Muffler Magic is a fast-growing chain and operates 25 automobile service centers throughout Malaysia. Originally started 20 years ago as a muffler repair shop by Mr. Chan, the chain expanded rapidly to many new locations. Muffler Magic also expanded the services it provided, from muffler replacement to oil changes, brake jobs, and engine repair. Today, one can bring an automobile to a Muffler Magic service center for basically any type of auto service.
Auto service is a tough business. The shop owner is basically dependent upon the quality of the service people hired and retained. However, retaining people is a challenge in this industry. A qualified mechanic will find it easy to pick up and leave for a bit higher-pay job at a competitor down the road. It is also a business in which productivity is very important and the single largest expense is usually the cost of labor. Auto service dealers generally don’t just make up the prices that they charge customers for various repairs. Instead, they charge based on the standardized industry rates for jobs like changing spark plugs or repairing a leaky radiator. Therefore, if someone brings a car in for a new alternator and the standard number of hours for changing the alternator is an hour, but it takes the mechanic two hours to complete the job, the service center’s owner may end up making less profit on the transaction.
Quality is a persistent problem as well. For example, “rework” has become a problem at Muffler Magic. Recently, a customer brought her car to a service center at Muffler Magic to have the car’s brake pads replaced. The job was completed as usual. But the customer discovered that her car has no brake power at all after driving for about two blocks away when she left. Fortunately, she was going at a slow pace and was able to stop her car by rolling up slowly against a parking bumper. It turned out that the mechanic who replaced her car’s brake pads had failed to properly tighten a fitting on the hydraulic brake tubes. Consequently, the brake fluid ran out and left the car with no braking power. There was a similar problem the month before. Another mechanic replaced a fan belt for a customer but forgot to refill the radiator with fluid. The car got overheated after the customer drove four blocks away. Muffler Magic had to replace the whole engine for the customer. Of course, problems like these will ruin company reputation and diminish the profitability of the company.
Organizationally, Muffler Magic employs about 300 people, and Mr. Chan runs his company with eight managers, including himself as the President, a Controller, a Purchasing Director, a Marketing Director, the HR Director and three Regional Managers to whom eight or nine service center managers in each area of Nevada report. Over the past two years, as the company has opened new service centers, company-wide profits have diminished rather than increased. The diminishing profits probably reflect the fact that Mr Chan has found it increasingly difficult to manage his growing operation. “Your reach is exceeding your grasp” is how Mr Chan’s wife puts it.
The company has only the most basic HR systems in place. It uses an application form that the HR manager modified from one that he downloaded from the Web, and the standard employee status change request forms, sign-on forms, employment eligibility forms, and so on, that it purchased from a HR management supply house. Training is entirely on the job. Muffler Magic expects the experienced technicians that it hires to come to the job fully trained. The service center managers generally ask candidates for the jobs basic behavioral questions that hopefully provide a window into these applicants’ skills. However, most of the other technicians hired to do jobs like rotating tires, fixing brake pads, and replacing mufflers are untrained and inexperienced. They are to be trained by either the service center manager or by more experienced technicians, on-the-job.
Mr. Chan faces several other problems. One, he says, is that he faces the “tyranny of the immediate” when it comes to hiring employees. Although it’s fine to say that he should be carefully screening each employee and checking his or her references and work ethic, from a practical pint of view, with 25 centers to run, the service center managers usually just hire anyone who seems to be breathing, as long as he or she can answer some basic interview questions about auto repair, such as, “What do you think the problem is if a 2001 Camry is overheating, and what would you do about it?”
Employee safety is also a problem. An automobile service center may not be the most dangerous type of workplace, but it is potentially dangerous. Employees are sealing with sharp tools, greasy floors, greasy tools, extremely hot temperatures (for instance, on mufflers and engines), and fast-moving engine parts including fan blades. There are some basic things that a service manager can do to ensure more safety, such as insisting that all oil spills be cleaned up immediately. However, from a practical point of view, there are few ways to get around many of the problems—such as when the technician must check out an engine while it is running.
With Muffler Magic’s profits going down instead of up, Mr. Chan’s HR Manager has taken the position that the main problem is financial. As he says, “You get what you pay for” when it comes to employees, and if you compensate technicians better than your competitors do, then you get better technicians, ones who do their jobs better and stay longer with the company—and then profits will rise. So, the HR Manager scheduled a meeting between himself, Mr. Chan, and a HR consultant. This HR consultant is also a professor teaching HRM at a local university. The HR Manager has asked this consultant to analyze the situation of Muffler Magic and come up with a comprehensive HR plan to deal with the company’s quality and productivity problems.
Adapted from Dessler, G. (2017). Human Resource Management. Pearson Education Limited.
Identify all the relevant HR problems in the case of Muffler Magic. Justify your answer.