Case analysis: ARISE a destination-for-a-day SPA

This is a case analysis with the help of my good friend Jewel Kristian Taino of DLSU-MBA taking Strategic HR.

Background and Facts of the Case

ARISE is a Destination-for-a-day spa that provides service with an emphasis on the health benefits of a spa treatment, fitness and well-being. The spa opened in May 11, 2009 which was founded by Kristen Chambers, a devotee of spa treatments herself. The business originated from a company named ABROAD, an international travel company in 1999 which was then sold and eventually had its shift to the spa business. Being inspired by the health benefits of spa treatments, Chambers envisioned the business having its full-time PWC (personal wellness coaches) that will help build strong customer relationships and can distinguish it amongst other spas. The spa also offers other services such as facials, massages, nail and hair care, yoga, Zumba, sauna and hydro baths, pool and relaxation areas such as garden atrium and rooms that aims to provide a total holistic and relaxation treatment to the clients.

The business is being managed by The VP of Business Operations (Sam Solti) and VP of Spa Operations (Twyla Thompson). The Director of Spa Services (Danielle Dunn) reports to the VP. During strategy sessions, the three leaders concur that ARISE’s marketing should emphasize the health benefits of regularly re-energizing the body and spirit to turn periphery customers into midlevel clients. Various strategies were thought of (i.e. spa ambiance improvement, lowering of cost of services, All-Star Team Strategy and even providing fixed salaries to their employees) in order to improve not just the quality of services, but the retention of their employees as well. Prior operation, a soft opening was launched in order to work out operational issues before the grand opening. With this, it has been identified that the critical part was selecting the PWCs. Having a strong pool of PWCs reinforces client-PWC relationship and helps keep low turnover of employees.
However, there are other concerns encountered such as problems with job duties, working schedules of PWCs, client reactions, employee turnover and employee morale. These, in overall, affect the financial performance and standing of the business.

Identification of Symptoms

• For Thompson, the primary concern was the growing revenue; while Solti is controlling costs.
• Turnover of employees are influenced by uncontrollable variable such as personal decisions of employees (non-work related).
• PWC provide key services in the spa but would have slack time in their schedules; having low productivity rate at that point. This is in contrary to the proposal of increasing their salaries to strengthen the pool and retain.
• There have been no clear job descriptions on other areas of responsibilities in ARISE.
• The All-Star Team plan has its own pros and cons, which makes it hard to management to determine if it’s deemed successful or not.
• The PWC relies heavily on the tips from their services and treat the tips as part of their monthly package income.

Problem Statement

What can management do in order to increase morale and decrease the turnover rate of ARISE is experiencing, while at the same time recover the loss incurred in the ARISE?

Ethical Problems

• Employee morale has been effected within the management team due to work habits which can cause de-motivation
• The company is not fair in providing ample break time for the PWCs as they do multi-tasking of activities, which was supposedly the task of facilities maintenance group
• Sensitivity and respect to one’s time is not being observed as this resulted in late picking up of clients and overlapping of treatment hours.
• Tipping affects income but been discouraged from destination spas such as ARISE.

Problem Analysis

The solution of the problem must address the reasons for high employee turnover of the spa, improvement of customer satisfaction and increase in financial performance. The solution of the problem must also address the employee morale improvement of the company.

Alternative Courses of Action

ACA # 1: Retain Full-time Employees (PWCs) and improve the current benefits package

Pros:
 This will give a feeling of guarantee and at-ease for the employees that they have a steady and regular job.
 The increase in benefit package will compensate for the poor tips that are expected by the PWCs.
 Will boost employee morale and motivation
 Will serve as employee retention that unlike with other spa business, is more of providing assurance to the employee
 Customer loyalty will likely to increase as clients will keep coming back to their loyal attendants in the spa
 Increased customer loyalty and relationship is likely to manifest

Cons:
 Increase in manpower expense and will require other sources of capital due to loss in income.
 The increase in benefit package may not guarantee retention and will not be suffice to compensate for the expected tips of PWCs.
 The increase in benefit package may not directly influence the customer satisfaction rating of ARISE.
 Turnout or impact to income is not yet foreseen

ACA #2: Keep the All-Star Team Plan and maintain the additional fee in the fitness center

Pros:

 Will increase employee morale and engagement as this promotes healthy competition amongst employees
 Management will be able to identify who are the key players and potential leaders
 Provides a different flavor of working together as a team which will help achieve and deliver customer needs
 Sharing of ideas and thoughts will come into play in most cases (i.e. process improvement, suggestions, etc)
 Group effort will be seen and peer pressure will increase (pressure in proving one’s worth and abilities)
 The increase in fees will give a prestige and quality image of the services and products that ARISE offers.
 The increase in fees will cover for the income loss of ARISE, financially.

Cons:

 Other employees might not feel comfortable working in teams and might result to de-motivation and decline in performance
 Individual effort might not be seen by management and there will be high instances of unequal work or labor.
 Scheduling problems will start due to limited number of employees and overlapping of schedules and availability.
 Queuing problems will start for customers who have different references.
 Some customers may not be comfortable in group and would prefer the individual treatment.
 The additional fee may discourage customers going to ARISE.

ACA # 3: Revisit and reiterate the duties and responsibilities of a PWC and the other positions in the spa

Pros:

 There will be clarity in the roles and what are expected out of the employees’ performance
 KPIs are measured and from these detailed duties and responsibilities that rewards are based
 Employees will know their areas for improvement for they will know their gaps in terms of competencies and skills
 Employees can manage their own time and promote harmony in ARISE

Cons:

 Might not help eliminate “slack time” and employees may view inequality in ARISE
 There will be resistance to change for employees due to additional work and responsibilities.
 The additional work and responsibilities may require additional benefits or compensations for employees of ARISE

Recommendations

The team recommends ACA 1 : Retain Full-time Employees (PWCs) and improve the current benefits package and ACA 2 Keep the All-Star Team Plan and maintain the additional fee in the fitness center.

By keeping the full-time employees will keep the morale of the employees and will save the company additional time and resources for the trainings of new employees. In addition, the good feedback of the All-Star Team signifies that the plan was successful and only needs improvement to fully utilize the plan.

While the plan for the additional fee in the fitness center will create a good image and high quality for ARISE. In addition, the additional income will be able to compensate for the increase in benefit packages of the employees without the need of additional capital. The additional fee and increase in package will increase morale for the employees and will give an image that ARISE is improving internally and externally.

Action Plans

• ARISE will start the additional of fee in the fitness center by the start of the month. While at the same time, ARISE will announce by memorandum to employees that an increase in benefit package will start by that month and employees may see the increase on the month end salary.
• The memo will ensure increase in morale of employees and will ensure that the employees will work hard while looking forward for the increase by the month end and in turn will increase the customer satisfaction ARISE gives to customers.
• The additional fee will cover for the additional cost of the increase in employee benefit package.
• ARISE can also promote a performance reward system for performing employees by the end of the month.

References

Beer, M. & St. Clair, Lynda (August 20, 2012). ARISE: A Destination-for-a-Day Spa. Harvard Business School (Brief Cases). 9-913-521.

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About marvzmartinez
an Engineer

One Response to Case analysis: ARISE a destination-for-a-day SPA

  1. “Case analysis: ARISE a destination-for-a-day SPA marvzmartinez” actually makes me ponder a small amount more.
    I loved every individual element of it. Thanks a lot ,
    Brent

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