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Case analysis: Sharpe BMW car dealership and service centre Report

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Updated: Jul 22nd, 2021

Introduction

The Sharpe BMW is an automobile dealership company that survives chiefly like what most companies survive on: automobile sales and services such as maintenance. The company has experienced a new fall over the years which Sharpe BMW have predicted to have been caused by the changing of the headship in which the company has experienced victory.

The adjustment in the management allegedly reduced client rankings and the revenues and profit margins of the automobile dealership company.

However, latest improvements made an immediate change when the top management decided that it required an adjustment in the company in order that it would be capable of meeting the sector margin and preferably, the victorious margins that the firm has attained previously under the headship of the former service boss.

Tom Dunn, the service manager and Bob Deshane, presented a proposal to the firm administration that would absolutely return the years when the Customer Satisfaction Index (CSI), which has been infecting Sharpe BMW, was strong. The CSI was identified as a cause of low service quality in the automobile dealership industry in the region.

Among the issues that should be solved in the plan, the technicians feel that the plan was an excellent concept the sole problem of which is the bonus would be so inadequate on their side. Adding a supplementary reality were the observations of Sharpe BMW technician that he would be comfortable performing more warranty tasks as this would provide him with more salary.

The other employee, however, was positive concerning the new plan. The technician remarked that the Customer Satisfaction Index offers extra details and concentrates on an aspect that is not actually useful as that aspect is beyond the reach of the technicians.

He as well commented that the new plan in addition granted the employees a more than congratulate recognition that further encourages the employees (Kenneth & Whitten 2007).

To add more trouble to Bob Deshane’s problem is that the task ahead of him specified that his work’s requirements comprise the focus on growing the service section’s income and on increasing the Customer Satisfaction Index ranking of the service unit.

Deshane understood then that the assignment ahead of him is in line with the new plan, but would include the amending of a number of items that are associated with the service section.

Deshane’s predicament includes that the integration of the plan would not be assured to work and bring an excellent result and that everybody would be pleased. To make things harder, Deshane think of the likelihood of that the plan or the integration would have a number of flaws and would have a likelihood that it would not work.

Background

As the issue comprises the plan and the judgment that must be made by the director, Bob Deshane, the initial step that the report has to focus on would be the company situation and the new plan’s merits and demerits.

In an attempt of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid (Herrnstadt 2007).

The task of executing the bonus plan falls to Tom Dunn, the freshly recruited Service administrator. Dunn must develop an extensive plan for implementing such organizational change. The setting of the case – a small car dealership – offers both familiarity and sympathy, with the role faced by the service manager.

There are two key objectives here. First, has the compensation plan been structured in a suitable way and does the organizational procedure seem right? Second, what is the complexity of the assignment ahead of employees who have to bring a change in the service department?

Objective of the report

The report is an attempt of developing an outline of implementation which discuses the exact steps that Dunn ought to follow with a view of ensuring that Deshane’s strategy is effectively executed. The report will focus on:

  • Providing a chance to use performance administration solutions, particularly a compensation system change.
  • Diagnosing and applying design process to a pay system intervention
  • Designing a change management plan

Discussion queries

The case involves two queries. These include:

  • What do you see as the merits and demerits of the suggested bonus strategy?
  • Based on the details in the Sharpe BMW case, prepare an execution strategy for Dunn to follow?

Analysis of the current plan

Prior to embarking into such significant queries, it is worth organizing the case scenario into an organized change process format. Particularly, how did the service manager find himself in this scenario and does that create issues? The case involves the following issues:

  • Service department’s revenues
  • Dealership’s customer satisfaction index
  • Service technician’s labour market

The case offers an assortment of details concerning the current compensation plan in addition to some pieces of information regarding how the evaluation (although non-formal) was carried out.

The current pay plan exists in a more enormous performance coordination model context. Specifically the present plan of warranty reward and client payment is closely associated with the client satisfaction index plan (Hassin 2010; Long 2006).

We can borrow and adapt the procedure for a successful employee appraisal plan in addition to the procedure for a successful compensation plan in assessing the association of these two criteria.

Pros and cons of the current CSI

The customer satisfaction index model can be evaluated as follows:

  • Relevance – the client satisfaction index method ranks well on relevance as marks are transferred to the company every four weeks (Mclean 2009).
  • Exactness – the precision of the client satisfaction index score can be disputed. It includes survey feedbacks. Only one of eight queries associates with technician attitudes and only four of five bring about a rating of 85%. A client bringing his or her vehicle in for a warranty fix, in the best scenario, cannot be a pleased client and thus the probability to rate the general service experience as excellent (100%) cannot be high regardless of how good the technicians perform (Chew & Cheng 2006).
  • Recognition – there is little recognition of the client satisfaction index plan as an applicable dimension. Under the present plan, an employee is not paid at all for good client satisfaction index score, so there is slight opportunity he or she would agree being controlled by it (Magal & Word 2012).

Generally, the client satisfaction index plan does not have lots of inspiring potential as a performance response model, particularly for the technician.

Pros/ cons of the current pay plan

The present compensation plan can be evaluated as follows:

  • Relevance – even though no particular details are available, it is possibly reasonable in assuming that under the present model, a technician is remunerated on a monthly basis. Relevance of the pay is consequently judicious.
  • Availability – here the query is whether remunerations are available. Based on the old model, the response is that there is no an extra incentive or appreciation awarded beyond the present hourly remuneration rate. Not to be assumed, however, is the actual uncertainty that a qualified technician is hard to get and there is an opportunity for the technician in other service enterprises.
  • Performance possibility – is there a link between remuneration and good service. The response here is no. A technician in the new plan is simply rewarded based on the job he or she performs (warranty payment versus client payment)
  • Equity – the plan seems to be fair as far as intrinsic and extrinsic equity is concerned.
  • Visibility – the current plan lacks visibility. However, it is perhaps realistic in assuming that a non-formal plan in the service unit exists (Stinson & Smith 2007).

A technician perhaps knows who gets what job and if or not some people are receiving higher proportions of warranty versus customer pay job. In general, the current reward plan is possibly average in its inspiring potential. The most fragile factors are performance possibility and availability.

The configuration between the current plan and new plan is not good. Basically, the communication model determines the worker attitude that is not being paid but for which top management is being recognized. It is no doubt the top managers at Sharpe BMW have selected the pay plan as the primary switch for change.

It is not likely that the managers would be capable of changing Sharpe’s business model. As far as the analytic process is concerned, the Sharpe BMW case leaves the tough feeling that the analysis was performed approximately totally by Bob Deshane (Burke 2011).

As an outcome, we can forecast that the technical employees will probably be doubtful and show as a minimum some resistance to the execution of the current pay plan. The senior technician’s comment in the case is suggestive of this resistance (Bloodgood & Morrow 2003).

Executing the new pay plan

Given the merits and demerits of the existing performance coordination approach and the way the analytic phases were carried out, we can resort to the query of execution.

Dunn’s responsibility in execution

As a service administrator in a car dealership, Tom Dunn is a central administrator. For Dunn, top managers want improved CSI scores, while his workers want to be fairly rewarded for their contribution.

Dunn’s work is that of finding a common ground, of getting a technician to understand the need for a reward alteration system (or the significance of precisely executing Deshane’s system) and, at the same time, assure that the new system attains top managers’ objective of advanced CSI scores.

Basically, Dunn is the change executor and therefore must balance the requirements of the management as well as anticipations of the workers (the technicians).

Execution plan

There are 2 methods to think regarding the establishment of an execution design. In the first scenario, the service manager can conduct a force-field investigation and generate a change approach derived from that investigation. On the other hand, Dunn can follow a change implementation design (Zhu & Meredith 2003).

Table 1: Force-field investigation

Forces for change Forces opposing
  • Dwindling CSI rankings
  • Directors chance for higher bonuses
Current pay plan
  • Technicians present way to think regarding rewards
  • Knowing the need for change
  • New plan does not improve payment that much
  • Association between CSI rating and attempt not clear
  • Relation between payment and performance not in the control of technicians
  • The likely change is not equivalent to the effort.
New pay plan

The new plan brings in another measure – CSI scores – that influences technicians’ bonuses, and that ranking is not in their favour. As an outcome, it is possible that a technician would oppose.

Managing change

Once the service manager has understood the scope of the change via a force-field assessment, Dunn must craft an execution strategy.

Dunn may have to choose whether he would conduct a pilot execution (comprising, say a single technician) or an entirely fledged execution comprising all technicians. Dunn then must develop a successful method of communicating this strategy to the technicians (Barlett & Ghosai 2007).

Reflections

Any strategy of execution that Dunn utilizes ought to stress the following core aspects:

1. Communication – he must explain the new system completely in a way that any technician can know its impact on him or her. Dunn must start by explaining what encouraged the company towards adopting the bonus plan and the outcomes that the managers expect once the system is executed.

Dunn must emphasis the gains (although small) that would go to the technicians based on the plan. Dunn as well should be specific to explain what is anticipated of the technicians, for example higher interest to warranty works. He should understand that good communication is critical to the victory of the plan.

2. Monitoring and response – after the reward system is implemented, Dunn should track it to see its result and offer response to the workers. It may encourage the workers if the manager can make public success episodes (increased CSI ratings) in addition to the bonus that a certain technician has got due to more focus on warranty job.

Conclusion

The case analysis aimed at assessing the current situation of Sharpe BMW and the new plan’s pros and cons. In an effort of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid.

A technician has to vividly know the underlying principle for the alteration, what he or she has to do to obtain the reward, and what type of modified attitudes are anticipated of him. It may seem right for the service manager to develop real figures and indicate how technicians can increase their present salaries by enhancing their CSI ratings.

Recommendation/ solution

Regardless of the reward plan’s slightly better structure, executing such change may not actually assist the Sharpe BMW in the long term. The solution is to sustain customer satisfaction index ratings at an echelon satisfactory to Sharpe BMW and to senior managers.

References

Barlett, C & Ghosai, S 2007, Managing across borders: The transnational solution, Harvard Business School Press, Boston.

Bloodgood, J & Morrow, J 2003, ‘Strategic organizational change: exploring the roles of environmental structure, internal conscious awareness and knowledge’, Journal of management studies, vol. 40 no. 7, pp. 1761-1782.

Burke, W 2011, Organization Change Theory and Practice, 3rd edn, SAGE Publication, United States of America.

Chew, M & Cheng, J 2006, ‘Managers’ role in implementing organizational change: case of the restaurant industry in Melbourne’, Journal of global business and technology, vol. 2 no.1, pp. 58-67.

Hassin, A 2010, ‘Effective diagnosis in organization change management’, Journal of business systems, vol. 5 no. 2, pp. 23-29.

Herrnstadt, O 2007, ‘Are international framework agreements a path to corporate social responsibility’, Journal of business and employment law, vol. 10 no. 1, pp. 187-223.

Kenneth, G & Whitten, D 2007, ‘Organisational culture of customer care: market orientation and service quality’, International journal of services and standards, vol. 3 no. 2, pp. 137-153.

Long, R 2006, Strategic compensation in Canada, 3rd edn, Thomson Publication, Toronto.

Magal, S & Word, J 2012, Integrated business processes with ERP systems, Wiley, Cambridge, MA.

Mclean, G 2009, Organization development principles processes performance, Berrett-Koehler Publishers, California.

Stinson, V & Smith, S 2007, ‘The CSI effect: reflections from police and forensic investigators’, The Canadian journal of police & security services, vol. 5 no. 3, pp, 125-133.

Zhu, Z & Meredith, P 2003, ‘Defining critical elements in JIT implementation: a survey’, Industrial Management & Data Systems, vol. 95 no. 8, pp. 21-29.

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