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Believe it or not, years ago it was normal for people to have wait… Believe it or not, years ago it was normal for people to have wait an hour or more to get their pizzas delivered. But those were the years B.D.?efore Domino’s. Started by Tom Monahan and his brother in Ypsilanti, Michigan, in the 1960s, Domino’s created a value proposition people were hungering for: pizza delivered in 30 minutes or less. Better yet, if a Domino’s pizza wasn’t delivered in 30 minutes, it was free. That was unheard of in the pizza business. Monahan changed the pizza industry not because Domino’s created a better product but because it was able to offer a different value proposition than anyone else was offering and align its people, processes, and systems to deliver against that promise. Domino’s used assembly line-based systems and standardized processes to improve efficiency and reduce pizza preparation times. For example, it was the first to use conveyor-belt oven technology to ensure uniform temperatures and reduce baking times. Domino’s also translated its strategy into HR deliverables by emphasizing and encouraging fast pizza-making and delivery. Annually the company holds a “World’s Fastest Pizza Maker” competition in which its pizza makers compete for cash and other prizes. As important as what Domino’s did is what it did not do. Strategy is about making choices. Domino’s did not focus on great pizza?t focused on fast pizza. It did not customize every order but prepared them all in advance. It didn’t hire premiere pizza chefs who tossed pizza dough into the air to make lighter crusts. It didn’t use the wood-fired stoves to give the pizza an old-world taste. And it didn’t offer in-store dining. Each of the ingredients in Monahan’s formula was aligned around its value proposition of fast delivery?a strategy that worked well for Domino’s for decades. This strategy and a franchise model helped the company grow by leaps and bounds. Today there are over 13,000 Domino’s pizza stores, which are located in 80-plus countries around the world. India is currently the company’s hottest market. Over time, however, Domino’s competitive environment changed. Other companies began delivering pizzas in about 30 minutes, and consumers began wanting more than fast pizza: They wanted good pizza. The problem was that Domino’s wasn’t delivering on that score. In taste tests, customers complained Domino’s pizzas tasted like cardboard. At one point, the firms’ customer-satisfaction scores in terms of its food and service were lower than any other pizza chain. Perhaps not surprisingly, the firm’s stock price reflected as much. To turn things around, the company had to rethink its value proposition. That included revamping its food. The company developed a new recipe for its pizza crusts; began using fresher, gourmet types of ingredients; and began offering new products, such as artisan pizzas, pasta, and desserts. It also remodeled stores and added in-store dining. But Domino’s had to revamp its HR strategies and policies, too. One problem was employee turnover. Domino’s turnover rate was 158 percent annually. In other words, for every employee hired during a year another 1.5 employees quit. Domino’s CEO at the time, David Brandon, wasn’t convinced that higher pay for hourly-wage employees was the solution though. “If we could have increased everybody’s pay 20 percent could we have moved the needle a little bit to buy some loyalty? Maybe, but that’s not a long term solution.” Moreover, because most of Domino’s stores are individually owned rather than corporate owned, it is the individual owners of the stores who have to decide for themselves whether to increase hourly wages. Instead, the company focused on the quality of store managers?hoosing better ones, finding ways to retain good ones, and coaching them to train and motivate employees by being respectful and polite. It’s store managers who cause employees to stick around?r not, said Rob Cecere, a regional manager for Domino’s. Employees can go to McDonald’s or Pizza Hut and make as much as they make at Domino’s. “You’ve got to make sure they are happy to come to work for you,” Cecere explained. Domino’s also worked harder to promote a culture of “fun” via its World’s Fastest Pizza competition and other initiatives. Domino’s chief strength still lies in its systems and technology though. The biggest department at the firm’s headquarters in Ann Arbor, Michigan, is its technology department. The department has built novel applications over the years, such as an online ordering system that allows customers to “build” their pizzas online and track their preparation, cooking, and delivery times. Customers can also use a mobile app for ordering, an emoji to text a standard order, or simply tell “Dom,” Domino’s chatbot, what they want. In Australia and New Zealand, the company is experimenting with robot and drone delivery. Has Domino’s new recipe worked? By most accounts, yes. Turnover dropped by more than 100 percent following the initiative, and customer satisfaction scores jumped up, too. In 2016, Domino’s sales growth was the best among the 25 largest restaurant chains in the United States. Its stock price has rocketed upward as well. Still, strategy changes and their implementation are continually evolving challenges for firms, and Domino’s is no exception. “We need to understand what’s going on and create competitive advantage by being ahead of the curve,” says the company’s current CEO J. Patrick Doyle. For one, the company still faces issues with its HR piece of the puzzle and ensuring its strategy is aligned all the way down the food chain. Recently a group of franchise owners in New York agreed to pay $1.5 million to settle cases for minimum-wage and overtime violations. Doyle says the firm has to start paying higher wages. Minimum-wage laws are rising in some states, and employers like Walmart and Target are raising their minimum wages. “The reality is the labor market is tightening up, and we’ve got to respond to that. It’s getting harder to hire people,” says Doyle. “We’ve got to do what the market demands to get the right people for our business,” he says. Will paying hourly-wage employees a little more buy Domino’s a little more loyalty and prevent negative publicity for the company? And if so, would the costs have been worth the benefits? And who should incur these costs since most of the stores are privately owned? These questions are food for thought, ones that Domino’s will have to resolve. After all, even with the best technologies and systems, pizzas don’t cook and deliver themselves. People do. Questions 1. Explain how Domino’s strategy differed from its competitors. 2. Has the firm been able to achieve a long-term strategic fit between its strategy and HR practices in your opinion? Why or why not?BusinessManagementHuman Resource ManagementMGT 241

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