Human Resources Issues

There are several issues related to Zubinos’ human resource management that we have identified
that immediate action should be taken to reduce any negative impact to Zubinos. As Luis
Zubinos has stated that customer services is the core competence of Zubinos coffee shops which
differentiate Zubinos with other competitors. Staff service quality, procurement control and
others which will affect the service quality provided to customer of Zubinos. This in turn will
effect on Zubinos’ customer loyalty, reputation and financial.

The role of Luis Zubinos

Currently, Luis Zubinos is the chairman and managing director for Zubinos which he need to
handle planning for strategic expansion of Zubinos and Zubinos operation activities. This causes
Luis Zubinos to be busy as he has big responsibilities to make sure the company operate
smoothly. The role of Luis Zubinos holding the chairman and managing director is not
appropriate in complying with the UK Corporate Governance Code. The code stated that
chairman and managing director roles must be separated independently so that chairman can take
up the roles of making decision for company future plan and managing director can manage the
operational activities of company effectively. Besides that, separation of duties will help Luis
Zubinos to have adequate time to deal with other important strategic issues such as expansion
plans.

We suggest that Luis Zubinos should hire another experience managing director to hold on the
operational position while Lui Zubinos can focus on the strategic planning of Zubinos such as
expansion to Europe and other countries. This will also help build up confidence in Zubinos’
investors as Luis Zubinos as the chairman are able to have time to communicate to Zuninos’
investors.

Job specification are not stated clearly

There are two people which are Vivien Zubinos and Jane Thorp handling procurement control
which often causes duplication of orders or gaps in delivery of supplies. This will cause an
adverse impact to Zubinos as duplication of order will cause Zubinos’ inventory level to increase
thus stock turnover will reduce. As Zubinos’ supplies are mostly perishable item such as
sandwiches and milk will also causes wastage to Zubinos. Furthermore, delay in delivery will
cause customer unable to purchase Zubinos products it may not meet the customer demand
causing dissatisfaction to customer which will increase customer switching to other coffee shops
such as Starbucks.

We recommend that Zubinos to determine a clear structure of responsibility to all management

roles to reduce conflicting duties occur. This is because proper procurement management is
essential value chain activities to ensure that Zubinos are able to provide quality product and
services to their customer. In addition, clear structure will also help eliminate conflict and
misunderstanding between staff such as duplication orders as staffs are able to communicate
effectively with each other when job responsibilities are clearly understood.

Performance related bonus

Performance related bonus is introduced to Zubinos staff as one of the way to motivate staff to
stay with Zubinos and reduce high staff turnover. Performance bonus is solely based on the
financial perspectives which are quarterly sales revenue and net margin for each coffee shop.
However, bonus pay for last two quarters of 2005 was lower than previous while target were
more challenging. This has cause dissatisfaction in staff as they feel disappointed even they work
hard.

We would like to advise that challenge set must be achievable such as using the SMART
technique (Specific, Measurable, Attainable, and Relevant, Timely). Target set must fulfill
SMART criteria so that staffs are motivated to achieve the goals, this would also reduce the high
turnover rate on Zubinos’ staff.

Apart from that, performance evaluation should not just based on financial perspective but
should also include non-financial performance such as customer satisfaction rate and services
time. Zubinos should use the balance scorecard to identify staff performance evaluation such as
financial perspective, customer perspective, internal process perspective and also growth
perspective. This can be an effective way to be getting a complete determination on employees’
works performance instead of solely based on financial perspective.

Human Resource control environment

The issues of staff dismissal due to minor theft that include 3 employees during 2005 in stealing produce
and cash shows that Zubinos control procedures are not effective which lead to assets can be easily stolen
by the staffs. This may happen because of store manager did not monitor or implement the procedure
properly and disciplinary action was not taken when staff issues occur.

Also, there was an issue on unfair dismissal of Thomas Watson who took legal action against Zubinos
because he claimed that he was innocent and framed by Val Pline (area manager) after he complained of
her sexual harassment in the past. Thomas also claimed that Zubinos did not provide opportunity for him
to defend himself before being terminated. So, this has clearly proven that Zubinos has lack of proper
procedure in staff dismissal and the higher management is in the position to control the staff under him in
an attempt to conceal unethical act such as sexual harassment. This cause an uproar to Zubinos’
reputation as Barista Trade Union and Zubinos’ staff show dissatisfaction toward Zubinos.

In addition, there is a lack of communication between Zubinos’ coffee shops manager and the top
management as there was a disagreement on one of the manager introduce new menu before consulting
with a management. Even though this is an opportunities for Zubinos to boost up their profit, however
communication are essential to an organization. The Board of Zubinos and shareholders are the one that
have the power to control any business planning. Therefore the manager should have go through the
procedure by adopting the bottom-up strategic management model whereby she should write up a
proposal on her new suggestion on introducing the new menu in Zubinos coffee shop.

We recommend that HR department should set proper procedures and ensure that all staffs will comply
with rules and regulation set by company. HR department shall provide adequate briefing and training to
all staffs in Zubinos so they understand the importance of procedures in Zubinos operation activities as
employees are the key asset in Zubinos. Proper disciplinary action should also be undertaken seriously
such as warning letters, penalty and consultation on staff wrongdoings. Besides that, HR department
should establish proper procedures for whistle blower or report for any unethical commit by the staff such
as theft and embezzlement.

Payroll Activity in Zubinos

From the beginning, Zubinos payroll was outsource to agency until Anita Wiseman, the HR Director is
recruited which she take over all resources matter. With so many highlighted issues emerge from staff,
there may be possibility that payroll error occur such as human error, fraud or delay of salary payment.

We advise Zubinos to purchase or set up a payroll system in order to correctly calculated employees
payment and taxes. Besides that, it also can keep track on employees working hours and rates. Thus, this
will then help HR department to carry out less burden on their current workload and payroll will be more
organize and systematic.

Workoverload

Due to the larger size of Zubinos coffee outlets, most of the staff are overwork as Zubinos has higher staff
turnover rate. Therefore, this will cause the staff having lack of rest period and taking overtime work. As
a result, the staff will feel demotivated as they are also been paid in minimum wages only while working
overload. There is also a threat that employees will resign and join T&A Zubino coffee shop as it offers
living wages as compare to Zubinos’ minimum wages.

We are highly recommended that Zubinos management should consider the suggestion given by Kingsley
Nu such as share ownership scheme and money rewards to motivate those employees. Furthermore,
Zubinos should recruit more employees to reduce the hours work by the existing staffs and improvement
on staff facilities such as accommodation, medical care and meal allowance. Hence, as employees are the
key assets to Zubinos such improvement will assist the company in providing quality service to customer
when employees are satisfied with their facilities and benefit.