Reducing Travel Costs at Applebee\'s Applebee\'s International, whose headquarte

Question

Reducing Travel Costs at Applebee's Applebee's International, whose headquarters are in Kansas City, in the US, is a large restaurant chain with roughly 2,000 restaurants in the US and 16 other countries. Among these are the Arab countries Bahrain, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia, and the United Arab Emirates. The company owns and operates 25 percent of the restaurants but the remainder are franchised. Applebee's has been growing and developing over time, opening roughly 100 new restaurants per year, and is now an international franchise. Consequently, the chain has found that its travel expenses have grown as well The Applebee strategy has challenged the regular style of 'doing things.' Instead of building large restaurants, Applebee's has focused on smaller spaces that are cheaper and faster to build-their philosophy: Faster is Better. Enter the market before the competition does and always offer customers an unforgettable adventure. There is no doubt that many expenses are incurred to achieve such great success. For Applebee's, much of that was spending on travel and even though it was money well spent, the firm was interested in finding ways to contain the costs. Andrew Face, Applebee's senior manager of human resources, was asked by his boss, the senior vice president of HR, to redesign Applebee's travel system. Face's job was to eliminate non-essential travel costs at the same time that he increased corporate travel benefits Face's first idea was to outsource-to look to an off-site call center, through which he would be able to negotiate group discounts for travel costs. But Face's boss thought outsourcing to a vendor wouldn't offer the type of support Applebee's needed for its employee travelers. For example, managers' plans would often change, and they needed flexibility in the travel system to accommodate that However, Face eventually decided on QualityAgent, a web-based system that offered employee support. Because Applebee's was concerned about removing users off the old system (using travel agents), participation was voluntary. But Face got an e-mail every time an employee used QualityAgent to make an airline reservation that didn't fall within the Applebee's travel policy, so he could send an e-mail before the employee purchased the ticket to remind the person of the policy. He also got weekly reports on travel usage to control costs and usage patterns better and to avoid abuse Although these elements saved Applebee's money, Face wasn't finished. He decided to provide employees with more incentives for using the system. To employees who followed travel policy and took six or more trips per year, Face promised a pair of domestic airline tickets if the company saved us$100,000 in costs that first year. Eventually he got usage up to 55 to 60 percent of employee travel

Explanation / Answer

Ans.1) The variable pay program discussed in the Applebee’s case is an example of “Profit-Sharing” pay program. Profit sharing is an example of variable pay program where a company decides to share its annual profits among all or few selected employees. In this case, Face also decided that he will give away a pair of domestic airline tickets to employees who followed travel policy if the company saved 100,000 dollars in costs that particular year. Therefore, the profit that company is earning by controlling the costs is distributed among the staff by the profit sharing method.

Ans.2) There will be some employees who will be dedicatedly following the travel policies and will be saving huge costs for the company. Therefore, these employees deserve more individual incentives. Face may consider following additional benefits for the deserving employees:

Ans.3) As an employee of the company, it would give me a proud feeling that I am contributing to the organisation’s profits by simply following its travel policies. And, if the company is recognising my valuable contributions and is in turn rewarding them by offering free airline tickets, it would be even better. After all, who does not like to be rewarded for their good deeds? Subsequently, I would also make extra efforts to help my organisation grow and add to their profits.

Ans.4) These types of incentives are applicable to the Arab world as well as the employees everywhere feel proud when their efforts are valued by their organisation and are in turn rewarded for their contributions.

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