The paper "Creating a Strategic Direction" is a wonderful example of a Management Assignment. Maggie’ s Eatery is a medium-scale restaurant in New South Wales. It operates in the hospitality industry and as such, its remuneration and benefits strategies are guided by the Hospitality Industry (General) Award (the HIGA) 2010. Like most businesses, the owners of Maggie’ s Eatery hope to expand their business in future by opening other branches in different towns and regions. According to Olk, Rainsford and Chung (2010), the presence or absence of a strategic direction depends on whether the management has a clear vision for the firm.
Based on Olk et al. ’ s (2010) views, it is therefore obvious that Maggie’ s has a working strategic direction since the restaurant has a shared sense of purpose and direction. Maggie’ s mission and goals for example indicate the intent of the restaurant expanding from the current sole restaurant to five more in the next two years. In the short-term however, the restaurant has goals that include increasing sales by providing customers with superior food quality and superior waiting services. Like other players in the hospitality industry, Maggie uses a combination of Key Performance Indicators (KPIs).
Employment-related KPIs adopted by the firm include wage cost percentage (i. e. the percentage of sales that is used in offering employees remuneration and benefits), average hourly pay, and labor turnover. KPIs in stock management include the costs of supplies purchased in a week against the sales obtained in the same period. Maggie’ s also using the number of customers as a measure of its popularity in NSW, the rate of customer satisfaction (often gauged by the number of complaints or no complaints), and the seating efficiency as other KPIs for its popularity.
The overall business success of Maggie’ s is however indicated by several KPIs which include: Return on investment (i. e. % profit compared to the investment made), taxes paid, and the cash available at the bank. The latter is especially an important indicator since it is used as a measure of how soon the restaurant can realize its vision of expanding the business to five more restaurants in the next two years. Remuneration strategy adopted by Maggie’ s Eatery.
According to Baghai, Coley and White (2000, p. 5), a strategy (whether remuneration or otherwise) should at the very basic “ extend and defend core business” . Additionally, Baghai et al. (2005) observe that a strategy should build “ emerging businesses” and “ create viable options” . The latter two functions of strategy as identified by Baghai et al (2000, p. 5) happen as the business attains longevity, and as the profits increase. As if prompted by the observations made by Baghai et al. (2000), Maggie’ s remuneration strategy at the very basic seems to be modeled toward defending and extending the core business.
Specifically, the business ensures that it complies with the HIGA provisions on basic wages, thus avoiding the consequences (e. g. civil penalties, suspension or revocation of the operating license) of non-compliance. The strategy at Maggie’ s is implemented by ensuring that all employees’ remuneration is in accordance with the HIGA provisions. Additionally, the management provides pay incentives for the best performing department, hence motivating them to provide superior products and/or services to customers. In the event that overall profitability exceeds a certain amount, all departments get bonuses.
Employees who stay with the restaurant for more than a year are often employed on a permanent basis subject to their willingness to become permanent employees as well as their skills and expertise, and they are also entitled to several fringe benefits. Through such strategies, Maggie’ s protects and defends its core business by ensuring that its remuneration approaches are legally compliant and that its talent is motivated (at least pay-wise) to keep working in the restaurant. The latter is especially a critical strategy since it prevents Maggie’ s from having a high labor turnover, and consequently saves the restaurant significant costs which would otherwise be incurred in recruitment and training.