Business & Finance Homework 1

Scarlett’s is a full service day spa and hair salon featuring a wide variety of spa treatments including full body massages, body scrubs and wraps, specialty manicures and pedicures, and a number of cuts and hair treatments. Scarlett’s flagship store and headquarters are in a large city in the UK. It also has spas/salons in four other major cities. Last year, Scarlett’s averaged around 22 employees per store; annual sales last year were approximately £1,500,000, a decrease of 14% from the year before. The company actually lost money last year for the first time since its first year operating. The management of Scarlett’s considers the firm to be a one-of-a-kind establishment serving a wide segment of the population. The success and growth of Scarlett’s has far exceeded all Mary Fitzwilliam’s (the founder and owner of the business) original expectations.

In response to the decline of the business Mary, who had no previous experience of running such a large organization, is retiring and handing over the running of the business to Lynne Montagu, an experienced health and beauty manager who has achieved success in a number of companies. The store managers at each of the other four Scarlett’s locations had reported directly to Mary. Within each store, individual store managers were the only employees serving in a supervisory position with each being responsible for all daily operational issues of his/her salon. In the early days of the company, all employees were termed ‘Scaries’ (because they worked at Scarlett) and at weekly celebratory meetings the ‘Scariest’ employee of the week, the employee that had shown off Scarlett’s values of teamwork and customer-focus, was presented with a small prize in front of everyone. In recent years, this practice has fallen away.

Scarlett’s offered a benefits package that was extremely generous. The company provides supplemental child-care reimbursement to all employees—even part-time sales associates. Additional employee benefits include part-time and flexible work hours, considerable paid time off, monthly company awards events, and 8 hours per year of paid time for employees to volunteer in the community. At the moment, there is no formal induction programme for managers or for staff. Mary used to like to take a lot of time explaining to new staff her vision for the company and that the the best approach was to see for themselves how things are done in the company.

Scarlett’s numbers had deteriorated dramatically in the past year. Profits were down; absenteeism was up; turnover, while not dramatic, was higher than it had been in the past five years. And while no formal performance appraisals, or any other form of performance management, had been done in the past year, Mary had provided Lynne with her own assessment of the performance of all Scarlett’s key people. It was clear that Mary felt that each was performing significantly below their capabilities, although it was not clear to Lynne exactly what evidence Mary had used to come to this conclusion.

Before she took the job, Lynne had stayed at the spa from opening to closing to visit with all the employees. She wanted to have as much information as possible before she started. While the conversations had been pleasant, it seemed pretty apparent that many, if not all, seemed reluctant to be totally honest. Though it was clear that everyone was friends in the company, and that the atmosphere was positive, it was not clear that the teams in the salons were performing as well as they could. She couldn’t help but worry that the majority of Scarlett’s employees simply did not feel part of a successful team, and that the company’s approaches to health and beauty were old-fashioned.

Adapted from Medlin, B. (2011) Bella’s: A Case study in Organizational Behaviour.
Journal of Business Cases and Applications, 4
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