Introduction
This section provides you with the general business scenario for
AB Shoes that lies behind the demonstrations and labs for defining work structures. This
information should help you to see the individual labs in the context of a complete business operation
and help you to understand how the labs were designed.
Working individually or within groups assigned by your instructor
you should read the following and determine answers to the questions.
Business Scenario – Company Profile
AB Shoes Corporation is a division of AB Inc. - a diversified
multinational corporation with operations in manufacturing, retail, finance, consulting, and
entertainment industries.
AB Shoes, formerly Panzanelli Shoes, opened its first store in New
York on Feb 1, 1979. Rapid expansion through the 1980s led to a chain of stores across
the US. In the early 1990s the company expanded into Europe through a series of acquisitions.
Panzanelli’s was acquired by AB Inc. in 1995 and renamed AB Shoes Corporation with new global
management and compensation structures in line with the rest of AB Inc. AB Shoes
has its World and US Regional Headquarters in New York, with European Headquarters in
London.
AB Shoes Corp. has purchased Oracle HRMS and now wants to
implement the system to support all of its global and local operations. If this implementation is
judged successful it may lead to further implementations in the other divisions of AB Incorporated.
AB Shoes Corp (US) US Operations
Headquarters in New York AB Shoes (US) maintains a central warehouse and distribution
center in Wisconsin that supplies shoes and leather goods to all other AB locations in the US.
There are three US Sales Regions: AB Shoes West in Las Vegas; AB
Shoes Midwest in Columbus; and AB Shoes East in Boston.
All employees of AB Shoes receive their paychecks from AB Shoes
Corp. AB shoes has hired a third-party administrator, called Great Benefits in Cleveland, to
handle its health-care benefits. AB shoes needs to run its Equal Employment Opportunity (EEO)
report based on AB Inc. information in a consolidated report for all of their
organizations.
Currently, one Senior Vice President oversees the North American
division for US and Canada with planned expansion to several Latin and South American
countries.
Finance
The accounting department requires the transfer of certain payroll
and budget costs to GL in line with a global cost center structure for AB Inc. that covers all
companies and organizations.
Accounting would like to track costs by company, by cost center, account
code, and project or product code.
Additionally, they would like to see a breakdown of tax costs by
state, city, county, and school district.
Compensation
Executives and managers are salaried employees with separate
grade-pay structures to cover differences in compensation for level and geography. Warehousing
stock clerks and retail sales associates are paid within hourly ranges. Stock clerks belong to
the United Stock Workers Union who negotiate annually to set rates of pay for employees in
their union. Stock clerks are automatically entitled to annual grade step increments within
their pay scale. Every three years the union also negotiates for changes in vacation, sick pay, and
overtime.
Sales associates in retail stores are entitled to earn commission
in addition to their regular wages. Wage rates for sales associates vary by grade and are updated
annually.
Annual bonuses for managers are calculated in January and paid at
the end of February. Sales and stock clerk associates are eligible for a bonus if AB turns a
profit in the preceding financial year.
All employees accrue vacation time at the rate of 40 hours for the
first year, 80 hours for the next four years, and 120 hours from five years of service forward.
These values are automatically pro-rated for employees who work part-time. There is no maximum
amount that can be carried over.
All AB executives and store managers are entitled to receive
company cars. AB Inc. offers an employee stock-purchase plan for all employees.
Employees can choose to deduct any amount from 1% to 15% of their pay toward
stock-purchase.
Additionally, stock options are awarded on a discretionary basis
to those associates who have exceeded sales quotas. The company will record stocks that the
associates sell.
AB Shoes runs a United Way campaign every November with
contributions to be deducted from the February 15 paycheck of the following year. In the absence of
a self-service enrollment option, local managers record individual employee contributions on
a spreadsheet that is provided to the Payroll Department who submit this through a batch
process. Associates can choose a one-time deduction or can spread the contributions over
each paycheck until the end of the year.
There are several agencies associated with the United Way and AB
Shoes will match contributions to the American Heart Society.
The company is offering a Preferred Provider Organization (PPO)
medical plan for the following
categories: Employee only, Employee + 1, Employee + 2, Employee +
3, Employee + Family; it
will offer a dental and vision plan in the future. Each employee
must choose one of the preferred
hospitals associated with this medical plan (Chicago Hope,
Wisconsin Central, Boston Hospital,
Buckeye Memorial Hospital, or Las Vegas Healthcare).
AB Shoes Corp. UK Operations
AB Shoes (UK) has a London HQ, with a warehousing and distribution
center located in
Manchester. There are three regional sales centers: AB Shoes North
- Manchester; AB Shoes
South-London and AB Shoes Scotland - Edinburgh.
AB Shoes offers all employees private health care options and
works with a third-party health
care group, Great Benefits (UK) to administer employee health
checks.
Currently, one Vice President based in London oversees the entire
UK operation. AB Shoes are
currently discussing options to establish an integrated European
management structure to cover
all European operations.
Finance
The accounting department requires the transfer of certain payroll
and budget costs to GL in line
with a global cost center structure for AB Inc. that covers all
companies and organizations.
Accounting would like to track costs by company, by cost center,
account code, and project or
product code.
Compensation
Executives and managers are salaried employees with separate
grade-pay structures to cover
differences in compensation for seniority and geography.
Warehousing stock clerks and retail sales associates are paid
within hourly ranges. Stock clerks
belong to the United Stock Workers Union who negotiates annually
to set rates of pay for
employees in their union. Stock clerks are automatically entitled
to annual grade step
increments within their pay scale. Every three years the union
also negotiates changes in
vacation, sick pay, and overtime entitlements.
Sales associates in retail stores are entitled to earn commission
in addition to their regular wages.
Wage rates for sales associates vary by grade and are updated
annually.
Annual bonuses for managers are calculated in January and paid at
the end of February. Sales
and stock clerk associates are eligible for a bonus if AB turns a
profit in the preceding financial
year.
All employees accrue vacation time at the rate of 40 hours for the
first year, 80 hours for the next
four years, and 120 hours from five years of service forward.
These values are automatically
pro-rated for employees who work part-time. There is no maximum
amount that can be carried
over.
All AB executives and store managers are entitled to a company
car.
AB Inc. offers an employee stock-purchase plan for all employees.
Employees can choose to
deduct any amount from 1% to 15% of their pay toward
stock-purchase.
Additionally, stock options are awarded on a discretionary basis
to those associates who have
exceeded sales quotas. The company will record stocks that the
associates sell.
AB Shoes runs a charitable giving campaign every January to
encourage employees to enroll in
GAYE - Give As You Earn, with contributions to be deducted from
the first paycheck of the
following tax year. Employees can choose to contribute a fixed
amount or a percentage of pay
each pay period.
To encourage employees to contribute, AB Shoes will match any
employee contributions to the
United Kingdom Heart Foundation.
The company offers a choice of coverage in a private medical plan
with BUPA: Employee only,
Employee + 1, Employee + 2, Employee + 3, or Employee + Family.
Each employee must
choose one of the preferred hospitals associated with the medical
plan (Manchester Hope,
London Central, Bristol Hospital, Norwich Memorial Hospital,
Plymouth Healthcare).
The company will offer a dental and vision plan in the future.
Business Scenario
Questions (US)
1. Draw an organization chart to reflect the structures of AB Inc
and AB Shoes.
2. How many business groups will there be?
3. How many locations and organizations (external and internal)
will there be for AB Shoes
(US)?
4. What effective date will you use when you set up your HRMS
structures?
Answers would be released soon
