Joe’s Hamburger Grill Discussion

Please reply by 9/22/2021 so I can send you my peers posts.   

Please read the case and answer the questions at the end. Please respond to two of your peers. Do you agree or disagree?

Joe’s Hamburger Grill has been doing business in the same location for the past 20 years. The Grill is located in Phoenix, Arizona, and caters to college students by providing some of the world’s biggest hamburgers in a fun and casual dining atmosphere. Joe looks back with fondness on the 20 years that have passed since he first opened the grill. His primary motivation for starting the business was the opportunity to work for himself. When he graduated from college, Joe took a job as an accountant and worked for a number of different companies. When he turned 40, Joe decided he was tired of working for a boss, so he began looking for an alternative opportunity. Knowing his love for cooking and his flair for providing great customer service, Joe’s wife and friends encouraged him to open the hamburger stand. After taking some time to decide what he wanted to do, Joe followed their advice and founded the business. By all accounts, his efforts can be seen as a success. He has made a good living doing something that he truly enjoys.

When Joe turned 60 several years ago, he decided it was time to slow down and let someone else deal with the day-to-day hassles of running the business. He hired a manager to oversee operations at the Grill. After three months, the manager quit and started classes at the local university. Joe was then able to hire a manager who stayed for 18 months but left to work at a bigger store in Dallas, Texas. For the last three months, Joe has been trying to hire a new manager. He hasn’t been able to find someone he thinks will be a successful manager. Joe wonders if part of the problem is his compensation package.

When Joe hired the first manager, he decided to pay a monthly salary that included full health benefits. He didn’t know how much to pay for a salary, so he asked the first manager how much she was making. He then offered her a $500 per month increase to work for him. The second manager seemed fine with the amount, but a few recent candidates have told him that he needs to pay more.

One day a customer of Joe told him that she was taking a human resource management class where they were discussing compensation issues. Joe described his dilemma about trying to decide how much to pay a store manager. The customer offered to do some research and learn more about pay levels for managers. A few days later she brought Joe a graph that had information about pay practices. She told Joe that she had been unable to locate specific information about pay for restaurant managers. However, she had found some information about food service supervisors. Just looking at the information she felt that the amount for the supervisor position was probably too low for someone who actually managed the entire restaurant. She thus found some additional information about the wages for general managers. She also looked at compensation figures for people who owned sales-related businesses. Knowing that Joe had lost one manager to a job in Dallas, she included information about compensation in Dallas and another large city—Los Angeles.

Joe looks at the information in the graph and wonders what to do with it. He wonders how important it is to take into account pay in other cities. Will he need to pay wages similar to what is being paid to managers at larger companies? Joe’s goal is to find a manager who will treat the Grill like an owner. He wants the manager to commit to several years of building and maintaining profitability. If things work out, he might even be willing to sell the Grill to a high-performing manager who shows loyalty.

Questions:

What are some suggestions that might help Joe as he thinks about changing the way he pays someone to manage the Grill?

Do you think Joe’s approach to determining how much to pay a manager was successful? Would you recommend that he do something different?

How might agency theory guide Joe as he thinks about finding a manager who might someday become the owner of the Grill?

How can the concepts of equity theory guide Joe’s decisions concerning comparisons with pay in other cities and for other jobs?

How might FLSA standards apply to Joe’s compensation decisions?

First peer below

Hello Classmates,

What are some suggestions that might help Joe as he thinks about changing the way he pays someone to manage the Grill?

After losing a couple managers, I would first start with looking at the interview process and ensuring right and relevant questions are asked to learn more about each candidate and find someone who is looking to make a long-term commitment and interested in possible investment or ownership of the business. I would be direct and ask what is their ‘expected’ salary range is, and consider benefits, bonuses, and other perks along with pay to attract candidates. I would also do my homework and research the market, geographical area to determine the market salary for this position.

Do you think Joe’s approach to determining how much to pay a manager was successful? Would you recommend that he do something different?

I don’t think Joe’s approach offering $500 a month increase was the best route to go in hiring the first manager. Joe should do his own research, which he could do on the internet to find information on pay and benefits for his geographical area. He could reach out to his networking group or reach out to local business owners for their expertise and feedback, or he could hire a consultant. The information the customer provided was helpful, but should not be his sole source of information to determine pay. Exploring multiple sources of data would be the most beneficial.

How might agency theory guide Joe as he thinks about finding a manager who might someday become the owner of the Grill?

It’s all about looking for the differences in interests between the manager and himself. Joe could also use the data he received from his research to see what current managers are making at other places and what he thinks they should receive so there is a fair compensation package in place.

How can the concepts of equity theory guide Joe’s decisions concerning comparisons with pay in other cities and for other jobs?

The essence of the Equity Theory is motivation through perceived fairness. It compares employee’s inputs (time, hard work, effort, leadership, talent, skill) with employees outcomes (recognition, job security, pay and fringe benefits, responsibility, and promotion). Joe can focus on whether the person believes the amount of pay is fair and also focus on the process used to decide who gets what.

How might FLSA standards apply to Joe’s compensation decisions?

Joe should refer to the government website to gain an understanding of FLSA guidelines. It will help Joe determine which managers are exempt from the overtime requirements of FLSA and which are not.

FLSA provides an exemption from FLSA monetary requirements for an employee employed in a bona fide executive, administrative, or professional capacity if all pertinent tests relating to duties, responsibilities, and salary are met. Also, restaurants with annual gross sales from one or more establishments that total $500,000 are subject to FLSA, so Joe has to look at all these guidelines. Usually FLSA does not apply to restaurant managers because that position is exempt because they manage a business or department. 

Second peer below

I would suggest adding incentives to motivate the manager to run the business well and stay long term. For example, it could add bonuses that are related to sales. Moreover, offer ownership percentage if he remains long term.

I think Joe did a decent job of finding out how he should compensate his managers. He might have done better on the research in his area to find out what they pay for managers. Comparing bigger cities compensations can give an approximate number, but it is higher than he can afford.

Joe’s goal is to find a reliable manager who might buy the store from him in the future. Agency theory can help him to achieve that. Remuneration is an excellent way to motivate the managers until they agree to sell and buy the store. Both parties take risks in the partnership since Joe might waste time again if the candidate is not working out and the new manager is willing to risk his time and effort for the future reward.

Equity theory helps Joe compare managers’ compensations and decide the right amount and benefit to give his manager.

FLSA helps Joe determine how much the minimum wage is, rules about overtime, and requires equal pay for men and women.