Safelite Autoglass

Safelite Autoglass

This report focused on Safelite AutoWe, a case study of how a company’s leadership can turn things around through strategic decision-making. The introductory part is an overview of the Safelite Autoglass Company before and during the administration of Barlow and Staglin, the CEO and COO, respectively. The detailed case examination covers some of the issues that were affecting its operation at the time when the two leaders came. The broad analysis examined Safelite’s challenges and how Barlow managed to counter the challenges strategically and make the company competitive again. The detailed analysis discussed the emerging difficulties after implementing the new strategic actions. The solutions section contains several solutions that could be adopted to solve some of the company’s challenges. The recommendation to the CEO section highlights some offers the CEO should take to boost the company’s performance.

Section 1: Introduction

Safelite Autoglass could be one of the best examples of companies that have solved problems and changed their fortunes. In the early 1980s, Safelite Autoglass was the largest Autoglass Company in the U.S. market. It had over 500 stores and 3,000 employees. However, as time passed, other competitors emerged, and it started to experience some operational problems that threatened its survival (Hall, 2001). It operates in the traditional fragmented, localized market, with a market share of about 12%, as its closest competitor has a market share of 6%. Safelite had grown due to its acquisition strategy, where it acquired small companies to increase its portfolio. The case study demonstrates how strategic thinking can help revive a struggling company and help it become a leading company in an industry.

Section 2: Detailed Case Examination

In the early 1990s, it seemed that the company was stagnant. Its sales and revenue were not growing. The company did not succeed because it only offered its services in its stores. Customers would bring their vehicles to the company’s stores for windshield replacement. However, the competitors have adopted mobile operations. They only served their customers in the field instead of the stores (Hall, 2001). Secondly, it did not have an efficient relationship with the insurance companies. Hence, customers’ claims took a long time to be processed. Again, during that time, the company’s productivity was low; the productivity for each employee was relatively low. In addition, Safelite did not have a performance pay plan like other companies, which led to high employee turnover (Hall, 2001). Due to the challenges, the company incurred a high labor cost, experienced a high employee turnover rate, and low sales.

1991 Safelite received a new CEO, John Barlow, and COO, Caren Staglin. These two individuals vowed to turn around Safelite’s fortune by using various problem-solving techniques for each issue. Barlow started by solving the problem of low sales; he decided that the company would serve its customers in its stores and serve the customers remotely, where its technicians would go to the home residences of the customers and service their vehicles (Hall, 2001). This strategy was meant to increase sales by reaching as many customers as possible. Serving customers from their place would boost convenience, meaning customers would not waste much time coming to the stores for service. Secondly, Barlow grouped stores into markets (Kessler & Purcell, 2001). The main goal of grouping the stores into regional markets was to create a central distribution of windshields from one region. Each market had a warehouse and dispatch command cemeteries where customers would call to seek the services (Shields et al., 2015). Several technicians and trucks were in each of the command centers. This strategy boosts convenience and service delivery to the customers.

Secondly, the insurance companies saw the auto claims as time-wasting and nuisance because of the low costs and many lawsuits. Barlow took advantage of Safelite’s total claim solution, which employed telephone numbers and data transfer technology to make claim processing efficient and straightforward. The company partnered with crucial insurance companies and had access to all customer policy information from its desk (Kessler & Purcell, 2001). In other words, the company was able to play the role of third-party administrator of the insurance claims through its network of independent stores away from its stores. In solving the problem of low productivity, it was realized that the company technicians did not work hard. Some spent much of their work hours doing personal things (Hall, 2001). Thus, Barlow introduced a performance pay plan where the amount one would be paid depended on the effort one put into his work. He incentivized technicians who surpassed their targets, encouraging them to work hard and increase productivity.

Section 3: Broad Analysis

One of Safelite’s issues was a high rate of employee turnover. A poor working environment caused this in terms of compensation. Other companies had competitive salaries, but Safelite did not have a good employee compensation plan; hence, the jobs were not rewarding. This compelled many skilled and experienced technicians to look for green pastures elsewhere.

The second issue that Safelite Autoglass faced was low productivity. Barlow realized that the company was experiencing low productivity despite heavy investment. It only took one hour for a technician to fix a windshield. However, it was established that one technician was installing 2.5 units of the windscreen during their 8-hour period. Looking at this performance, it was apparent that technicians waste a lot of time doing nothing.

The third problem that Safelite faced was inaccessibility to the customers. Safelite had more than 500 stores country-wide. However, they were too few compared to the demand for the services. Customers struggled to access the stores because they were far away (Hall, 2001). Hence, the company was unable to reach as many customers as possible. Therefore, the company could not increase its sales significantly.

Safelite’s fourth challenge was increasing competition from competitors in the industry. Safelite had a market share of about 12%, being a market leader. Numerous small companies were offering similar services, thus threatening the survival of Safelite (Adair, 2007). Therefore, Safelite needed to develop strategic actions that would give it a competitive boost to continue leading the industry.

The fifth problem that Safelite faced was poor communication with the clients. Initially, the company had numerous dispatch command centers; some customers did not receive good information; hence, they resorted to using the competitors’ services. Many communication centers brought confusion while communicating with the clients (Kessler & Purcell, 2001). Thus, the company lost some of its valuable clients due to this challenge.

Additionally, Safelite had the challenge of creating a sound compensation program to motivate employees. Many companies have adopted performance payment plans, but Safelite has yet to do so. The lack of a compensation plan created more problems for the company (Shuields Et al., 2015). Thus, Barlow and Staglin found it hard to develop a good compensation plan for every employee from scratch.

Further, Safelite faced the problem of determining how much the managers should be paid after adopting the performance payment plan. It was easy for technicians to assess their performance since each technician had to attain the weekly target (Hall, 2001). However, it was difficult to determine the performance; hence, determining their pay scale became hard.

Moreover, after adopting the performance payment plan, there was a problem with the probability of an increased employee turnover. It was established that in some instances, the employees would be compensated less than they were getting initially because of this program (Kessler & Purcell, 2001). Therefore, it was likely that some technicians would run away to join the competitors who had better payment plans.

Section 4: Detailed Analysis

One economic issue facing Safelite is that the company requires many technicians, yet these technicians are in high demand. This implies that the company must pay its technicians high pay to retain them, which could affect its profitability. Subsequently, a political issue that could affect Safelite is the minimum wage requirement. This company and all other companies are supposed to adhere to the minimum wage requirement by paying their employees at least the national minimum wage. This requirement could increase the company’s labor cost.

One of the socio-cultural issues Safelite Autoglass could face is the lack of diversity. The company has not taken the issue of embracing diversity seriously. This can be attributed to the company’s need for flexible technicians who can walk around anytime. Therefore, there is no diversity in the hiring process because of the nature of the work. The company employed more male technicians compared to women. Technologically, Safelite is slow to adopt new technologies (Hall, 2001). The company was slow in adopting the PPP and going to the market from the stores. Therefore, Safelite should be ready to embrace any new technology to help with innovation. In addition, companies that embrace new technology and leverage it gain competitive power and remain industry leaders.

One of the domestic issues facing Safelite is high taxation. Tax is one of the high costs many companies in the U.S. incur. High taxes reduce the profit margin. One budgetary issue that could affect Safelite’s overall budget is the introduction of incentives to the workers. Many companies offer various incentives besides regular salaries(Adair, 2007). This compensation is an extra cost to the company. Suppose Safelite introduces employee incentives like other companies; this will automatically affect its budget.

Section 5: Best Solutions Available

The company should only introduce employee incentives when its productivity and profits have increased.

• The company should invest much in innovation to develop technologies and tools to foster its service delivery efficiency.
• Safelite’s human resources department should consider the issue of diversity while recruiting and hiring new employees. Embracing diversity while engaging brings in unique talents.
• The company should ensure its performance payment plan is competitive to attract and retain talented technicians.

Section 6: Recommendations to the CEO

• They should think of expanding to foreign markets outside the U.S
• The CEO should strive to build an innovative culture so that the company can remain ahead in the industry
• The CEO should adopt cost-cutting measures to boost the company’s profitability
• The CEO should initiate staff empowerment and training to foster productivity

Conclusion

Safelite managed to solve its problems through focused leadership. This implies that having experienced and attentive leaders like Barlow could turn things around in any company. The company solved the issues of low productivity, high employee turnover, challenging insurance claims process, and the payment plan. Modern company managers need to borrow a leaf from Barlow’s leadership at Safelite to steer their companies. My opinion about performance payment plans is that all companies need one. The labor market is quite competitive, and many companies seek to attract and retain qualified and talented workers. Having a progressive performance payment plan would include many gifted people, and this would reduce the rate of employee turnover.

 References

Adair, J. E. (2007). Decision making & problem-solving strategies. London, U.K: Kogan Page.

Hall, J. B. (2001). Performance Pay at Safelite Auto Glass (A). Harvard Business School.

Kessler, I & Purcell, J. (2001). Performance Related Pay: Theory and Practice. Oxford Centre for Management Studies,

Shuields, J Et al., (2015). Managing Employee Performance and Reward: Concepts, Practices, Strategies. Cambridge University Press, M10 1

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Have you heard of George Polya? His book sold over one million copies and has been translated into 17 languages (Nicholson, 2018). You probably haven’t read How to Solve It, published in 1945. George Polya identified four basic principles of problem-solving that have been used worldwide: in classrooms, in boardrooms, and any situation with a complex problem. The principles are simple to learn, and the others are relatively simple once you have completed the first step. However, the first principle is the one that causes many to stumble and often requires the most time to consider. The first step in solving a problem is understanding, restating, t and clarifying what you are asked to find. That is where you will begin working with your team in this Assignment. Using the information in the case study, your team will determine the fundamental problems and analyze the cause-and-effect relationships associated with them.

To complete this Assignment, review the learning resources for this week and other resources you have found online, then respond to the following bullet points, using the Team Project Template provided, in a 4- to 7-page paper:

Introduction (Section 1)
Include an overview and relevant details of the subject and the case.
Note: This section usually is 1–2 pages in length.

As a team, read and examine the case thoroughly (Section 2)
Take notes, highlight relevant facts, and underline critical problems. Create a laundry list of all the potential difficulties the main issues could cause for the organization and its employees. (This is from where you will draw your possible solutions. This is also Appendix A.)
Note: This section is a laundry list of bulleted topics and usually ranges between 1 and 2 pages.

Broad analysis (Section 3)
Identify eight to 10 critical problems or concerns.
Apply critical-thinking skills to analyze cause and effect for each selected item comprehensively.
Write about these eight to 10 key issues or problems, describing the cause of their disruption. One way to think critically and creatively is to apply the questions below when seeking potential issues within the Safelite Auto Glass case study:
What economic issues is Safelite facing?
What legal/political issues are affecting Safelite?
What socio-cultural issues is Safelite facing?
What technological issues are affecting Safelite?
What global or domestic business issues are affecting Safelite?
Identify at least one budgetary/financial problem within the case and explain how it affects the overall strategy.
Note: Using these questions will jump-start your team conversations into potential problems and concerns. This section should consist of 2–3 pages in length.