Management Problem

7-Eleven is considered to be the largest convenience and petrol retailers in Australia. It is an international chain that operates, licenses, and franchises convenience stores. There are around 56,000 stores spread out in 18 countries. All the franchisee and licensed store owner employ their employees locally and send their data to the company for records. It is the responsibility of the franchisee owner to pay its employees. Management of 7-Eleven audits all the franchisee at the end of the financial year (Bedford & Malmi, 2015). In the last few years, regular complaints are coming from the employees of the convenience store Australian Franchisees that they are not getting paid as per the books and employment law. Franchisees are supposed to keep a record book of the employee’s working hours. But their also fraudulent activities were found. Records showed only half of the actual working hours an employee has put. This report will identify the problem and the reasons behind the occurrence of the issue. A research program will be designed, and primary and secondary data will be collected to analyse the problem and find a solution for it. In the end, a conclusion will help in summarizing the whole report in brief (Bishop, 2007).

Australia has around 615 stores of 7-Eeleven convenience store. In 2015, complaint against the franchisees of 7-Eleven was reported claiming that the store does not pay it, employees, the pay they are liable too. As per the complaint the company is paying its employee just $10-$14 per hour which was much less than the minimum wage rate which is $24.69 per hour. The records kept by the company were also manipulated and the actual working hours were not recorded in it. They were also not being paid for loadings, penalty rates, overtime hours, weekends, public holidays, and nights which they were legally entitled to (Blaxter, 2007).

7-Eleven franchisees are using fraudulent practices in employing the employees?

How it become possible for the franchisees to manipulate records and pay employees lees wages?

Why has management not taken any steps regarding the complaint when it reached them for the first time?

How such fraudulent practices can be stopped?

A research design is a method or a plan that is chosen to determine the various components of the study in a logical and systematic way. That helps in making sure that the research problem is effectively addressed.  A research design includes the blueprint for the way of collecting data, collected data, its measurement, and analysis. There are three types of research design Exploratory Research, Descriptive Research, and Casual Research (Cox, 2015). The research design used for analysing and finding a solution for the problem between 7-Eleven and its employees is Exploratory research, and it includes:-

• Open-end questioning to collect the primary data
• The report submitted by Fair Work Department can be used to get the secondary data.
• Analyses of the data
• Recommendations and solutions

Open-end questioning gives the first-hand account of the information required for the research purpose. A questionnaire was prepared and forwarded to the employees of 7-Eleven. The answers filled by the employees helped in determining the problem and the reason behind the problem (De Jager, Muller, & Roodt, 2013). Few questions that was included in the questionnaire are the employee’s nationality, age, any other occupation, education level, reason for working for the company, how much they get paid in last one year (if they are working for more than a year), the number of hours they put in on daily basis, the number of holidays they worked for the company, how much overtime they are doing and how much they are being paid for it and the employment benefits are provided to them or not (Ekelund, 2014).

April 2016, a report was published by the Fair Work authorities who reflected that a lot of underpayment of wages and falsification of employment records were happening in Australia’s largest convenience retailers. It disclosed that 7-Eleven is deliberately manipulating the records to hide the wages fraud and disobeying the rules of the Fair Work Act 2009 and Fair Work Regulations 2009. The report also determines the reason for non-compliance of the franchisee with Fair Work Act 2009 (Jebb, Parrigon, & Eun Woo, 2016).

The primary data collected resulted that 70% of the employees working at 7-Eleven are being paid less than the minimum wages finalized by the Fair Work Authorities 2009. The franchisee is manipulating the records by showing less working hours than the actual working hours put up by the employee. It was also found that the employees are not being paid penalties and overtime wages which they are liable of. The reason that was determined through the data collected is that the business model of 7-Eleven is such that it allow as the franchisees to do such fraudulent practices (Kunz, 2015). Secondly, the most of the employees are students those who are not allowed to work, so they start working for such less pay. The owners of the franchisees are mostly the immigrants coming from out of Australia who does not have full information about the laws and regulations of Australia. No proper guidance is being provided by the management of 7-Eleven to the franchisers, and therefore they do whatever they feel like. The government had not taken any strict action against the company when the first report against the company came in front of them.

The secondary data which is a report coming from the fair work authority also confirms the complaints registered by the employees. It states that employees are not paid as per the norms of Fair Work Authority. As per the report, from last eight years, the regular complaints are being come regarding the problem of underpayment of wages to employees. Many survey and studies are being done in last eight years (Mafini, 2016). Many notices were sent to the company management. Also, few recommendations were given to management to solve the issue. But, no action was taken from the side of management. Even after regular reminders, the franchisees did not stop their fraudulent practices and continued to take away their employee’s rights. Somewhere it was a mistake of Fair Work Authority also because they do not take a proper step to stop this fraud from happening again and again. If a proper action has been taken by the Fair Work Authority when they got the proofs of the fraud management is doing with its employees then this would not have been continued, and many employees may have not suffered in the hands of 7-Eleven management. The report also says that the problem is in the business model followed by the company. That business model is designed in such a way that it allows the franchisees to practice such frauds. As per the report, Fair Work Authority has even asked the management of 7-Elene to change or redesign their business model (Peile, 2010).

There are few alternatives that can make the situation less severe than the present. The employees working in the company has to get together and then negotiate their demands with the management of the 7-Eleven company. There are just a few employees those who came up and accepted that yes they are being underpaid by the management.

Recommendations for the company are as follows:-

• A guaranteed fund should be setup by the company that will help in repaying the employees their wages if the franchisee fails to pay it(Weiping Chen, 2011).
• A compliance partnership should be formed in between Fair Work Act and 7-Eleven, this would help the company in understanding a better way to deal with the employees working for it and also, they will have all the information about the rights and benefits that a company should give to the employees (Bedford & Malmi, 2015).
• A modern system of keeping a record of all the employees that is a biometric system should be installed in all the franchisees of 7-Eleven (Bishop, 2007).
• It is recommended that 7-Eleven should be external auditors who can audit all the franchise stores of 7-Eleven and send a compiled report to the company. This will help in reducing the fraudulent practices and give the correct picture of each franchisee’s accounts (Blaxter, 2007).
• The management should consider accepting the responsibility of the issue that has taken place and make clear that in future such things will not happen. This will help in improving the company’s image in the market (Cox, 2015).
• The business model followed by 7-Eleven has some loopholes that give a chance to franchisee holders to exploit their employees. A change of business model or redesigning of the current business model is suggested to cover up such loop holes.
• A direct approach of employees to the management is required because many a time’s employees were not able to take their problems to the management and it increased the tension between the employees and the franchisors(De Jager, Muller, & Roodt, 2013).
• The owners of the franchises should be given a full detailed norms and regulation of employment system that they are supposed to follow(Ekelund, 2014).

If the company follows the above-given recommendations, then the problem between the employees and the management of 7-Eleven will solve to the maximum. It is necessary that the company should make sure that once the problem gets solved it does not arise again (Jebb, Parrigon, & Eun Woo, 2016).

Every company has few issues in their management which it should identify and solve as quickly as possible. Once the problem is identified a proper research should be done to find out the actual problem and the reason behind the problem. Like in this report, an issue between the employees of 7-Eleven and its management is being discussed. The employees were not being paid fairly by the franchisers and books were also manipulated. A research design was formed to find out the answer to the research questions regarding the issue a company management is facing. Hence, it concludes that if the 7-Eleven follows the recommendations and alternatives suggested in the report then the issue between the management and the employees can be solved and employees will get their rights and benefits as per their demands.

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