GraduateSchoolofBusinessHRMGT289:TalentManagement StanfordUniversityWinter2011

Assignment #1: Store24

In 2001, Store24 was the fourth largest convenience store retailer in New England, with 82 stores located throughout Massachusetts, New Hampshire, Maine, Rhode Island, and Connecticut. The store had a long term policy of aiming to increase employee retention (though we dont know the turnover rate). The store had created a manager bonus plan providing a quarterly bonus of 3% of the managers salary if the manager increased the average crew tenure in the store by 1.38 months during the quarter.1 Sarah Jenkins was hired as an intern to develop a new employee attraction and retention strategy. As an MBA student, she had had some training in data analysis. The question raised is, is there any value to increasing the retention rates of either the store managers or the crew employees? What is the financial impact of higher retention? These are convenience stores located in many different places. Some have customers who arrive entirely by foot or from the subway; others drive. Some are in very densely populated areas; some arent. The COO, Tom Hart, had spent a lot of time in stores, and felt that people could improve performance by insuring compliance with Store24 merchandising and operating standards, maintaining in-stock position, and managing shrink and cash control. Hart asked Jenkins to find out whether tenure increased store performance. She gathered data on the financial results and tenure for 2000 for 75 of 82 stores. The data Jenkins gathered was as follows:

Variable Name Sales Profit MTenure

CTenure

Comp Pop Visible Ped Count Hours24 Res

Fiscal year 2000 sales Fiscal year 2000 profit before corporate overhead allocations, rent, and depreciation Average manager tenure during FY-2000 where tenure is defined as number of months of experience with Store24 Average crew tenure during FY-2000 where tenure is defined as number of months of experience with Store24 Number of competitors per 10,000 people within a mile radius Population within a mile radius 5-point rating on visibility of store front with 5 being the highest 5-point rating on amount of pedestrian foot traffic, with 5 being the highest Indicator for open 24 hours or not Indicator for located in residential vs. industrial area

For more details, see HBS Case 9-602-906. Store24: Managing Employee Retention

GraduateSchoolofBusinessHRMGT289:TalentManagement StanfordUniversityWinter2011

Youd like to better manage these stores. Consider the following questions.

1. Does the tenure of the crew in the store raise the performance of the store? Be prepared to defend your answer using relevant econometric tools and managerial analysis. 2. Does the tenure of the manager raise performance? 3. If tenure does raise performance, what HR levers should be used to raise tenure? 4. Is there any other data that Jenkins would like to request to more confidently test whether tenure raises performance? 5. As she works on her assignment, Jenkins begins to think about other recommendations that she might make to her boss. Two questions come to mind: i. Should Store24 assign higher quality managers to stores located in the areas that face more competitors? Should Store24 pay managers a bonus for higher store profits?

ii.

What do you think?

Notes on Doing Empirical Assignments 1. Hand in written answers for your group. Keep a copy. 2. I look for two things: what data analysis you do (regressions and other), and why you do it. Because there are so many different ways that data can be analyzed, your answers on why you do what you do are as important as the actual analysis. 3. Your answers should not be too long try to strike a balance between thoughtful answers and not becoming obsessive. 4. You might organize your typed answers as follows: two pages of written answers then an appendix with your results (my length suggestions are a guess). It is nice to embed some regression results in your written text if you want to do so, please do. But it is not required. Please dont spend too much time formatting your answers for me. 5. Thank you. Please email me with questions!