EZ-ABC school is an ESL (English as a second language) school in the Kangnam business district of Seoul City. The school has two major problems. One of the problems is employee retention under the human resources management department. The other problem is lower student enrollment, which should appear under general management. General management deals with creating strategies for capturing a larger market share.
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The school operates as a franchise of EZ-ABC, which is a brand with a good reputation. Sandy is the principal of the school. She has a doctorate degree in educational leadership. On the other hand, Mr. Lee is a retired soldier.
He is the sole proprietor of the school. Without professional management, the standards of the school cannot improve. With lower teacher retention, students cannot perform well in their courses. Teacher retention requires a suitable work environment. Some of the external constraints include increased rivalry and unfavorable economic conditions.
Identifying Problems/ Issues
Integrity/ honesty/ honouring contracts
One of the symptoms of lack of integrity is the irregular city deductions from employees’ salaries. It appears dishonest to imply that the city council has deducted some taxes when it has not. The firm is not honest when reporting facts to the employees. It was inaccurate to tell Bert that teachers do not need to draft lesson plans. If the management appears dishonest, none of its core values can be taken seriously. Dishonesty also indicates a lack of a vision.
The school lacks professional leadership. Mr. Lee hired Sandy to be the principal of the school and to act as the manager. Mr. Lee is a retired military officer who has no formal knowledge of running a school. It creates a leadership gap if Sandy takes orders from him.
The autocratic leadership style used by both Sandy and Mr. Lee demoralizes teachers. Daft (2014) explains that an autocratic leader “centralizes authority and derives power from her position, control of rewards, and coercion” (p. 44). Sandy is demoralized by Mr. Lee’s commands.
In turn, she also applies similar commands to teachers. The commands are uttered together with threats. Her repeated use of commands and threats are a characteristic of the autocratic leadership style. Mr. Lee’s resistance to a curriculum change is another characteristic. The management is resistant to change.
Conflict of interest
The conflict of interest that Sandy has on the development of a new curriculum affects general management. She wants to experiment with her lesson plans by forcing other teachers to comply with them.
One of the symptoms of the problem is that Koreans do not expect foreigners to complain about small deductions provided it is returned to the firm that employs them. It appears as if the firm needs the small deductions to survive. In Korea, it is normal. In Canada, it is unacceptable to make false deductions. The difference in cultures makes the problem bigger to Bert and other foreigners.
Human Resources Management
The firm recruits teachers who have experience despite the fact some are not trained as teachers. Bert studied a business course for his degree. However, he is employed as a teacher. The firm values him less compared with Larry who is an American teacher. The same issue has been used to support the mistreatment of foreign teachers by locals. They claim ESL teachers are under-qualified.
The firm has the problem of retaining employees. The real problem came out when Bert realized that there were 19 new teachers that year. The retention rate is 5%, which is obtained by dividing 1 by 20. The retention rate should not be less than 50% in a single year. It would mean that the firm starts afresh every year. It does not gain from accumulating knowledge about the industry and their students’ needs.
The firm has to employ experienced teachers because it does not have time to develop its own as a result of the low retention rates. The firm has to offer higher salaries compared with other schools to attract experienced teachers. It leads to higher costs, which compel the owner to make irregular deductions to recover part of the money.
Diversity in the workplace
There should be an organizational culture that creates a tolerance for different cultures, ethnicities, races, and gender. Mr. Lee does not want Sandy to recruit female teachers. The workplace lacks gender parity.
Harsh work environment
The harsh work environment makes teachers hate their jobs. The harsh work environment may be linked to absenteeism, low retention rate, and lower performance.
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Lack of teamwork
The competitive teaching and lack of communication among teachers limit the growth of capabilities and the school.
Sandy appeared brusque during the phone that she made to Bert. It is poor communication to appear less courteous to someone you have never met personally. It is a sign of poor communication skills of the manager. There is also poor communication among employees. Mr. Lee was seen only once during the interviews, afterward teachers never saw him again.
Reduced number of students
A lower enrollment of students has been attributed to an external factor (economic downturn). It results in lower revenues, which compels the owner to use tactics that can allow the firm to survive. Some of the tactics make the situation worse, such as the pay discrepancy and competitive teaching.
Identifying Key Elements
The criteria are the objectives of the school.
Attract and retain the best ESL teachers
The firm targets to attract the best ESL teachers through higher salaries. Its retention method is to create a competitive atmosphere among teachers. It threatens to fire teachers with lower ratings and lower performance. Competition among teachers may lead to unwanted methods, such an indirect leakage of exams. One of the situations is where teachers directly cover areas that they know are covered in the exams.
- Higher salaries in the face of declining student enrollment are becoming less sustainable.
- Threatening to sack teachers based on performance induces a competitive environment that undermines teamwork. Teamwork is virtually non-existent in the firm.
- The autocratic leadership style is discouraging employees.
- Lack of integrity of the school management disappoints teachers.
The firm targets professional management and leadership
The firm hired Sandy because she has the necessary qualifications to run the school professionally. A doctorate puts her above all other employees. Her educational leadership degree also matches her job.
- Interference in management decisions from the sole proprietor cause unprofessional management.
- The disagreements between Sandy and Mr. Lee affect overall management.
- Conflict of interest that Sandy hers affects her leadership style. She has moved from transformational to an autocratic leadership style.
Higher enrollment of students
The management targets a higher enrollment of students by hiring the best teachers and using the best curriculum.
- High enrollment is tied on high performance and the high retention of the highest performers in the teaching staff.
- The difficult economic times induce the population to reduce expenditure on nonessential commodities, such as ESL learning.
Higher academic performance and higher ratings by students
The school wants teachers that end up with higher academic performance among students. It also wants teachers that are highly preferred by students. The school has initiated a competitive environment among teachers.
- The goal does not take into account the fact that lower performance depends on the students’ effort and attitude. There are also other factors that teachers cannot control.
- Competition reduces the team spirit necessary for capacity building for the entire teaching staff.
- It is difficult to have higher ratings and high performance with high employee turnover. Each student has unique needs that are understood when a teacher stays with them for a longer period than a year or a single term.
Reduced number of teachers
Sandy creates the impression that the firm hires more teachers with the intention of reducing the number based on their performance and enrollment of students.
- There are a minimum number of classes that must be retained.
Diversity in the workplace
The firm employs teachers from different countries, which is a sign of diversity in the workplace. Larry is American, Sandy is Australian, and Bert is Canadian. However, it discriminates against female teachers.
- There is a lack of gender parity in the workplace.
- The firm does not have an organizational culture that integrates differences in cultural background. It requires foreigners to conform to Korean culture.
- There is a harsh work environment.
Develop a new curriculum
The firm will be successful if it develops a unique and popular curriculum for its programs. The project is personally undertaken by Sandy. Initially, she had consulted with other teachers.
- Mr. Lee does not support the project.
- There is a risk associated with introducing a new curriculum. Students may dislike the new curriculum leading to lower enrollment. It may also be successful.
- The lesson plans are used through coercion that may lead to demoralization and poor implementation from teachers who dislike being forced to carry out activities.
- Sandy has eliminated consultation with teachers.
Reduced communication among teachers
The management prefers when there is little communication among teachers because it reduces the instances of uncovering discrepancies and complaints.
- It is not easy to enforce.
- It creates a harsh work environment that leads to high employee turnover.
The ESL teaching programs are the products. There are different courses that students can pay for in the school curriculum. The ESL school may have a line of products, which includes different courses. Mr. Lee has not agreed to the expansion of the product line. On the other hand, Sandy thinks of increasing the number of programs.
Increasing the number of programs and maintaining the same price increases value for students that can lead to an increase in student enrollment. A multi-segment focus is necessary to ensure that the school meets specific needs at reasonable prices.
Lamb, Hair, & McDaniel (2012) explain that a multi-segment strategy requires the firm to target multiple segments using differentiated products. Students can choose programs that specifically meet their needs. It helps to create value when students are targeted with differentiated products.
Price should be adjusted to match the requirement of different courses. People do not mind paying a higher price provided that the product is customized to their needs. In an economic downturn, the school should consider offering shorter courses to increase their affordability.
Another method is to have different units to have similar prices. Similar prices will ensure that students pick different units regardless of their price. It helps to distribute students evenly across classes. It will also ensure that teachers do not complain about teaching higher-priced units and being paid salaries that are similar to others.
Place refers to accessibility when talking about offering services. Place refers to the location of the distribution center when the products are physical goods (Lamb, Hair, & McDaniel, 2012). EZ–ABC has a central location. Its location in the Kangnam district in Seoul is a good site for business.
It is a business district with plenty of activities as described by Bert. An area with a lot of activities increases visibility reducing the need for marketing. Seoul is a centralized location and densely populated. It offers a good opportunity for being the capital city. It creates a radial network of customers. The place also refers to having the product at the customers convenient time. It may include evening classes for those that work during daytime.
Franchising has helped to reduce the need for individual marketing. Additionally, the firm can carry out separate promotions to increase awareness about its programs. The social networks offer an opportunity for marketing.
- The brand name of the franchise
- Ability to attract experienced teachers
- Highly qualified principal
- Sole proprietorship decisions can be made instantly
- Located in the capital city
- Employee retention rate is very low
- Interference with the professionalism of the management from the owner
- Harsh work environment
- Lack of teamwork
- Low enrollment and declining revenues
- Difficulty in raising additional capital as a sole proprietor
- New curriculum may create competitiveness
- Ability to expand using the franchise
- The legal environment favors the school
- Franchising costs
- Intense competition among ESL schools
- Unfavorable macro-economic conditions
The external environment
Porter’s five forces
There is intense competition because there are many firms offering similar products. Competition may lead to lower prices that may reduce the firm’s profitability. Competition may result in lower enrollment if the firm does not have a strategy to retain its market share.
Bargaining power of buyers
Preventing students from switching from one school to another is not enforceable by contracts. It increases customers’ bargaining power. However, their power is limited to individuals. Buyers would have higher bargaining power if they were corporations enrolling a large number of their employees for ESL classes.
Bargaining power of suppliers
As an institution of learning, the school has higher bargaining power over suppliers because it makes large purchases. Teachers are the main suppliers of skills and products. However, teachers are also part of the firm. Teachers have low bargaining power, considering that they are foreigners offered accommodation under contracts.
The threat of new entrants
It is easy to enter and leave the industry because it does not involve building a plant or laboratory. New entrants increase competition among schools. Ability to leave the industry reduces the level of competition. Firms have an option of shifting to another business if they are not making the required rate of return. Teachers and classrooms can be hired easily in the market. There is a high threat of new entrants.
Presence of substitutes
The existence of close substitutes creates an option that customers may use for lower price decisions.
The political and legal environment favors the school. The locals support the school decisions despite their lack of integrity.
South Korea is experiencing an economic downturn that may reduce expenditure in ESL education. The school is located in a vibrant business area. South Korea is considered one of the emerging economies in Asia. It has a higher purchasing power compared with other Asian countries.
A higher percentage of the working classes among the population may sustain the profitability of the firm even during the economic downturn. Kangnam business district was a favorite for young couples to hang out. It is situated in a place suitable for its targeted demographic group.
Technology may refer to how good the school uses assistive technology to enhance learning. The firm may offer DVDs and learn through video links as some of the options that learners can use.
The internal environment
The firm plans to reduce the number of teachers to match the reduction in student enrollment. Operations require the efficient use of resources. The firm has to make maximum use of resources.
It can have additional classes separated by time within the same facilities. It helps to spread fixed costs over a larger contribution margin. Marginal costs will be the overtime benefits paid to teachers. Operations may require the use of technology to enhance learning. The facilities should be well-furnished to bring relaxation and prestige among students.
Service refers to the additional activities that the school carries out to enhance its programs. One is the development of a new curriculum. The school could also add additional value creation lessons as planned by Sandy. However, they are not supported by the school owner. The school also has a feedback system that supports the rating of teachers. A customer feedback system creates value for students.
Human resources management
The firm has a problem in its HR department elaborated by the high employee turnover. The firm has created a harsh work environment, which intensifies rivalry among teachers. There is a lack of communication among teachers. The principal also lacks better interpersonal traits to communicate effectively with teachers without demoralizing them. The management lacks integrity in handling teachers’ contracts.
General administration is supposed to form the school’s vision, core values, competitive strategies, and coordination between departments. Sandy is strategically trying to develop a new curriculum, which is a good strategy. The firm also intends to reduce the number of teachers to reduce salary expenses in line with a reduction in revenues. The management also identifies the economic downturn as a factor that should shape the management’s strategy.
Identifying and evaluating alternatives
The school should:
- Reduce the number of teachers to a number that needs no further reduction to prevent destructive competition among teachers
- Induce teamwork, role modeling, and inspire those with weakness
- Motivate with rewards rather than using threats
- Include female teachers in the teaching staff
- Consult when making changes, empower employees by subdividing roles, not all leadership roles should be carried out by Sandy
- Be honest with employees to avoid disappointing them
- Encourage communication because it creates a friendly work environment
The firm should concentrate on using non-monetary motivation factors. Employee empowerment can start with freedom on using their lesson plans. Daft (2014) suggests that “positive attitudes can be tempered through strong ethics” (p. 39). It requires leaders to have integrity and to be honest.
Teamwork can assist all members to be top performers. As a team, the school can have better performance and higher ratings for all teachers because the units are interrelated. Teamwork may also mean matching strengths with roles (Daft, 2014). A calm work environment is supportive of the quality of instruction given by the teacher (Bonnici, 2011). It may increase creativity, which is necessary because teaching is more effective when it is artistic.
The objective will be measured through employee retention rates and employee feedback.
- Mr. Lee should allow Sandy to make management decisions without interference.
- Mr. Lee should only be consulted on introducing new products, such as a new curriculum. The reason is that a new curriculum involves a risk that affects the value of the ownership.
- Leaders should be optimistic (Daft, 2014). Mr. Lee and Sandy should be optimistic despite the economic downturn.
Teachers can be interviewed to give their opinion on whether the school is run professionally.
High enrollment of students
- It needs high retention of teachers
- Adding value to existing products, such as additional programs offered for free and increased differentiation of programs
- Develop new curriculum, which can be introduced gradually to reduce risk
A new curriculum can be introduced gradually by ensuring existing students complete their studies using the old curriculum and only new students are introduced to the new curriculum. Sandy should convince teachers to use her lesson plans rather than force them (Bonnic, 2011). The feedback mechanism can be used to assess the popularity of the new curriculum. Students’ performance can be used to assess their effectiveness.
Change in leadership style
- Sandy should change from the autocratic to the transformational leadership style because the autocratic style leaves teachers demoralized. Bert describes how Sandy issues commands in a discourteous manner.
The best method is to assess Sandy’s leadership style is to use questionnaires. Teachers can be asked if there is more consultation before changes are made, reduced use of threats, distribution of leadership roles, and employee empowerment among other characteristics. Bonnici (2011) suggests that the implementation part is more likely to succeed when teachers are consulted. They will consider change as theirs.
Bonnici, C. A. (2011). Creating a successful leadership style: principles of personal strategic planning. Lanham, MD: Rowman & Littlefield Education.
Daft, R. (2014). The leadership experience (6th ed.). Mason, OH: South-Western Cengage Learning.
Lamb, C. W., Hair, J. E., & McDaniel, C. D. (2012). Essentials of marketing (7th ed.). Mason, OH: South-Western Cengage Learning.