaires completed by Senior Management of both Mugg & Bean: Sthabile and Burger King: Mkhize Jnr.

Report

i) Background details of Organisation A: Mugg & Bean

Mugg & Bean started as a trip to Chicago in the United Stated of America, where Ben Filmalter and wife Judi were on holiday in the early 1990s. They happened to stumble across a little coffee shop on the South Side of Chicago, enjoying the atmosphere and drinking bottomless cups of coffee. They thought of bringing the same concept to South Africa as they saw that this would be a great opportunity in the South African Food market, as it had never been seen or heard of. Coming back to South Africa, Ben Filmalter had a job as head of a multi-restaurant company, and Judi assisting in the detail of the various units. Finding the right launch location and time was next; their vision of a coffee shop ultimately came to light as Mugg & Bean arrived in September 1996 at Cape Town’s V&A Waterfront Mall. Their philosophy of generosity: generous portions; giant muffins and bottomless coffee. This corresponds with their culture of customer focus as well as generosity which they experienced in the little coffee shop in South Side Chicago. After twenty-one years of being in the South African Food Market, Mugg & Bean has become a house-hold brand. Being a most desirable place for business meeting with client or conducting business deals, Mugg & Bean has become an office away from the office. The general public find Mugg & Beans atmosphere one of comfort, hospitality, an enjoyable environment, on top of that a home away from home. Mugg & Bean has a hundred and thirty-six restaurants across the country, as well as in other countries such as: Lesotho, Swaziland, United Arab Emirates, State of Kuwait, Canada, Saudi Arabia, Namibia and Botswana.  (Advertising, Sauce, 2017)  (Advertising, 2017)

The Organisational Culture

The organisational culture at Mugg & Bean is a Hierarchy Culture. This is a formalized and structured work environment. Procedures decide what people do. Leaders are proud of their efficiency based coordination and organisation. Keeping the organisation functioning smoothly is most crucial. Formal rules and policy keep the organisation together. The long-term goals are stability and results, paired with efficient and smooth execution of tasks. Trustful delivery, smooth planning, and low costs define success. The personnel management is to guarantee work and predictability.  (Bremer, 2017)

Leader Style: Coordination, monitor and organiser.

Value Drivers: Efficiency, timeliness, consistency and uniformity.

Theory of Efficiency: Control and efficiency with capable processes being effective.

Quality Improvement Strategy: Error detection, measurement, process control, systematic.

Leadership Style

Mugg & Bean has two leadership style characteristics to them: Direct Leadership Style and Affiliative Leadership Style.

  • Direct Leadership Style:These are leaders who tell subordinate staff what they are expected to do, and how to perform the expected tasks. This therefore adds much-needed stability to an often chaotic environment. (Djones524, 2012)
  • Affiliative Leadership Style:This leadership style promotes harmony among followers, and helps to solve conflict. By making sure that followers are fully connected to one another, this leader is adept at building teams.  (WebFinance Inc., 2017)

    Size (number of employees)

    Mugg & Bean employees thirty-four members of staff this including both permanent and temporary members of staff. This number may differ from other Mugg & Bean’s in South Africa due to: floor space being wider or smaller; the area at where the Mugg & Bean restaurant is situated and the management of the restaurant.

    Span of Control of Managers

    The span of control that managers have is very wide from the kitchen all the way to the restaurant serving floor, where they are often seen. The managers at Mugg & Bean are usually on the floor of the restaurant, looking to see that there are no problems. Managers usually coming up to customers and asking if everything is okay; and giving a few orders to staff on how to serve customers quickly and efficiently. Managers are seen asking staff if there were any problems that they are facing on the floor, furthermore greeting customers at the entrance of the restaurant.

    Form of Ownership:

    The form of ownership is a franchisee.

    Industry Related Issues

    Industry related issue subject to Mugg & Bean are: the strikes that were held for a salary increase by employees of Mugg & Bean at Sun Coast Casino in Durban; a Mugg & Bean employee at Walmer Park was convicted of faking an armed robbery; unfair dismissal and labour disputes. (Hlatshwayo, 2013)  (Palezweni, 2016)

     

    ii) Background details of Organisation B: Burger King

    Burger King was founded in 1953 in Jacksonville, Florida under the name Insta- Burger King. Founded by and owners Keith J. Kramer and his wife’s uncle Mathew Burns. The word ‘Insta’ coming from their Insta- Boiler oven which every store had to have. Burger King became a great success until it faltered in 1959, and was purchased by Miami, Florida franchisees, James McLamore and David R. Edgerton. They undertook a corporate restructuring as well as renaming the company Burger King. They ran the business as an independent entity for eight year, and had opened two hundred and fifty stores throughout the United Stated of America. They sold the company to the Pillsbury Company in 1967, which tried several times to restructure Burger King in the late 1970s and early 1980s. The most prominent change was in 1978, the company hired MacDonald’s Executive Donald N. Smith to help revamp the company this was called Operation Phoenix, Smith. This operation instituted an upgrade of the franchise agreement, also a new standardised restricted design. Donald N. Smith left the company for PepsiCo in 1980. (Djones524, 2012) (Afiq, 2017)

    Pillsbury Executive Vice-President of Restaurant Operations Norman E. Brinker wanted Burger King to strengthen its position against its main rival, MacDonald’s. This then started the 1984 Competitive Advertising which was named the ‘Burger Wars’, this saw rival burger companies being targeted on Burger King’s commercial adverts. Brinker left Burger King then later for the Dallas-based gourmet burger chain Chili’s. Burger King was thereafter not cared for, which in addition lead to a poor operation and ineffectual leadership. Pillsbury was later acquired by the British entertainment conglomerate Grand Metropolitan in 1989. C.E.O. Garry Gibbons worked with restructuring the Burger King Company, his attempts either were a great success or a horrible failure in his two year contract with Grand Metropolitan. Grand Metropolitan made a merger with Guinness in 1997, forming Diageo. After numerous attempts of bringing the sales of Burger King up, the company finally put Burger King on sale in 2000. (Djones524, 2012) (Afiq, 2017)

    A group of investment firms led by TPG Capital purchased the Burger King Company from Grand Metropolitan in 2002 for US$1.5 Billion. TPG Capital revamped the whole franchise: added the Burger Whopper Bar to the menu; new design format called the 20/20 was introduced; re-energising the company resulting in a score of profitable quarters; the company being taken public in 2006 with a highly successful initial public offering in the New York Stock Exchange. This did not last long as the 2007 financial crisis crash damaged the company tremendously, resulting in weakening sales in 2010 when rivals MacDonald’s were growing. This resulted in TPG Capital and investors deciding to sell the Burger King Company due to declining sales. Burger King was sold for US$3.26 Billion to 3G Capital in Brazil. Burger King was delisted from the New York Securities Exchange as a way of building the Burger King Franchise from the inside out. This resulted in sales dropping to third place behind Ohio-based Wendy’s. (Djones524, 2012) (Afiq, 2017)

    Burger King has 15 738 stores in a hundred countries, 47% are based in the United states of America while 99, 5% are privately owned and operated. This being part of a 2016 analysis of the company’s growth. (Djones524, 2012) (Afiq, 2017)

    The Organisational Culture

    The organisational culture which Burger King uses is the Normative Culture. This is your everyday corporate workplace. Normative culture is very cut and dry, following strict regulations and guidelines that uphold the policies of the organisation. Employees rarely deviate from their specific job role, break rules or do anything other than what is asked of them. These types of organisations run a tight ship, and have an object-oriented approach to motivating their employees. (Sponaugle, 2014)

    Leadership Style

    Burger King uses the Transactional Leadership for their Leadership Style.  This is a leadership that maintains or continues the status quo. It is also the leadership that involves an exchange process, whereby followers get immediate, tangible rewards for carrying out the leader’s orders. Transactional leadership may be basic as it focuses on exchange.

    (Raza, 2017)

    The three main focuses a leader looks at are:

    1. Clarifying what is expected of follower’s performance.

    2. Explaining how to meet such expectations.

    3. Allocating rewards that are contingent on meeting objectives.

    Size (number of employees)

    Burger King employs twenty members of staff. This is due to all of them being permanent, as        well as the small space that they occupy at the Pietermaritzburg Liberty Mall. This shall furthermore differ from other Burger King Franchise’s in South Africa, as they may have a bigger floor space. Burger King‘s sole purpose is as a take-away restaurant and not a sit-down restaurant, therefore there will be less people employed as there is less work needed.

    Span of Control of Managers

    The span of control which managers have is rather unlimited from the kitchen all the way to the cashier or collection of orders table.

    Form of Ownership

    Burger King’s form of ownership is a franchisee.

    Industry Related Issues

    The industry related issues which relate to Burger King are:

  • Competitive Advertising
  • Law suits
  • Legal disputes
  • Misconduct of behaviour by employees to customers
  • Employees being assaulted by management
  • Physical bodily harm from management to employeesiii) Summary of data collected for each organisation

    Organisation A: Mugg & bean

    Looking at the recruitment of employees Mugg & bean uses both the Internal and the External Recruiting. The Internal recruitment method is job posting, and the external method are Business advertising and Walk-Ins. The business heavily relies on external recruitment. In the selection process Mugg & Bean have candidates fill application forms; they do initial screening; while they don’t shortlist candidates; they do reference and background checks; they use a predetermined interview guide; they conduct test and examinations which they use the work-sample test to measure candidates’ ability and actual performance. Candidates are therefore ranked by Mugg & Bean, and the candidate most eligible for the position is awarded the job position.

    There on candidates are placed in positions that they originally applied for. Mugg & Bean has on induction programme for new employees where they are given written copies of the Mugg & Bean policies and procedures. In the Remuneration and Employees Benefits the business employees both temporary and permanent members of staff, which therefore they are paid wages and have equal pay to their colleagues doing the same job as them. Employees get paid overtime as this is paid as an extra one and a half of their remuneration. Mugg & Bean doesn’t use the help of SAQA, but uses money out of their capital to train and develop skills in their employees. The training method used is a workshop.

    Mugg & Bean uses Performance Appraisals moreover rating of productivity and effectiveness of each employee against performance targets. They use the evaluation tool, which they use Personal Improvement Plans to identify improvements in employees. Mugg & Bean has a low turnover of employees, Sthabile Senior Manager at Mugg & Bean says, “It’s an indication of great management I feel because most of our employees have been with the business for fourteen years”, commenting on the low turnover. Mugg & bean conduct an Exist Interview for employees that do leave the business.

    Organisation B: Burger King

    Burger King uses both the Internal and External recruitments. The Internal recruitment method used is job posting, and the external recruitment method used is Employment Agencies. Burger King relies heavily on both the Internal recruitment and External recruitment. The selection process requirements consist of an application form a candidate has to complete; initial screening which excludes shortlisting or reference and background check of candidates; included are predetermined interview guide as well as tests and examinations which Burger King uses the: Work-sample test measuring the candidates ability and actual performance, Psychometric test measuring mental ability and personality, Medical exams. Burger King therefore ranks candidates, and rewards the most eligible candidate the job position.

    In the placement process employees are placed in the position they applied for. Burger King conducts an induction programme for new employees, in this they are provided with written copies of the Burger King Policies and Procedures; a face-to-face introduction to management; a chart to identify various role players in the organisation; a tour of the Burger King facilities; detailed instructions outlining how new staff should perform certain tasks; therefore allocations of  ‘buddies or mentors’ are established to guide new employees if they need help or have a query about the running of the organisation.  Burger King only employs permanent staff members, which are therefore paid a salary. Employees are paid the same remuneration as a colleague doing the same job. Employees get paid overtime, and this consists of double of their remuneration.

    Burger King uses SAQA to assist in training and developing skills in employees. The training method used is on the job training; classroom training; a buddy or mentor system; and a learnership. The employee evaluation which employees are rated on the productivity and efficiency of their work against Performance targets furthermore, Performance Appraisals are used which Burger King uses a planning tool, evaluation tool and a feedback tool. Burger King uses Personal Improvement Plans to identify improvement in an employee. The retention of employees at Burger King shows a high turnover of employees in the business. Mkhize jnr. Senior Management comments on this by saying, “Team members are not suggestive to selling or inquiring efficiency but rather consistency at what they have been trained on, which will result in them having to be roistered less hours due to Labour vs. Sales”. The high turnover of employees is due to factors such as: an opportunity for a better salary and / or benefits; travelling time to work is unacceptable for whatever reason as well as the employee feeling that there is a lack of balance between work and personal life. Burger King conducts Exist interview employees that do leave the business.

    iv) Analysis of data

    2.7.1 Recruitment

    The recruitment process differs as Mugg & Bean’s External recruitment consists of Business Advertising and Walk-Ins, and relies heavily on external recruitment for employees. Burger King on the other hand uses Employment Agencies for their External recruitment and relies heavily on both the Internal as well as the External recruitment.

    Selection

    The selection process differs as Mugg & Bean does not shortlist candidates, and only uses one type of test and examinations which is the work-sample tests. Contrary to these findings Burger King does not use shortlisting of candidates, nor reference and background checks as well as. The conduction of tests and examination are done on the work-sample test, psychometric tests and medical examination.

    Placement

    The placement process does not differ from both Mugg & Bean as well as Burger King. These franchises both use the candidates’ application for a position as the position the applicant will be allocated and not change at all.

    2.7.2 The organisation with the most well-established induction programme is Burger King as they take time, cost as well as the comprehensive training programme. Burger King besides giving written copies of the business policies and procedures they get to have a face-to-face introduction to management; an organisational chart is shown to new employees to identify various role players in the Burger King organisation; a tour of the Burger King’s facilities; detailed instructions outlining how new staff should perform certain tasks furthermore an allocation of ‘buddies or mentors’ to new employees. The business takes time to make sure that the employee is well situated in the business environment and is able to work to their optimal best.

    2.7.3 Burger King has the most comprehensive training programme as they use four different training methods: on the job training; classroom training; buddy or mentor system and a learnership. These training methods are comprehensive as it gives the employee a thorough support system as well as a variety of ways to learn the position better. The comparison between Burger King and Mugg & Bean is , that Mugg & Bean only has a workshop as their training method. This therefore limiting their ability to work to the fullest as they may have queries on how to do a particular function, but can’t ask anyone due to the rush of the business therefore setting back the employee on their work duties.

    2.7.4 Mugg & Bean has the most advantageous benefits and incentive schemes as their employees’ contract is based on a Cost to Company scheme, which therefore puts all the employees’ needs into one salary. This doesn’t include any other additional benefits of travel allowance or anything else along the lines of a benefit. Employees are given discounts for their families if family members are eating at Mugg & Bean, as well as if employees order something on the menu they will receive a discount for it. Mugg & Bean offer a bonus to members of staff that have a stayed a number of years with the restaurant, this is not seen as a thirteenth cheque  and has a non-disclosed amount of money as a reward for the number of years that they stayed loyal to the restaurant.

    Conclusion

    Mugg & Bean

    In terms of the Mugg & Bean Human Capital Department and its effectiveness, it is seen that the retention of employees is low due to a loyalty and management style of the business. By doing this, it motivates and encourages employees to do their upmost best, while working to their optimal. They use both Business Advertising as well as Walk-Ins to find the best candidates for the business, which therefore brings in more experience to the business and an enthusiasm to work hard. In the selection process they use reference and background checks on candidates, as this reduces a number of candidates that are seen as ‘dangerous’ to the image and reputation of the Mugg & Bean brand, furthermore decreases the risk of theft in the restaurant. By the business using their own capital to train and develop skills in employees this ensures high quality training; up-skilling employees and keeping them up to-date with the latest trends in the food industry. Therefore coming to the conclusion that the effectiveness of the Human Capital Department is reflected on the employees and their loyalty in addition to their trust that they have in the Mugg & Bean restaurant.

    Burger King

    At Burger King the Human Capital Department is seen using both the Internal and External recruitment, therefore benefiting by promoting employees within the business. This therefore increases the employees to have a high morale to do their job to their fullest potential, and by increasing their salary they get to achieve a better standard of living. Having External recruiting ensures the employment of new people with new ideas and a passion for the business are put in position. They can benefit the business by creating new and innovative ways to entice customers to come to Burger King. In terms of tests and examinations done in the selection process shows a high interest in the candidate both mentally and physically, therefore showing that they want to employ the best people to work for Burger King. Their induction program is highly informative, as in addition is detailed to accommodate for any queries about the franchise or their job position. Therefore coming to the conclusion that the effectiveness of the Human Capital Department at Burger King by enabling the employee to work hard with understanding.

    Recommendation

    Mugg & Bean

  • Placement of employees in terms of their applied position to look into potentially promoting employees to positions you see that they have a special skill undiscovered, which could make the business even more successful. Generally keeping an eye out for employees that can make a huge difference in the business.
  • In the induction process, Mugg & Bean could improve by: giving new employees a tour of the facilities as well as a ‘buddy or mentor’ to overshadow them, while learning how to perform their job to the fullest. A recommendation that could be put into action would be to pair up current staff members with new employees, and have them work together. This would therefore be less costly than having a workshop to train the employees on how to perform their duties; the new employee gets a better understanding of the position as they get to experience an on the job training; there is a ‘mentor / buddy’ with them all the time incase of any queries that may arise; customer service would be quicker and efficient. This therefore resulting in fewer mistakes made, and creating a team work environment building up the confidence of the new employees.Burger King
  • Burger King could employ temporary staff which would reduce the load of work from other employees, when a staff member / members are sick or take leave. Presumably during the holiday seasons and public holidays, temporary staff would be needed due to permanent staff taking leave. The temporary staff would be paid a wage, and would not be employed for long. This would therefore decrease the amount of stress put on by the employee, and would make the working conditions of the business better.Glossary

    S.A.Q.A.: South African Qualifications Authority

    C.E.O.: Chief Executive Officer

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