Abstract
Chipotle is a leading and rapidly growing fast-food chain which is known for its innovative practices, including in employee motivation and career development. Although the performance and quality-driven approach has allowed achieving success, there have been emerging concerns regarding the workplace conditions, company culture, and sustainability of growth under the current model. This case study analysis focuses on examining the Chipotle status, practices, and culture, identifying potential issues. A hypothesis is presented backed by motivation theories. Furthermore, the evidence is presented along with recommendations on further action through negotiation and conflict resolution. Chipotle has significant potential and its model is both innovating and forward driven, but changes need to be made to ensure sustainability and adherence to industry realities.
Introduction
The human factor consisting of employee motivation, satisfaction, and career development is a critical aspect of any business. As a company, Chipotle prides itself on the corporate image and culture which provides support and opportunities to its employees, incorporating incentives and focusing on internal promotions at every level. However, the high standards of the company combined with rapid expansion presents potential issues with its human resource practices and the company has faced criticism for its approach from employees, managers, and analysts. This case study on Chipotle will seek to examine, address, and discuss the corporation’s practices on career development and employee motivation initiatives.
Outline of the Situation
The case study presents an overview of Chipotle, which is a rapidly growing fast-food and casual dining company focused on Mexican cuisine. From the very beginning, the company took an unorthodox approach to its practices, ranging from its ingredients and food preparation to its internal structure and employee motivation. The key to Chipotle’s approach was to implement a company-wide performance-based culture, which its business model of owning all restaurants instead of franchising allowed it to do. The performance focus was present in every aspect of the company such as: hiring only individuals who demonstrate certain traits, intense training, and job requirements that require work-ethic and multitasking, as well as establishing an internal promotion program that encouraged employee growth and competitiveness. This framework of quality, hard work, and rapid growth in employees reflected on Chipotle’s success as a chain and profits, which in turn allows it to offer above-industry salaries and benefits (Qumer and Purkayastha). The culture element is almost an obsession at Chipotle, which brings up substantial issues and challenges going forward.
The authors of the case study brought up potential criticisms and others can be deduced as well based on the detail provided and existing knowledge. From a business perspective, the approach taken by Chipotle is potentially unsustainable. Its already high costs of operation are exacerbated by its employment practices and compensations. Although not necessarily a negative aspect, it can impact future profit margins. However, bigger human resource issues are hiring and promotion practices, which are extremely specific. While it does identify the top talent, as the chain continues to expand it will only face understaffing, inconsistency, and overextension from a human resource perspective. It is impossible to staff a large number of restaurants with top-performing staff and quick dismissal of even mediocre employees can be detrimental from both a practical and legal standpoint.
This leads to the reports by both employees and managers that Chipotle restaurants create an environment with poor conditions, long hours, unhealthy work-life balance, and high-stress environments. While the employee motivation and growth programs exist, the reality significantly differs from the image the company is attempting to portray according to accounts, stating that promotional opportunities are rare, and compensations do not justify the amount of work and stress that employees will face. In the long-term, this and other mentioned issues could potentially endanger the corporate culture of Chipotle, both from the perspective of realistic conditions actually existing in the restaurants as well as the image that the company is attempting to cultivate.
Questions Addressed
Having an understanding of the situation and key issues, it is important to list some potential questions that will be explored or addressed in this case study.
- Who is most affected by Chipotle’s practices, is it the employee base or the overall company? Is there an inherent clash between the ideological perfectionism practices of top management and the practical realities of on-the-ground restaurant conditions?
- Despite the arising issues, is this performance-based approach to employee motivation and career development an overall problem for Chipotle in the long-term? Is it sustainable or modifiable to address the arising challenges as the company expands?
- Do the problems based on Chipotle’s employee practices represent a concrete failure in its long-term business model due to its deviation from industry standards or simply a minor shift in practices and ideology can resolve the criticisms?
- Is there a responsible party for the rising issues and how can this entity modify their practices or behavior to resolve the problems?
- What theoretical, management and business theories and concepts can be implemented to address the problem?
Hypothesis and Theories
Based on available evaluation and information, the hypothesis presented states, “If Chipotle can modify the performance-based approach to motivation through consideration of basic employee needs (especially at lower levels) for working conditions and safety and enter into good-faith negotiation and communication while offering the same level of advancement opportunities, then the company can address its criticisms and sustainability issues while maintaining an innovative model in the industry.”
The first theory to consider is Maslow’s Hierarchy of Needs Theory which establishes a pyramid of human needs, where once a level is fulfilled, the next one is activated. The bottom two levels are physiological needs and safety and security. Although the theory was not specifically developed for business, it can be applied in this case, where Chipotle’s policies seem to take a completely opposite approach of focusing on self-actualization and esteem first, while leaving basic needs unfulfilled (Robbins and Judge 210). It is then understandable why extensive criticisms of poor working conditions and understaffing have been voiced over the years.
Herzberg’s Motivation-Hygiene (Two-Factor) Theory is also relevant in this case. It describes two distinct but interrelated categories of motivation and hygiene factors which directly appeal to satisfaction and dissatisfaction of employees. It is the hygiene factors such as salary, conditions, status, and job security which often cause dissatisfaction. However, addressing these is not a guarantee of satisfaction since motivational factors the likes of achievement, recognition, responsibility, and advancement must be competently and fully implemented as well. It is a dual continuum since motivators can be hygienic factors since they become less influential. In turn, hygiene factors may become a motivational factor for another person (Robbins and Judge 212). Chipotle struggles to find a healthy balance between motivational and hygienic factors. Although it seemingly provides motivational factors meant to drive satisfaction, it does not sufficiently address a myriad of hygienic aspects which may drive dissatisfaction or potentially improperly implement the motivational means. It is a conflict between intrinsic (motivational) and extrinsic (hygienic) drivers, whether impetus for behavior origins within based on the pleasure of performing a job or external based on its rewards. Therefore, Chipotle’s practices seemingly revert these by attempting to stimulate intrinsic motivation through hygienic factors, or superficial rewards, leading to dissatisfaction.
More business-oriented frameworks should be considered as well. Vroom’s expectancy model which suggests that motivation and strength of the tendency to act depending on the strength of expectations of a particular outcome as well as its appeal. Focusing on three key relationships of expectancy, instrumentality, and valence, the framework emphasizes the need for consideration of the expectations among the workforce (Martin and Fellenz 443). This is potentially a critical error that Chipotle has made as to its public image and internal culture building emphasizes tremendous rewards in all aspects of financial, advancement, and growth of opportunities as a result of hard work and dedication. This is appealing to practically all individuals, no matter the relationship they adhere to in the expectancy model. However, reality may greatly differ from expectations, leading to decreased motivation and satisfaction.
Meanwhile, Adam’s Equity Theory which states that individuals compare their workplace inputs, outcomes, and rewards and compare to others – attempting to eliminate any inequality. This leads to organizational justice of various forms (Martin and Fellenz 448). As discussed earlier, Chipotle employees often cite unfair pay (even at slightly above industry levels) for the amount of work they are expected to perform. The inputs, including working conditions and others, lead to distributive and procedural justice in the form of public voicing of concerns and strikes which disrupts Chipotle’s image and perception of its culture. Perhaps, the loyalty and work ethic of Chipotle employees goes far, but most demand interactional justice of dignity and respect in order to be motivated.
Proof and Action
It is necessary to derive proof from the case which would support the hypothesis. First, it is vital to establish that Chipotle’s current approach does not address the basic needs of employees by creating difficult working conditions where fundamental worker’s rights are being violated. The case study offers a few examples of complaints of the company not being employee friendly, forcing long 10-12-hour shifts of a stressful and rapid environment. The employees were not provided with adequate and legally required breaks, but also were severely underpaid, or in some instances not paid due to a system which automatically clocked out workers at a certain hour as evident by a 2014 lawsuit. Employees in this case and other restaurants in the chain suggested that any complaints were dismissed by management and they were threatened with termination. This constitutes a violation of the Fair Labor Standards Act. Another restaurant in Pennsylvania closed after mass quitting of managers and employees, once again citing the same issue and suggesting the work was performed in “borderline sweatshop conditions” (Qumer and Purkayastha).
As recent as 2016, an article in CNN, presented both anecdotal and legal evidence regarding very hostile or illegal practices against low-tier employees. It is cited as an ‘endemic’ problem where employees would accept working overtime without compensation and managers are pressured to manipulate payroll to keep down labor costs. Both parties accepting this as a “silent agreement” to achieve job security and the promotions that Chipotle executives vehemently promise within the company culture (Long). Both in the CNN article and the case study, former general managers support this emerging information about anti-employee practices. Therefore, there is an emerging pattern of evidence suggesting that in its performance-driven approach, Chipotle does not consider the basic needs or workplace conditions of employees, does not offer appropriate reward or compensation, and fails to treat its employees with dignity. For the public and shareholders, these recent revelations have come as a surprise considering the company’s clean reputation and slogan of “Food with integrity.”
In turn, this leads to the issue of sustainability of the company practices in its long-term expansion and fiscal profitability. The internal promotion program and structure inevitably has its benefits, but as evidence shows, it is a tedious process and there are top-to-bottom pressures placed on middle-tier managers from executives. The promotional opportunities are present, but they are strongly disruptive of any work-life balance as well, leaving few to actually seek and succeed at Chipotle’s programs. Furthermore, as the chain expands, it will inherently need to continue filling basic positions and alternate some of its processes to reduce workloads or continue to face lawsuits and federal investigations into labor practices which are penalizing both financially and its public reputation.
Recommendations and Solutions
In the context of Chipotle’s situation, status, and objectives, it is recommended to implement a two-step solution, which is to enter negotiations with employees and their representatives, and then to make certain changes to its practices with the goal of creating a healthy and sustainable culture. Negotiation is a process of discussion of a perceived conflict between interdepending parties with the objective to achieve a mutually beneficial outcome that would be a better resolution than something that they could achieve unilaterally. Negotiation allows each side to present demands and voice their interests and help the other party to understand and consider them. It is suggested that the Chipotle employees and executives engage in the integrative type of negotiations since the problem is a joint one for the company, both sides have common interests and objectives, and it is beneficial for the needs of both to arrive at a conclusive win-win outcome.
Conflict management is an additional aspect which is recommended for consideration. Based on the evidence, this seems to be a structural conflict which focuses on unfair or inefficient policies, organizational culture, and ingrained practices. Taking an approach of compromise or collaboration is the most logical in the context of Chipotle as the company attempts to gain control of the crisis and unmanaged conflict which has emerged. The issues have become polarizing and psychological impacts are being seen in terms of motivation, which significantly limits innovation and growth that Chipotle is striving for. In the end, it is recommended for Chipotle to modify its practices. First, any illegal means of reducing labor costs and pressuring managers should be eliminated. Furthermore, steps should be taken to improve working conditions and hours for employees. Although the Chipotle business model does demand more responsibility and versatility from even its hourly part-time employees, there can be significant efforts to revamp the environment, including by expanding hiring. The performance-driven approach and internal promotion model developed by Chipotle is positive but does need to be revamped to accommodate the realities of the industry and the chain’s expansion.
Alternatives
As a conclusion to the analysis, a list of questions is presented which may be either questions still remaining unanswered that can be explored in future case studies or potential changes to perspective on the issues.
- Are issues with employee motivation and satisfaction that Chipotle faces not so much a matter of its performance-driven approach, but rather illegal practices?
- Is there more evidence or analysis which can be presented to support the case?
- Is it possible to examine the problems from the realistic perspectives of executives without facing the rehearsed media responses which Chipotle has provided in response to allegations?
- Should Chipotle continue its current approach and campaign regarding motivating employees based on character traits and performance indicators?
Conclusion
Chipotle is a rapidly growing company in the fast food industry which prides itself not only on its business practices and cuisine, but employee motivation and career development approach as well. It is a performance-driven internal promotion model, which in part has allowed the company to succeed and provide a high quality of product and service. However, several issues arose over the years regarding the sustainability of this approach as the chain expands as well as the high level of expectations, unreasonable demands, and poor working conditions that employees, especially at lower tiers, face even if Chipotle does offer better compensation and promotional opportunities than the rest of the industry. This case study determined and discussed the issues identified applicable motivational theories, and hypothesized with potential recommendations on how Chipotle can address the problems and continue sustainable growth.
Works Cited
Long, Heather. “My Chipotle Nightmare.”CNN Business. 2016, Web.
Martin, John, and Martin Fellenz, Organizational Behaviour and Management. 5th ed., Cengage Learning, 2017.
Robbins, Stephen P., and Timothy A. Judge, Organizational Behavior. 17th ed., Pearson, 2017.
Qumer, Syeda M., and Debapratim Purkayastha. “Career Development and Employee Motivation Initiatives at Chipotle.”ICMR, 2015, Web.