Core Values and Concept at Pals Sudden Service

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It sells hamburgers, hot dogs, chipped ham, chicken, French fries, and beverages as theyll as breakfast biscuits with country ham, sausage, and gravy. It can easily distinguish itself from fast-food competitors by delivering competitively priced food of consistently high quality, delivered rapidly, cheerfully, and without error.

Pal's is the first business in the restaurant industry to receive a Malcolm Baldrige National Quality Award. The performance excellence goals and criteria for the Malcolm Baldridge Quality Award offer a formalized program that defines, measures, and rewards organizations who exemplify the principles of an organization that is actively taking step and reaping the results of being a high-performing organization.

Visionary Leadership

Pal's Senior Leaders (Chairman and President/ CEO) set their Vision and Values annually as part of their strategic planning process after carefully analyzing the market environment and actively seeking input from all stakeholders. Senior Leaders personally lead, monitor, and coach the Pal's Leadership Team in interpreting their Vision and Values. Leadership is sharply in tune with customer preferences and organizational needs. Senior Leaders communicate with employees throughout the organization by:

Using the Pal's Communication/Feedback Process, frequently being present at the restaurants

Employing an open-door policy, providing easy access to all Senior Leaders for the entire staff, reading and responding to employee e-mails, and being easily accessible by phone or e-mail.

The impact on Pal's organization from this leadership-driven, full stakeholder involvement approach has been rapid improvement actions, standardized processes, ongoing organizational learning, employee development, a proactive culture, and high-value business results. This employee engagement practice creates and reinforces an environment for participation, employment, and innovation. It also drives organizational agility and organizational and employee learning.

Besides, the leadership team uses the Strategic Planning Process to set direction and pursue future opportunities for the business while using inputs from all key stakeholders (e.g., customers, store owner/operators, general staff, suppliers/partners), taking into account their needs and expectations. This process is used to define, align, review, and maintain a Corporate Mission Statement, Vision Statement, Key Business Drivers, Values & Code of Ethics, and action plans. Through these strategic outputs, Pal's Leadership Team maintains clear values, high performance expectations, and a keen focus on all stakeholder needs.

Senior leaders and store owner/operators communicate and interpret these at each organizational level to define organizational, store, and individual responsibilities and to identify opportunities for learning and innovation. Innovation is driven through the Product/ Service/ Process Introduction Process. Senior leaders personally lead cross-functional teams through this systematic approach for developing new or modified products, services, or processes.

Senior leaders personally lead cross-functional teams through this systematic approach for developing new or modified products, services, or processes.

Leadership Team members adopted the On-line Quality Control Process (Figure 4) and routinely review its application of best practices to achieve high performance and excellence in Pal's operational and support processes.

This ensures consistent adherence to procedures, standards, and targets.

Organisational & Personal Learning

The impact on Pal's organization from this leadership driven, full stakeholder involvement approach to deployment has been rapid improvement actions, standardized processes, ongoing organizational learning, employee development, a proactive culture, and high value business results.

Leaders create a sustainable organization by:

Investing in the future by developing the people to ensure that they will be able to always meet future needs and requirements

Employing a progressive capital reinvestment plan

Pal's brand-building

Actively listening and staying tightly aligned with their customers and their needs,

Building a strong and healthy supply chain,

Helping the communities where they operate to grow and prosper.

Pal's has a process for everything organizational and operational. There are always new product introductions to hiring decisions to the design of support processes and work systems.

Key learning's are captured and shared throughout the organization using the Communication/Feedback Process and the On-line Quality Control Process.

Pal's market research seeks comparative information relating to key issues such as (1) customers likes or dislikes concerning Pal's or specific Pal's competitors, and (2) reasons a particular restaurant is selected as a favorite. They analyze the comparative data for trends and shifts in buying patterns to identify needed changes in their business strategy and to target other potential customer groups and future markets.

Key customer requirements and drivers of purchase decisions are determined from the application of the following listening and learning methods:

• Telephone interviews

• Mall interviews

• Drop-in surveys

• Mail-in surveys

• Marketing By Wandering Around (MkBWA),

• On-site interviews

• user-based surveys

Pal's frontline staff training program includes intense instruction on effective listening skills. These skills are not only critical for high performance on the food preparation line (required for order accuracy, speed, and customization), but are also beneficial for gathering valuable customer information about needs, expectations, and satisfaction (as post transaction feedback).

Through the Plan-Do-Study-Act improvement cycle they conduct small-scale pilot efforts to evaluate and improve their processes for listening to and learning from customers and their ability to understand changing customer needs and buying habits. In addition, they measure and evaluate the overall effectiveness of their customer listening and learning approaches by checking the validity of their market research, customer surveys, and results against operational data, industry trends, and competitor information. They also evaluate how they are doing against their customer-focused strategic objectives by benchmarking their Key Business Drivers against competitors.

Moreover, Pal's staff members (from hourly worker to senior leader) have continual learning ingrained into their basic approach to performing work. They participate regularly on improvement and learning teams where brainstorming and consensus-building sessions enable them to identify problems or opportunities for improvements, analyze processes, and recommend solutions. This experience builds individual confidence, provides skills in problem solving and continual learning, and motivates employees to develop and utilize their full potential.

Valuing Employees and Partners

Pal's aims to provide the "quickest, friendliest, most accurate service available." Achieving this objective is a real challenge in an industry with annual employee turnover rates of more than 200 percent. The company's success in reducing turnover among front-line production and service personnel, who are between the ages of 16 and 32, has translated into a competitive advantage.

The company's training processes support improvement in operational and business performance with the aid of benchmarking studies. Owner/operators and assistant managers have primary responsibility for staff training. They use a four-step model: show, do it, evaluate, and perform again. Employees must demonstrate 100 percent competence before they are certified to work at a specific work station.

Initial training for all employees includes intensive instruction on effective listening skills. In addition, in-store training on processes, health and safety, and organizational

Culture is required for new staff at all facilities via computer-based training, flash cards, and one-on-one coaching. Cross-training is required of all store-level staff to ensure their complete understanding of all production and service procedures as well as quality standards.

Recognizing that most of its front-line workers are first-time entrants into the labor force, Pal's management believes it has responsibility to help its workers develop knowledge and skills that can be applied in future jobs. This approach, along with competitive wages and financial incentives, has made the restaurant chain a desirable place to work for high school and college students. Pal's has leveraged its reputation by implementing a statistically controlled, talent-based hiring system that helps managers identify applicants with attributes associated with effective job performance and customer satisfaction.

In their work environment, where their staff meets the customer face-to-face, they employ effective job designs and a flexible work organization to encourage cooperation, collaboration, individual initiative, responsibility, and innovation. The staff at each Pal's facility is organized into process.

They also performed extensive market research to pinpoint customer requirements: convenience; ease of ingress and egress; easy-to-read menu; simple, accurate order system; fast service; wholesome food; and reasonable price. This data has been used to translate their key customer requirements into Key Business Drivers. Customer requirements are linked to clearly define operational processes, procedures, and systems that are continually monitored to ensure that they are meeting customer requirements. They maintain on-going communications links to their customers so that they can listen to how well they think they are meeting their needs. They also listen to learn if customer needs are changing or if new needs have arisen.

Pal's has three key suppliers/partners who provide the majority of their raw materials. Focusing their supplier/partner base on just three vendors has reduced product variability. It has also allowed them to develop a more positive relationship with each supplier/partner with whom they have established long-term, mutually beneficial partnerships. They work with suppliers to design in quality, value and their unique flavor profile.

The Key Business Drivers are mainly:

• Quality of products, service, and process

• Service

• Cleanliness

• Value

• People

• Speed

Customer Excellence

Customer-driven excellence is a strategic concept imbedded in the Baldrige Award Criteria.

Pal's uses the industry-proven standard method of segmenting by age, gender, income, and proximity to the store location for analyzing buying patterns and defining expectations.

• Age

• Gender

• Income

• Proximity

Product quality, hospitality, accuracy, and speed are important factors to their customers. Pal's has solidified its already strong market position on product and service performance by realizing improvement in each of these customer-linked critical areas.

Pal's performance in customer-rated results for food quality, service (hospitality, convenience, ease of access, menu board readability), and accuracy are consistently improving. These product and service outcomes are a direct reflection of Pal's ability to understand the voices of customers and the market and to address them with menu design, pricing strategy, sudden service performance, and proactive customer contact standards.

Pal's order handout speed has improved more than 30 percent since 1995, decreasing from 31 seconds to 20 seconds, almost their times faster than its top competitor. Errors in orders are rare, averaging less than one for every 2,000 transactions. The company aims to reduce its error rate to one in every 5,000 transactions. In addition, Pal's has consistently received the highest health inspection scores in its market and in the entire state of Tennessee.

Through the Plan-Do-Study-Act improvement cycle, they are able to continually evaluate and improve their processes for listening to and learning from customers by assessing how have understood changing customer needs and buying habits. Through small-scale pilot efforts, the Customer Listening and Learning Process are continually evaluated and improved.

Customer complaints are tracked at the store level on an Opportunity Log and then aggregated at the company level to indicate trends. This critical-incidents information is used to understand key service attributes from the point of view of customers and frontline employees.

Also, as part of their market research, they ask customers very specific loyalty questions that they translate into key customer loyalty data.

Focus on Results and Creating Value

Pal's begins considering user requirements during the data and information selection stage with predefined user criteria. The data selection, collection, and reporting criteria include:

• Meets stakeholder requirements

• Links to our Key Business Drivers

• Provides a balanced scorecard

• Drives action

• Creates reliability

• Provides rapid access

• Allows rapid update

• Supports continual learning/improvement

Besides, the rapid acceptance, popularity, and growth of our web site, www.palsweb.com, is another strong indicator of customer loyalty to the Pal's brand. The rapid acceptance, popularity, and growth of our web site, www.palsweb.com, is another strong indicator of customer loyalty to the Pal's brand.

The company's Business Excellence Process which is the key integrating element and a management approach ensures that customer requirements are always met in every transaction.

Pal's lays emphasis on data which is the basis for sound planning and decision making. Customer, employee, and supplier feedback is central to all processes, and it is gathered in numerous formal and informal ways. For example, Pal's owner/operators must devote part of every work day to "marketing by wandering around." Views on how a location is performing and to solicit ideas for improvement from employees and customers are noted. Anstheyrs to predesigned questions are recorded, compiled, and later analyzed at the store and corporate levels. Owner/operators also maintain a communications log.

The Communication/ Feedback Process is a progressive and rapid means of communication to/from all stakeholders. This process serves as a standard operating mode for Leadership Team members.

SysDine, is a key tool, generating store-level and company-wide data on sales, customer count, product mix, ideal food and material cost, and turnover rates. This information supports daily operational decisions. It also is used to update Pal's Balanced Scorecard of Core Performance Measures, which links directly to its key business drivers: quality, service, cleanliness, value, people, and speed. Managers regularly review the value of the data collected, and the company employs an outside statistician to evaluate the type of information tracked, how it is used, and how it is collected.

Social Responsiblity

Pal's measures and pursues continual improvement in the areas of ethics violations, labor violations, sexual harassment complaints, and honesty violations.

Pal's Senior Leaders promote an environment of legally, morally, and ethically correct behaviors by:

modeling correct decision making and behaviors,

providing training in correct decision making and behaviors

testing to verify that the training transferred the desired knowledge

holding monthly reviews at leadership meetings, creating a culture of open-book whole-company data sharing

communicating openly and honestly

Food safety, which is a primary indicator of compliance with sanitation requirements established by federal and state regulations and of Pal's ability to serve wholesome food products, is their key measure of industry leadership and social responsibility. Pal's consistently receives the highest health inspection scores in their market.

Agility

Customer and Market Needs/Expectations are evaluated using market research studies and customer complaint data. These data are used to interpret customer needs and requirements, to project market trends, and to establish new strategies that will delight customers and sustain our competitive advantages. Competitive Environment and Capabilities Relative to Competitors are evaluated with data from our benchmarking process, benchmark data exchange, and competitive reviews. They use the data to identify market and industry trends, industry and competitor capabilities and Best Business Practices, competitor strategies, potential competitor reactions to our strategies, and promotional and technological improvement opportunities.

Technological Risk is evaluated with data gathered from manufacturers, vendors, and industry trade associations using the following criteria:

• How will the technology help them meet needs?

• Are any of their technologies becoming obsolete?

• Do our existing technologies have new hazards/ risks?

Managing by Innovation

Operational Capabilities and Needs are considered by evaluating anticipated needs and capabilities for human resources, technology, research and development, innovation, and business processes. Internal capability data are analyzed against industry trends, technology developments, and performance advances, looking for ways to develop dominant positions within our market.

They have focused their Human Resources strategies, plans, job/work designs, and HR processes for developing capabilities that support the key competitive performance expectations of their organization (speed, accuracy, quality, and hospitality).

In their work environment, where their staff meets the customer face-to-face, they employ effective job designs and a flexible work organization to encourage cooperation, collaboration, individual initiative, responsibility, and innovation.

The equipment, facilities, and technologies that Pal's uses to meet customer needs are components that serve their manufacturing, service and retail needs through ongoing use of their Benchmarking, Innovation and Product/Service/ Process Introduction processes Innovation is driven through the Product/ Service/ Process Introduction Process. Senior leaders personally lead cross-functional teams through this systematic approach for developing new or modified products, services, or processes.

Also, their Business Excellence Process will continue to drive them toward performance improvement over the next two to five years by maintaining their focus on strategies and plans linked directly to Key Business Drivers and derived heavily from customer/market. Pal's projected performance will continue to strengthen their position as the market leader versus their leading competitor by generating additional sales, and by developing the required operating capabilities. At this time, they are the regional leader in all major areas of comparative performance (quality, service, speed, food health/safety, customer satisfaction, market share, sales, and profit).

Management by Fact

Pal's Leadership Team has carefully designed a performance measurement and analysis system for the collection, integration, and analysis of information and data that feeds and interacts with their Strategic Planning, Continual Improvement, Benchmarking, and Management Review processes. Pal's Management Information System is also used to guide the selection, gathering, integration, management, and effective use of information and data to support our key operational processes, action plans, and performance management system.

Pal's Management Information System gathers and integrates data and information from multiple sources (e.g., operations, customer listening/learning processes, market research, benchmarking studies, suppliers, regulatory agencies, and industry publications). Much of the data is gathered at its source (in the store) through our automated SysDine data collection, integration, and analysis system.

SysDine generates store-level and companywide reports on sales, customer count, product mix, ideal food and material cost, and turnover rates. This data, which is readily available at each store, is reviewed and analyzed for use in support of daily operations.

Focus on Future

The Pal's Strategic Planning Process is used by Senior Leaders working with the Leadership Team to provide a disciplined and structured approach for setting strategic directions to strengthen business performance and competitive position. Strategic planning is performed annually, with primary emphasis on one- and three-year planning horizons. strategic objectives and action plans with a planning horizon of up to five years are also maintained.

Pal's organization's strengths, weakness, opportunities, and threats (SWOT) are addressed during strategic planning, using the SWOT analysis process and supported by various analyses of key processes, internal capabilities, and Key Business Driver data.

Technological changes and risks are evaluated with data gathered primarily from manufacturers, vendors, and industry trade associations.

Human resources strategies and plans are developed to recruit, staff, train, and educate personnel to build staff capacity for success; to improve work/job designs and work areas; and to build a better culture for excellence and employee well-being.

Employee turnover shows that employee retention levels are clearly superior to the industry average. Pal's continues to reduce employee turnover and to set the pace for other QSR operations. Their group of store Owners/Operators and Senior Leaders has experienced near-zero turnover for the past 25 years, which has provided a major advantage in leadership continuity over their competitors.

Pal's existing strategic objectives, action plans (short term and longer term), and target completion are carefully managed throughout the year.

Systems Perspective

Pal's Business Excellence Process is based on the core concepts of the Malcolm Baldrige Criteria for Performance Excellence. These principles, which are a pervasive part of our culture, are used to achieve our action plans. They are integrated throughout our training for team skills, performance measurement, standards, continual improvement, problem solving, quality control, and benchmarking.

Pal's Training Program contains a variety of modules designed to support our strategic objectives, key action plans, and operational capabilities by addressing organizational and employee needs for development, learning, and career progression

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