Essay Case

A very small car restoration business (CRB, Inc.) is interviewing you for a position as its human resources manager on a part-time basis, working 20 hours per week, while you complete your degree. You would be the first HR manager they have ever been able to afford to hire, and the husband and wife owners (Al and Mary Brown) have been operating the business for 10 years. In addition to you, they recently hired a part-time janitor. This brought the paid staff to six full-time employees: a foreman who is responsible for scheduling and overseeing the work, two auto body repair workers, a person who disassembles and reassembles cars, a painter, and a detail person who assists the painter with getting the car ready to paint and sanding and waxing it afterward. Al Brown handles sales and estimating prices, runs errands and chases down parts, and envisions the future. Mary has been doing the bookkeeping and general paperwork. The owners and employees are very proud of CRB's reputation for doing high quality work in the restoration of old cars made as far back as the 1930s.

CRB pays its employees based on "flagged hours" which are the number of paid hours that were estimated to complete the work. (For example, the estimate may say that it will take three hours to straighten a fender and prepare it for painting. When the auto body repair worker has completed straightening the fender, he would "flag" completion of three hours, whether it took him two hours or six hours to actually complete the work. It is to his benefit to be very fast and very good at what he does.) CRB pays the workers 40 percent of what it charges the customer for the flagged hours; the other funds are used to pay the employer's share of the taxes and overhead, with a small margin for profit. The foreman, who does some "flagged hours" auto body repair himself, is also paid a 5 percent commission on all the labor hours of the other employees, after the car is accepted as complete by the customer and the customer pays for the completed work.

Employees are given feedback by Al, the foreman, and by customers on an infrequent basis. Right now, everything is going well and the employees are working as a team. In the past, the situation was less certain and some employees had to be fired for poor work. When an employee filed for government paid unemployment compensation saying that he was out of work through no fault of his own, CRB challenged the filing and usually was able to prove that Al had given a memo to the employee requesting improvements in quality or quantity of work. There has never been a formal planning or appraisal process at CRB.

Mary Brown has read an article about performance management and is wondering whether CRB should implement such a system. Please answer her questions based on your understanding of this small business.