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Introduction to Management
BUSM4185B Case study analysis
Happy Coffee

Bui Ngoc Minh Thu - S3914993

Word count: 2207
Lecturer: Truong Thi Tuyet Ngan
I. Unprofessional human resource management

According to Jorgensen and Becker (2017), human resource management (HRM)

occupies a pivotal role in improving organizational performance and coordinating
the success of the organization. HRM is defined as concentration on the management
of an organization’s employees which is a set of recruiting, training, evaluating,
taking care of the compensation system and employee wellbeing (Stahl 2003). It
means those tasks such as hiring the right applicants, motivating them and
guaranteeing the administration of the compensation accurately (Stahl 2003). In this
case study, Happy Coffee went bankrupt because of its unprofessional HRM which
are a failure in procedures to find new potential employees and an unreasonable
compensation system.

1. Case analysis

• Unsuccessful procedures of seeking new potential employees

Ineffective human resource planning and poor selection decisions are 2 main factors
causing this consequence. Firstly, HRP is defined as the process of future-oriented,
which means personnel managers are responsible for determining the precise
quantity and kinds of people that will be needed to achieve organizational objectives
as well as matching the individuals with their right capabilities at the proper time
(Nkomo 1987). HRP process requires an assessment the availability of the workforce
with their requisite abilities, skills and qualifications to perform their tasks
effectively, scrutiny of vacancies to avoid being understaffed or overstaffed and
anticipation of human resource (HR) issues to meet future organizational objectives
effectively (Chakraborty & Biswas 2019). Hence, an effective HRP could contribute
to reinforcing organizational performance and is a solid foundation for other HR
strategies such as recruitment, selection and training in supporting to limit the
following problems (Al-Qudah et al. 2020). Nevertheless, the HR department from
Happy Coffee has not carried these theories into its HRP which results in manpower-
related problems. In detail, as Mr. Tran, who is the manager of the closed branch,
said that he frequently fell into a shortage of personnel and got stuck with very
inexperienced employees. The reason is that the HR department did not implement
the HRP process carefully in assessing current capabilities to meet future needs.
Secondly, problems about workers such as being late for work, having a negative
attitude on the job, overusing sick leaves and only staying for a few weeks before
quitting because of Happy Coffee's poor selection decisions. Sahoo, Das and
Sundaray (2011) confirmed that poor selection decisions lead to spending more time

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in training, workforce turnover, absenteeism, industrial unrest, employees’
satisfaction with their jobs and underperformance. Therefore, the HR department
needs to pay more attention to HRP and selection decisions so that they can have
quality human resources.

• Inappropriate compensation system

Based on Truong (2021c) theory, employee compensation is the process of

determining wages and providing bonuses or special gifts in a productive way in
terms of attracting the available manpower and maintaining the competent personnel
with equal pay levels. Wolf (2013) stated that employees have been identified as the
key driver in contributing to economic growth and making sustainable
organizational success. Therefore, implementing the compensation policy could
substantially impact job satisfaction, employee performance and organizational
reputation (Soliman 2009). However, Mr. Tran has not applied the ideal
remuneration which resulted in job dissatisfaction, poor performance and bad
feelings of his labourers about this coffee shop. To be more specific, as the waitress
(ex-employee) shared, although her work was of a high standard or she had an
excellent performance, it was impossible for her to earn extra money. The reason is
that the manager did not provide bonuses or incentives for high-calibers. Moreover,
an inappropriate remuneration system made her unmotivated and had led to a
negative Happy Coffee' organizational culture. For example, as in this case, she was
emotionless when the shop was closed because her efforts were not recognized.
Besides, she did not have any connections with her coworkers and the manager to
go to work. Those mean that this Happy Coffee's employee did not accept its
compensation decisions as well as no above-mentioned human relations. Those
could lead to a poor organizational culture because employees did not follow the
same type of beliefs, values and ways of working that the organization has suggested
(Murtiningsih 2020). The job satisfaction of the waitress was negatively affected by
these factors resulting in her dislike of coming to work could also be considered as
a component of the high turnover rate at this workplace. As affirmed by Alam and
Asim (2019), there is a close attachment between employees’ satisfaction with their
job and turnover rate.

2. Solutions

Enhancing the HRM system is a vital element for the existence of Happy Coffee.
O’Donovan (2019) confirmed that a proper adoption of HRM contributes to the
development of the organization and making sustainable competitive advantages.

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 • Applying quantitative approach and selection tools

The first solution to have quality human capital is to apply a quantitative approach
into HRP. This approach uses quantitative techniques such as data collection
(mathematical and statistical information) and mathematical manipulation of that
data to help decision makers enhance quality decisions (Truong 2021a). Purwadi
(1996) proved that a quantitative approach can help the organization get the
applicable decisions about the right number of new workers which place them
consistent with their competence at the right time and can get standard qualifications
of workers. Therefore, Happy Coffee should apply quantitative techniques because
it not only assists to avoid staff shortages or redundancies but also improves
organizational productivity. Using selection tools is the second method to have a
fruitful workforce for this coffee shop. There are a variety of methods through which
personnel selection can be carried out such as application forms, written tests,
interviews, performance-simulation tests, etc. (Truong 2021c). They can support the
HR manager in picking apposite candidates to be hired. Opayemi and Oyesola
(2013) have emphasized that the behaviours of employees plays a crucial role in
achieving an organizational goal. Hence, the manager must be deeply understanding
of whether employee characteristics are associated with such job performance.

• Reconstructing the compensation system

To tackle this problem, an optimal compensation system should be designed as a

practical solution. According to Lai (2011), a rational remuneration strategy depends
on 3 factors: job-based pay, performance-based pay and skill-based pay. So, a
successful organization will flexibly adjust its wage structure and incentive system
relating to changes surrounding the organizational environment. To overcome the
poor compensation system, in this case, Happy Coffee should pay more attention to
adjust variable pay based on employee performance as well as contributions to the
organization and add more values to promote their motivation. Tobing (2016)
affirmed that the higher employee satisfaction from well-paid wages, the higher
employee motivation in obtaining significant achievement and productivity. From
that, employees may be engaged with the organization well, limit labour turnover
and build strong ties with their supervisors and colleagues in case the employee
benefits are successfully presented by the corporation (Pertiwi & Supartha 2021).

3. Recommendations

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 • Using various quantitative approach and selection tools to be more
effective

With the sophisticated development of information technology today, there are

plenty of available quantitative tools for planning in computer programs. For
example, simulation model is a descriptive technique which can help the
organization forecast the manpower requirements by analysing the data information
(Bhattacharyya 2002). Therefore, Happy Coffee should consider using the
simulation model into its HRP to plan strategies in the HRP process accurately.
Moreover, using interviews and various tests can help Happy Coffee examine the
level of applicants meticulously and suitable attitudes based on the organization’s
standard criteria so that they can have valuable personnel to increase performance
and profits for the organization.

• Establish a clear compensation policy system: overtime payment, high

performance, enough attendance, incentives.

The combination of a clear compensation system and some strict contract terms will
ensure employee commitment to the company at the beginning. Happy Coffee
should consider whether salary decisions are appropriate based on employee
productivity and hours worked. They are highly recommended to use monitoring
tools to control and assess their employees more effectively and precisely. The
manager should care more about the quality of employees’ work for the organization
and overtime payment terms as well. Also, Mr. Tran should provide some bonuses
such as special gifts or tip money which will boost employee motivation to work
more efficiently. A perfect compensation package will energise internal races and
generate more profits. Finally, the expected outcome is an increase in job
satisfaction. As Happy Coffee meets workers’ needs and gives them a much greater
piece of mind financially, the workers' hostility will diminish considerably.

II. Ineffective leadership style

Leadership is a special skill of the head to provide directions, have inspirations of a

shared vision, have the power to enable other people to act and make sure the
followers are toward ultimate goals (Klingborg, Moore & Varea-Hammond 2006).
Mr Tran's leadership is opposite to that definition so it leads to abuse of power and
disempowerment.

1. Case analysis

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 • Abuse of power

According to Truong (2021b), power is defined as the capability of a person to

influence other people and control others’ outcomes. Therefore, to become an
effective leader, that person has to have the perception of the strength of followers,
an capacity or competence to identify what needs to be improved and flexibly change
leadership style to suit the situation (Sethuraman & Suresh 2014). Nevertheless, Mr.
Tran does not have those characteristics. The evidence is that he made every
decision. No matter how trivial they were, they had to be approved by him. As an
example was given, his staff made a small mistake in an order, the staff could not
correct the mistake by preparing a new drink for the customer without his
permission. This is one of the reasons why Happy Coffee's sales were constantly
decreasing and there was a lot of negative feedback about customer experience.

• Lack of employee empowerment

Employee empowerment is based on the idea that providing them with the resources,
skills, authority and opportunity to perform their work well, as well as holding them
responsible and accountable for their behaviours will make them more satisfied and
more proficient (Truong 2021b). Lashley (1996) claimed that empowering
employees will enable them to accomplish their tasks well, take responsibility for
their own actions and performance in the working process so that they can produce
more customers’ satisfaction and gain greater profits for the organization. Yet,
employees of Happy Coffee were not empowered to perform. Specifically, a
customer complained to an employee in the service team about the wrong drink
given but nothing happened to correct that problem about 20 minutes later. The
reason is that this employee was not allowed to compensate the customer if Mr. Tran
did not agree. This led to customer dissatisfaction and made a bad reputation for the
organization “Avoid this coffee shop at all costs!”.

2. Solutions

• Diminish the manager’s powers

As mentioned above, a good leader has to know what needs to improve and put the
power appropriately. Therefore, Mr. Tran should consider whether it is right to put
his power to do something. Reducing the use of overpowering and empowering
employees can help Mr. Tran avoid feeling work overload or stressed.

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 • Implementation of empowerment

According to Dainty, Bryman and Price (2002), empowerment is critical to enhance

the self‐efficacy of the workers, self motivation and happiness. Therefore, Mr. Tran
should provide his employees with job autonomy and scope of decision-making
suitably. Self-determination gives employees a high sense of responsibility because
they know that they have had a direct influence on the organization’s outcomes
(Dewettinck & van Ameijde 2011). In addition, Morrison (1996) stated that a
product is a necessary link between the employees and the customers. So, it could
be understood that through empowering employees, employees will be connected
emotionally to provide the business and services that the customers have demanded.
Therefore, the Happy Coffee’s manager should empower employees to make their
own decisions so that they can meet customers' needs and get job satisfaction
simultaneously.

3. Recommendations

• Providing leadership training programs

There are a variety of programs that provide training to managers on how to be great
leaders. Program Development was designed to improve leadership skills and it was
provided a framework for program designs which focus on authentic leadership and
increase self-awareness (Hackworth et al. 2018). Mr. Tran should take part in this
program because it facilitates an expansion of the participant’s self-perception about
strengths, limitations and behaviours so that it fosters transformative leadership
skills. By attending the training programs fully, he will acquire the necessary skills
of a leader to be able to run the company smoothly and successfully.

• Let employees take part in decision-making

To overcome poor customer experience, Mr. Tran should let his staff participate in
making decisions about simple problems relating to customers’ satisfaction. For
instance, when they get a mistake in an order, they can make a new drink
intermediately to compensate for that consumer. This helps employees have a good
impression of themselves as well as the organization and is a plus point in attracting
customers to use products of Happy Coffee to earn more revenue. As Azoury, Daou
and Sleiaty (2013) claimed, employee empowerment gives them a sense of

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confidence and respect, develops their acumen to reasonably solve situations and
motivates them to bring more significant achievement and values to the organization.

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