Challenges and issues in Human Resource Management: Fast Food Industry:

Prof.Kavitha .V, IBS-Mumbai, Powai, Faculty Member

Abstract Fast food is one of the worlds fastest growing food types. It now accounts for roughly half of all restaurant revenues in the developed countries, where it continues to expand. However, some of the most rapid growth is occurring in the developing world; where it is radically changing the way people eat. People buy fast food because it is cheap, easy to prepare, and heavily promoted. Studies of new employees socialization have gained importance in the fast food industry in view of the demand for high quality service in this increasingly competitive business environment. New employees in the industry are unique in terms of job expectations. The aim of this study was to investigate the unmet expectations of new employees, and the relationships between unmet expectations, job satisfaction and organizational commitment in the fast food industry. A sample of 203 employees from the industry was collected. The results show that expectations are normally unmet, and job characteristics, training and development, and compensation and fairness are related to satisfaction and commitment.

Keywords: Fast-food industry; Employee surveys; Job satisfaction; Commitment;

Opp.Hiranandani Hospital, Technology street1, Powai,Mumbai-400076

Email id:kavitav@ibsindia.org, 9920061014

Introduction Fast food or quick meals have become an essential part of Indian lifestyles. Many people associate fast food with convenient food. Teenagers and young adults are the primary targets of fast food centers.The fast food trend in India have finally come of age. Urban Indians are amongst the top ten regular consumers of fast food across the sphere worlds leading market research firm). According to the survey, more than 70% of urban Indians consume food from take away restaurants once a month or more regularly. Out of this 70%, 37% of the adult populations carry foods from take away restaurants at least once a week. Out of the 28 countries surveyed, India is among the top ten countries in terms of frequency of fast food consumption.

The international fast food chains in India have redefined ambience, marketing strategy, and menu, etc., according to the Indian taste and preference. The success of McDonalds is because of its global and local mix of products and services. The international strategy of McDonalds includes fun, quality, consistency, value, convenience, quick service in their rating proposition. Indian strategy states McDonalds as a family restaurant and this can be seen in their advertisements. Other international fast food joints in India are: Subway, Pizza Hut and Dominos, Smokings Joes, McDonalds, and Pizza Hut offers different menus in some cities in India. For example, in Ahmadabad, there is a 100 % vegetarian outlet that serves a special Jain menu. The vegetarian and non vegetarian preparations are prepared differently. Dominos has localized toppings for their pizzas which the Indian consumer is fond of such as paneer pindi chana and chettinad chicken. Mumbai fast food restaurants such as Countdown, The Heart and the Indian brand Nirulas are facing stiff competition from these international fast food chains and are trying to keep their standards at par with any international fast food joint. The psychology of Indians is that they are not satisfied after a burger or pizza. Changing the existing habits is difficult. However, burgers, sandwiches, hot dogs, pizzas are available at every nook and corner. There have been several

issues concerning fast food in recent times. Large fast food chains are being questioned in the context of nutritional content of the food products and hygiene. Fast food is a cause of great concern to children because it can lead to problems like diabetes, obesity, etc. An unbalanced and fat rich food that is low in nutritive values can lead to constipation and reflux. Fast food has been defined in a variety of ways, with no single definition or interpretation gaining a consensus. Backman (1994) stated that fast food should have four generic aspects: a low relative monetary price, quick service of the end product, suitability for eating with fingers, and low finished product durability. The growth of the industry in Mumbai has aroused concerns among practitioners and scholars about human resource management. For example, it is considered that the fast food industry is a service- and people-oriented business; to survive in such a competitive market, it is crucial that customers are satisfied not only with the products and the dining environment (hardware), but also with the service (software) provided by employees. Although fast food is perceived as a relatively low-price product, this does not lessen the level of customer expectations of quality food and services. Some studies have found that employee satisfaction is important because customer satisfaction can only be achieved when employees are content, and the level of employee satisfaction is positively related to customer satisfaction (e.g. Rogers et al., 1994). Job satisfaction is also found to be related to organizational commitment. The latter is defined as a function of an individuals involvement and identification with an organization (Steers, 1977). It is reasonable to argue that employee organizational commitment and job satisfaction are equally important to customer satisfaction. Corcoran and Johnson (1974) stated that most catering posts are perceived as dead ends. Particularly in the fast food industry, the long working hours (for permanent employees), the less competitive pay, the repetitive nature of the job, and low job security have jeopardized new employees commitment and satisfaction. However, new employees in this specific catering sector are rarely discussed in the literature.

The Indian Fast Food Market The traditional dhabas, potential restaurants in the customers colony and some restaurants in a five star hotel predominantly dominated up to the year 1995 in the Indian food market. Having

fast food, i.e., burgers, pizzas, etc., was considered to be an option for eating out. It was not at all synonymous with the American concept of fast food as a quick take away bite or a substitute for lunch. Apart from fast food being available at the local colony restaurants and at some five star restaurants, Nirulas was the only fast food chain existing in the country with its restaurants expanding with every passing year since its inception. It has been almost 50 years now, since its set up and there is hardly any one who doesnt know that Nirulas exists. Nirulas was the first one to bring fast food to India in 1950s and since then it has evolved into an eating place with tremendous brand equity and brand recognition. It proved to be a perfect eating place for an average middle class, who wants to eat out at an affordable price, cant afford the five star restaurants and would also not want to go to the local dhabas. Nirulas almost had a monopoly for decades due to the way it has been placed. It is a place where a person from an average middle class group to upper class group can go to eat out. Its popularly has increased over the decades. With the changing trends and the rising incomes, almost

anybody who can afford to eat out could go for a snack at Nirulas. However the year 1995 1996 witnessed a drastic change. 1996 is considered to be the year of Indias entry into the world food market. International giants such as McDonalds, Kentucky Fried Chicken (KFC), Dominos, and Pizza Hut bombarded the Indian food market. Before these, UK based joint called Wimpys had established its chain in the country in 1990. By 1996, it had about three to four joints established in Delhi. However, it did not pose much of a threat to Nirulas, the reason being its lack of variety and that Wimpys was looked at more of a hangout place rather than eating out with the family. Its been the American international giants i.e., McDonalds, Pizza Hut, etc., who have targeted their restaurants to the families. Apart from the foreign and Indian fast food chains setting up their shops, there are a range of specialty restaurants offering varied fare such as Chinese, Mexican, French, Italian, etc. These places, however, offer a range of items different from burgers, pizzas, etc., but they definitely pose a threat to both foreign and Indian fast food chains. Nevertheless, restaurant business is such, which is surrounded by threat from all sides, be it Indian or foreign joints. It is only these international joints and specialty restaurants which are gradually coming up and a few Indian restaurants which have made up the food market. Prior to this, it was only the local restaurants which became visible while passing by or through local

banners etc. The five star restaurants were for the elite class, out of the reach of an average middle class customer. There was hardly any awareness or promotion to beat competition. Each of the foreign food joints that have come into the country have their own strategy lined up to differ from the rest. Each of these studied the Indian tastes and styles and thereby targeted the Indian customer. An average Indian restaurant goer is no convenient eater, unlike the

Americans. If he is paying, he is paying for food that tastes good (spicy, soft, savory, etc.), and not for how pleasantly the stuff is served or how spotless the windows are. He wants food which can make him come back to the restaurant. An Indian food joint owner would definitely understand this but an American company which comes and places itself directly without knowing the customer is definitely in for trouble. Customer loyalty in a restaurant business is essentially low. When a customer comes to a restaurant, he usually looks at the quality of food, variety, ambience, speed of delivery and the location. They variety would influence the

frequency of visits, since taste is a dominating factor to the Indian customers. Almost all the fast food chains both Indian i.e., Nirulas and foreign i.e., McDonalds etc., are targeting the families. This serves to be an advantage because the turnaround time is short and family has a higher propensity to spend as different members order larger variety of dishes. Each of these restaurants delivers quality, value and services in its own way through its line of strategies. The emphasis is on the value that the restaurant is delivering to the customers. Theoretical background Organizational socialization is important for new employees during the early stages of their employment (Wanous, 1980). It is defined as the process by which a new employee comes to appreciate values, abilities, expected behavior, and social knowledge, and the way he/she adjusts to a specific organizational role, all of which are essential for participation as a member of an organization (Chao et al., 1994; Louis, 1980). Various temporal criteria were found in the literature for identifying new employees in studies of employee socialization, ranging from four weeks (e.g. Major et al., 1995) to six months (e.g. Saks, 1995). According to the theories of organizational socialization suggested by researchers (e.g. Hughes, 1959), new employees expectations are formed prior to entry into the organization. Porter and Steers (1973) defined the concept of unmet expectations as the discrepancy between what a person encounters in his job

by way of positive and negative experience, and what he expected prior to entry into the organization. When new employees join an organization, they are concerned with the extent to which they are expected to change personally in order to fulfill organizational roles (Fisher, 1986). Some of them are surprised to discover that aspects of their characters/personalities do not fit the demands of their new roles as adequately as they had believed they would prior to entry (Louis, 1980). From a normative perspective, expectations are often likely to be unmet. McCleary and Weaver (1988) investigated the job expectations of fresh graduates from a hotel school and showed that there were large discrepancies between their expectations and perceptions. Previous studies have found that unmet expectations among new employees are associated with two dominant socialization outcomes, namely organizational commitment (Tannenbaum et al., 1991; Wanous et al., 1992) and job satisfaction (Greenhaus et al., 1983; Wanous et al., 1992), and that job satisfaction is a significant predictor of organizational commitment (Vandenberg and Lance 1992; Knoop, 1995). Allen and Meyer (1990) suggested that employees willingness to contribute to organizational goals is influenced differentially by the nature of their commitment, with those wanting to belong (affective commitment) being more likely to exert effort to perform than those needing to belong (continuance commitment) or obligated to belong (normative commitment). Rousseau (1990) stated that an initial psychological contract is developed during the early socialization process, and before any formal organizational encounter, but is considerably modified at the later stages. New employees may only perceive job satisfaction if they consider the subsequent psychological contract to be fair and equitable (Nelson, 1990). Objectives of the study: The three objectives of this study were to: 1. 2. To investigate the unmet expectations among new employees in the fast food industry; To study the relationships between unmet expectations, job satisfaction and organizational commitment; and

3. To make suggestions of ways in which industry practitioners could motivate new employees. Methodology The sampling frame of the study was comprised of fast food restaurants in Mumbai that were identified according to the definition given by Backman (1994). Drawing on the literature defining new employees (e.g. Major et al., 1995; Saks, 1995), both part-time and full-time employees who had been employed by the targeted fast food restaurants for at least three but not more than six months were invited to participate in the survey. The convenience sampling method was employed to choose fast food outlets for the survey. The human resources managers of three large-scale fast food chains, which have in total more than 40 fast food restaurants in India, were approached, and two consented to allowing their new employees to participate. All new employees from 25 restaurants belonging to each of these two fast food chains were invited to participate in the survey. The questionnaires were distributed through the restaurant managers to the new employees. Altogether, the number of questionnaires distributed was 250 and those returned numbered 203. The overall response rate was 81.2 per cent. Sample and procedure: The questionnaire comprised four sections. Section 1 determined new employees job expectations, and section 2 their job perceptions. These two constructs were measured based on the job diagnostic survey (JDS) instrument developed by Hackman and Oldham (1980). In the survey, 14 attributes of job expectations and job perceptions were used. A seven-point rating scale from 1 (strongly disagree) to 7 (strongly agree) was used. A representative item of the scale regarding job expectations is: I expected to work with friendly co-workers. The coefficient alpha obtained for job expectations in this study was 0.79. An example of a job perception item is: I have found that I am working with friendly co-workers. A coefficient alpha reliability estimate of 0.82 was obtained for this measure. Since it was a cross-sectional study, the respondents were asked to recall their expectations prior to commencing their new work. It was anticipated that the poor memory of the respondents might bias the results (Dunnette et al., 1973; Steers, 1977). Section 3 measured the level of job satisfaction. The 13-item measuring scale developed by Hackman and Oldham (1975) was used. Job satisfaction was measured using a

seven-point scale ranging from 1 (extremely dissatisfied) to 7 (extremely satisfied). An example of a job satisfaction item is: What do you think about the level of challenge in your current job? The coefficient alpha for the satisfaction scale in this study was 0.94. Section 4 measured organizational commitment using a six-item scale developed by Ostroff and Kozlowski (1989, 1992). A seven-point scale was used, ranging from 1 (strongly disagree) to 7 (strongly agree). An example of an organizational commitment item is: I really care about the fate of this organization. The coefficient alpha of this scale was 0.83.

Data analysis and results: Profile of new comer respondents (n=203) Variables Gender Subgroups Male Female Under 20 20-29 30-39 40-49 Primary or below Secondary Vocational University %of Total 70 30 18 52 24 6 25.5 64.5 4.5 5.5

Age(years)

Education

Table I Profile of newcomer respondents (n = 203) Table 1 shows that among the 203 respondents, the percent of females to males was almost 70 percent and 30 percent. A large proportion of the sample population, representing 76 per cent, was between the ages of 20 and 39. About 69 per cent had secondary school and vocational level

qualifications. The respondent profile shows that 20 per cent of the sampled employees had worked in the fast food industry for three months, 32.7 per cent for four months, and 50 per cent for five to six months. Factor analysis was employed to extract the factors by means of principal components and orthogonal rotation with the VARIMAX criterion approach. The purpose of the factor analysis is to simplify the 14 complex job attributes into the minimum number of factors that can be used to describe them without leaving a large part of the variance unexplained (Calder and Saps ford, 1996). Factor loadings are greater than 0.50 were considered significant in the study.

Table II Results of factor analysis on 14 attributes (n = 203) Table 2 articulates the result of the factor analysis. Three job factors were extracted from the 14 unmet expectations of job attributes by the factor analysis with Eigen values over 1, and with factor loadings greater than 0.50. These three job factors are defined by the original variables

that are most heavily loaded on them. The first job factor, job characteristics, is composed of five original attributes which had high loadings on that dimension: challenging job, sense of accomplishment, meaningful work, friendly co-workers, and job security. The loadings of these five attributes on the job factor ranged from 0.519 to 0.838, representing one abstract and homogeneous underlying dimension that accounts for 37.87 per cent of the variance. The second job factor abstracted is training and development (15.26 per cent), comprising the original six attributes: training for personal growth and development, promotion opportunity, learning opportunity, having personal responsibility, opportunity to exercise independent thought, and opportunity to use creativity in work. The third factor is compensation and fairness (8.23 per cent) and that has three underlying attributes: competitive salary, competitive fringe benefits, and respect and fair treatment from managers. The cumulative percentage of the total variance extracted by the three job factors was 61.36 per cent. The gap mean of each of the three job factors was measured by subtracting job perceptions from job expectations.

Table III Unmet expectations in the job factors (n = 203) Table 3 shows that the t-tests of the gap means of the three job factors exhibit significant results at the p-level of 0.001. It can be concluded that there is a significant difference between expectations and perceptions of the respective job factors among the new employees in the study, and the negative gap mean scores imply that unmet expectations exist. The largest gap mean was found for job characteristics (gap mean=1.90, sd=0.04), followed by training and

development (gap mean=0.78, sd=0.03), and compensation and fairness (gap mean=0.57, sd=0.07). This might indicate that the new employees were very disappointed with repetitive job tasks and the non-significant nature of the job, and that they did not have a sense of accomplishment in their work. Training and development programmes provided by management were not perceived as useful and beneficial to their promotion prospects and career growth. Although this involved the least degree of unmet expectations, new employees considered that salary and fringe benefits were not competitive in the market, and that restaurant managers did not treat new employees fairly and respectfully.

Table IV Results of regression analysis of job factors towards organizational commitment (n =203) Table 4 shows the results of regression analysis with the three factors treated as the three latent independent variables and organizational commitment as the dependent variable. The coefficient of determination R 2, the measure of the proportion of the variance of the dependent variable about its mean that is explained by the independent variables, is significant at the level of p =

0.001 (F = 36.33, p < 0.001), indicating that organizational commitment can be predicted by job characteristics, training and development, and compensation and fairness. The partial regression coefficients () of the three independent variables indicate that the most important factor in predicting organizational commitment was training and development ( = 0.323), followed by job characteristics ( = 0.305), and compensation and fairness ( = 0.194). These results may imply that provision of continuous training and development opportunities for new employees that can help them grow and work independently may elevate their commitment to their restaurant and the job. Elevation of commitment can also be achieved by improving the core job characteristics such as skill variety, and job autonomy, and by providing competitive but performance-linked compensation. Multiple regression analysis was also used to assess the relationship between the three job factors treated as independent factors and job satisfaction as a dependent factor. It was found that compensation and fairness was not significant at the level of p = 0.05.

Table V Results of regression analysis of job factors towards job satisfaction (n = 203) Table 5 summarizes the new findings by employing multiple regression analysis with compensation and fairness being excluded from the multiple regression model. The coefficient of determination R 2 is significant at the level of 0.001 (F = 55.33, p < 0.001), indicating that job satisfaction can be predicted by the two job factors. The partial regression coefficients for job characteristics ( = 0.155) and training and development ( = 0.440) are significant at the levels of 0.05 and 0.001 respectively. Thus, the results show that training and development

activities are more important than improving job characteristics in enhancing job satisfaction among new employees. Suggestions and Recommendations: The unmet expectations are greatest for job characteristics. It appears that new employees do not find the nature and responsibilities of their jobs to be challenging and meaningful, and feel that their jobs do not provide them with a sense of accomplishment. They also consider their coworkers to be less friendly than they expected. The possible reasons for this are that most fast food operations have been standardized, requiring employees to follow strictly the pre-set guidelines and procedures. The standardized operational requirements do not provide much room for employees to exercise their own discretion and decision-making in daily operations. Therefore, their jobs seem boring. In addition, the part-time job nature adopted in this industry normally results in high turnover, and new faces are common. It is difficult to maintain strong friendships among employees in any single fast food restaurant. The results of the study show that job characteristics and training and development affect both job satisfaction and organizational commitment among new employees, whereas compensation and fairness can help improve organizational commitment but not job satisfaction. Significantly, training and development is a relatively important predictive factor for socialization outcomes. It is said that members of the young generation nowadays have higher job expectations than their fathers and mothers. The ever-expanding Indian economy and fast food industry have provided many opportunities for the career development of young new entrants. However, given the increasing demand by restaurant managers for highly qualified and experienced employees, new employees look forward to participating in various training activities to acquire the necessary knowledge and skills that will improve their promotion prospects inside and outside restaurants. Generally, most employees in the Indian fast food industry are hired on a temporary basis and paid by the hour. It has been pointed out that the industry cannot attract new entrants, particularly young employees. One of the possible reasons for this is that fast food restaurants do not offer competitive wages or other fringe benefits to compete with other sectors of the hospitality

industry for quality new entrants. This is not a debate as to whether the fast food industry should destroy its historic compensation systems. On the other hand, it is imperative for management to consider providing strategic compensation, as it was found in this study that money genuinely enhances new employees organizational commitment. Based on the findings and discussion of the results in this study, the five following suggestions and recommendations are made in an attempt to enhance new employees organizational commitment and job satisfaction in the Indian fast food industry: 1. Management should consider creating a congenial work environment. A large proportion of new employees in the industry are teenagers who look forward to fun and pleasure in their work despite the repetitive nature of the job. For example, in-house competitions in cooking hamburgers or hotdogs can be organized and awards given to the champions. Some fun activities after work, such as outings or karaoke tournaments, can be arranged. 2. Training is important for new entrants, and development and career plans are necessary for new but experienced employees. On-the-job training should be intensified during the early stages of employment, and follow-up incentives are crucial. Orientation and induction programmes are important in providing realistic information for new employees. Most fast food restaurants conduct such programmes only rarely. Some innovative measures may be used to update newcomers realistic perceptions of the working environment. Restaurant managers should be actively involved in the exercise. The mentor system should be employed during the early stages of employment to ensure that new employees are able to acquire knowledge and equip themselves with the necessary skills from experienced mentors. Mentorship should be another measure to provide counseling support and motivation to new employees. 3. Restaurant supervisors and managers should be encouraged to communicate with new employees at all times through meetings, briefing sessions, and training sessions. Particularly, on top of formal communication via training, orientations, and briefing sessions, for example, informal communication should also be emphasized, which helps to build friendship among the parties. This requires training for supervisors and managers in communication skills and techniques.

4. A 15-minute daily briefing session is suggested for new employees in particular. These sessions are useful for information sharing and communication improvement. Some gimmicks can be incorporated, such as quizzes and tests regarding the companys mission, goals, operational knowledge, new facilities, etc., and outstanding employees can be awarded prizes. 5. Strategic performance evaluation systems should be designed. New employees should be informed that promotion and pay rises are linked to performance and contribution. Performance tracking using computing technology may be useful for ensuring a subjective evaluation that produces a fair system. The pay structure can be tall to provide room for pay rises, each rise being analogous to a new motivational stroke.

Conclusion This study shows that there are unmet expectations towards job characteristics, training and development, and compensation and fairness among new employees in the Indian fast food industry. These three job factors are related to job satisfaction and organizational commitment. It appears that most new employees in the industry are employed on a part-time basis. Therefore, the management may think that it is not worthwhile investing much effort and money in training and developing the new employees, or paying them well. The routine nature of the job has also discouraged new employees from performing well. However, the study has shown that these problems should be improved as they may affect employees job satisfaction and organizational commitment. As the fast food industry is expanding exponentially in India, new employees should be motivated strategically so that more and more of them will join and stay in the industry and work for the best interests of customers. This study had three limitations. First, India was hit by economic recession at the time when the survey was conducted. The poor economic situation might have influenced newcomers affective evaluation of their job expectations and perceptions. Second, their assessment of levels of satisfaction and commitment might have been biased by the prevalent redundancy policies of fast food restaurants and the poor employment market.

Third, the survey required the respondents to recall their initial job expectations at the time when the questionnaires were being completed (i.e. at least three months later). Poor memory may have biased the validity of these results. In future research, it is suggested that a longitudinal approach be taken to investigating new employees socialization process, so that the retrospective account of job expectations can be avoided. Cross-cultural studies should be conducted to investigate the possible influence of cultural factors on the employee attitude in the fast food industry in different countries.

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