Implementation of CSR and stakeholder theory in the company model

Internal stakeholders (employees)

Summery

Wowprime‘s CEO realizes that employees are the most valuable asset of the company.

This is why the company goes to great lengths retaining employees with visible and usable talents. Wowprime is the top employer of choice for university graduates and tries its best to hire as many educated individuals as possible. (Huang J. , 2012) This is because Wowprime offers real, tangible incentives to their most important stakeholders. Wowprime also offers many other incentives for employees, including:

- Higher wages than any in the industry - Bi-monthly pay- Salary and bonus

57 wages closer to $700 or $800 a month for a full time waiter, Wowprime is pushing for $1000.

CEO Steve Day believes to attract professional workers you have to give tangible incentives.

That‘s why Day implemented the ―20/20 program‖ into his business model. In order to stay competitive, the company should offer 20% more in benefits and pay to its employees than its competitors while spending 20% less on personnel of the competition. This is an impressive model and is difficult to duplicate for any company that wants to be like Wowprime for Wowprime does this and still maintains a 10% profit margins and keeps its personnel turnover below 2%, 8% lower than the industry average. (Chen & Chen, 2012)(Huang J. , 2012).

Reasons for Wowprime’s commitment to employees

Like Cconma Wowprime realizes that the customer should come first. Wowprime also realizes, during normal business operation, leadership and managers cannot control whether or not the customer comes first. That responsibility falls on the waiter and waitresses shoulders, and day believes that the employees will model after their employers (Chen H. y., 2011). Day realized that in order to put the customer first during normal business operations, incentives must be given to the employee. Day made a reference to classical conditioning in

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this aspect. The idea is offer a reward to elicit a desired response. Therefore, as of 1994, Wowprime has had a profit-sharing strategy to the business model. Employees can share 33%

of profit generated per store. (Chen & Chen, 2012). This makes employees feel that their actions can create a desired response. In addition, employees also feel that they are part of the company, further strengthening their dedication to the company. Day describes this strategy as a ―virtuous circle.‖ (Figure 23) Employees are happy to work at Wowprime because benefits are higher than other available jobs. Customers are treated well by employees, which drives up profit. Profit increases allowing Wowprime to give more benefits to the employees. When looking at the tree model we can automatically make connections. Just like a tree sets up roots that offer strength and protection of the soil, so does Wowprime offer strength and protection of its employees (see figure 24)

Figure 23- Wowprime‘s ―Virtuous Circle‖ Model analyzed with the ARBORE model

59 Figure 24- Wowprime and its employees

Other incentives for employees

If higher salary and profit sharing were the only areas where Wowprime differentiated itself from the competition, then Wowprime would still be ranked very high among companies in the service industry in Taiwan. However, Wowprime goes beyond even employees expectations and offers employees ―peace of mind‖ and personal growth

Security funds

As mentioned Safeguard funds, emergency funds and college funds are all examples of benefits employees can receive by becoming a part of this restaurant chain. Funds like these are almost unheard of in the restaurant industry in Taiwan, but that did not stop

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Wowprime from creating them, and they have given employees a sense of security, and given aid to those that have suffered an unfortunate accident.

But how can a company afford to give what is essentially social security benefits to its employees? The answer is simple: company profit. In order to create the employee safeguard fund, Steve day donated company stock, which was used to set up a seed account. As the company grows, the stock also grows. An annual average return of one million US dollars is generated in this fund, which is used to pay for any emergency needs the employees have. In order to be eligible for this service, all an employee must do is be at the company for a full year. After a full year the "peace of mind certificate," which the employee receives after 3 months in the company, will be activated.

These, and other employee services, are what really set Wowprime apart from the competition. Giving an employee a raise is a cost that most companies sooner or later must address, but providing for an employee‘s wellbeing and peace-of-mind is beyond the call of duty.

Personal growth

Few companies care about employee free time or employee‘s personal growth. As long as an employee is efficient and gets his/her job done, without any complaints, then management and leadership is happy. Wowprime, on the other hand, does not follow this trend. Wowprime wants employees to value their free time and focus on personal growth.

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To help employees set goals, Wowprime implemented the ―300 credit‖ program. This program consists of three objectives:

- Eating at 100 different restaurants

- Hiking 100 different mountains over 3000 meters - Visiting 100 different countries

The total score is 300, and every time a full time employee can achieve a new goal, there is a small pay increase. Steve Day does not only set these goals for others, he also teaches by example. Steve day is an avid hiker and enjoys his free time. In 2011 he and many of his top managers took trip to Nepal and hiked to Everest Base Camp. In 2012, he had already climbed over 50 of the top 100 mountains in Taiwan. (Chen C.-y. , 2011)(Personal discussion with CEO).

Customers

As stated, customers are number one, and in order to satisfy the customer, a company must offer him/her value. Wowprime does a survey of 1000 customers before putting a meal on the menu. One of the key questions involves pricing. When Wowprime finds the average expected price of a dish, they cut it by 30% in order to ensure a strong ratio of value/price.

Wowprime‘s does not need to obtain high margins since it can use scale to keep operating margins above 10%. But net profit margin is pegged at 10%. Day said that if the company has a higher margin than 10% then customers are not being offered a good enough product for the price they are spending, but it should also not slide below 10% because then employees will worry. (Asia, 2012). This focus on the customer as priority number one stakeholder creates

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stronger ties to the company. Just as the tree creates strong ties with the ground, so does Wowprime create strong ties with its most important stakeholders (Figure 25)

Figure 25- Wowprime and its customer relations

Other important CSR strategies

Though Wowprime‘s focus is on internal stakeholders and customers, the firm does have other CSR policies which it implements into the company. In addition to basic rules, the company also has a few special rules, termed ―fastidious‖ rules, which even the Chairman must follow. Some of these 27 rules are:

- $3.50USD fine for being late to a meeting - Political neutrality in the company

- In the company, luxury brands are not encouraged or advocated

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- Counterfeit goods are prohibited

- No employee should drive a car valued at over $50,000USD - Gifts on wedding days may not exceed $30.00USD

- No member of the company can be a political party member while working at Wowprime

- Zero tolerance acceptance of gratuities or gifts over $3.50 US, with penalty of job loss⁶

Some of these rules may seem ―fastidious‖ and that may be why the chairman named them so, but there is importance to many of them.

First, politics and business should not be mixed if one wants the business model to be

―pure.‖ There are many examples of how business use political connections to continue with unethical operations or use business connections to get special treatment. Also the use of expensive cars or designer clothes to obtain ―status‖ in society is something that Day says he tried and failed, and that he gained more true friendships after dropping the façade. Day does not want this, especially after entering the Chinese market, which is notorious for the avocation of political ties and ―guanxi‖ in business. (Luo, 2000). The company created these rules to raise the standard on morals and work ethic. Since Wowprime gives so many incentives to its employees, it can be ―picky.‖

6 All rules originally found and translated from Chinese in this document:

http://eshare.stust.edu.tw/EshareFile/2010_12/2010_12_d3027bbf.pdf

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