Interclean Generic Benchmarking

Running head: INTERCLEAN GENERIC BENCHMARKING

InterClean Generic Benchmarking

John Hintz, Jere Cullen, Terry Robinson, and Marla Thompson

University of Phoenix

Table of Contents

Intersect Investment Benchmarking 3

Individual Company Synopses 3

Circuit City: John Hintz 3

Aaron Rents: John Hintz 4

AT&T: Jere Cullen 6

Entelos, Inc.: Jere Cullen 7

Starbucks: Terry Robinson 8

Xcel Energy: Terry Robinson 10

Hewlett-Packard: Marla Thompson 12

GTE: Marla Thompson 14

Compare and Contrast Intersect Investment to Benchmark Companies 16

Circuit City: John Hintz 16

Aaron Rents: John Hintz 16

AT&T: Jere Cullen 17

Entelos, Inc.: Jere Cullen 17

Starbucks: Terry Robinson 18

Xcel Energy: Terry Robinson 18

Hewlett-Packard: Marla Thompson 19

GTE: Marla Thompson 19

Conclusion 19

References 21

Intersect Investment Benchmarking

In business, many concepts exist that have a significant effect on the performance and success of an organization. These concepts range from leadership style to effective management practices. Although leadership and management style are crucially important factors, the impact of human resource issues on organizational effectiveness is equally as important. InterClean Incorporated is a good example of how human resource issues can shape the future of an organization. In the InterClean scenario, the organization will shift from product sales to offering solutions and services in the sanitation industry. The result of this change could increase market share and profit within the eight billion dollar industry. In order for this to occur, InterClean must establish an effective process for its employees to understand and implement new changes in sales. The inability of human resources and management to guide this change will mean the failure of the organizational transformation. This research paper will benchmark eight companies that have faced similar issues that InterClean is facing and how they dealt with those issues. By benchmarking these companies, InterClean should discover techniques which have produced success and failure and how to facilitate both.

Individual Company Synopses

Circuit City: John Hintz

Issue

At the beginning of the 2007 fiscal year, Circuit City (CC) announced that it would layoff more than 3,400 of its highest paid employees (Business Week, 2007). The goal of this reduction in personnel was to reduce internal costs by eliminating a large percentage of CC’s upper and middle management. The main issue with this reduction is CC has lost most of its skilled employees and customer satisfaction has plummeted. CC needed to make changes in order to cut costs, but it failed to integrate staffing practices with strategy (Dreher & Dougherty, 2001). The result of this and many other failures at the upper management level is CC shares have fallen 28% in the last year.

Strategy

The strategy CC chose to use seemed quite simple. Fire its employees and re-hire them at a lower “market rate” wage (Business Week, 2007). This would undoubtedly save the organization a great deal of money and CEO Philip Schoonover thought it was an excellent solution. The problem was CC failed to realize it was firing its key customer service representatives. The employees who made contact with the customers on a daily basis were being let go.

Results

The result of CC firing thousands of employees is it saved money on salaries, but lost a great deal more in sales while increasing customer dissatisfaction. CC failed to integrate staff practices with strategy. These practices require an organization to characterize explicitly its business strategy then make judgments about if existing staffing practices appear to be aligned with strategic orientation. CC fired personnel but failed to see the effects these cuts would have on staff and its ability to satisfy customer needs. The result of this decision is CC shares tumbled to $4.80 during trading on December 21, 2007 hitting a new 52-week low of $4.76 earlier in the session (Business Week, 2007).

Aaron Rents: John Hintz

Issue

Aaron Rents is an Atlanta-based organization which has been in business for 52 years. Last year Aaron Rents (AR) reported a 36% increase in net income to $78.6 million. As revenues rose 18% to $1.3 billion, its stock price has surged 160% over the last five years (Business Week, 2007). As the business continued to succeed and grow, so did its need for quality employees. The CEO, Charles Loudermilk, decided the organization must use an external recruiting technique in order to entice new employees (Dreher & Dougherty, 2001).

Strategy

The strategy for AR has not changed during its five decade existence. Hire the best employees who can be found and treat them like family. Loudermilk states that some may think this is old-fashioned, but its good business. With this philosophy in mind, as CC began to fire its employees, AR conducted an aggressive advertising campaign to attract the newly unemployed personnel. AR began posting advertisements on recruiting Web sites, "Attention Circuit City employees: So they say you make too much and are laying you off to hire lower paid employees? Aaron's doesn't lay off our highly paid employees…. We put them on a pedestal, and show others how they can make more.” (Business Week, 2007) The external recruiting technique worked quickly as hundreds