Spring Wellness Products Case Study - Centralizing Support Services

Company Background

Spring Wellness Products (SWP) started as a small family business selling 100% natural products in one retail outlet in Ontario. As a result of the increasing interest in wellness and the excellent reputation of its products, SWP has experienced rapid growth, with 25 stores at present and expects to open 15 more next year. This has expanded its retail operations from three provinces to seven, as well as one location in the United States. 

The full-time employees include those at head office and retail employees; the part-time employees work in the retail stores and there are a number of seasonal workers who are brought in during the holiday season to work in the stores, the online order office and the warehouse. 

The company has made two acquisitions in the past five years. After outsourcing their online ordering to Global Services for several years, SWP acquired the company so it could handle that line of business internally. The online business currently contributes 30% to the company’s revenue. Similarly, SWP’s product warehousing and distribution was previously outsourced to Reliance Logistics, until the company acquired that firm last year.

The company’s head office is located in Ontario with the majority of operation and administrative functions managed there, while the US operations are managed from the California location. The online order office is located in New Brunswick and the warehouse and distribution centre is located in Québec.

SWP has decided to centralize support services rather than having overhead costs in each operational centre. The current business plan calls for all support operations to be centralized at the Head Office over the next year.  There are four payroll systems currently being used because of different locations and the acquisitions. The Head Office processes the payroll for the Head Office and all Canadian retail employees. The following chart outlines the characteristics of the various sites:

The new centre will provide support services to the company’s current 400 fulltime and part-time employees who are at 28 sites located in seven Canadian provinces and one state in the USA. The centre will also support approximately 150 seasonal workers who are typically only hired for a six week period. With the planned addition of 15 more stores next year, there will be an increase in the employee base, both full and part-time.

SWP has both hourly and salaried employees with weekly, biweekly and semimonthly pay period frequencies. In addition to the details in the chart above, the monthly executive payroll for the management team is done manually by the President’s Executive Assistant

As it can be difficult to retain employees in a retail environment, the company offers a competitive benefits package. There is a collective agreement in place at the warehouse site that provides better benefits for the unionized employees. One of the first projects for Human Resources, once the services have been centralized, is to determine what the increased expense would be if the company offered the same benefits to all its employees.

Another project in the business plan is to standardize the various human resource policies that currently exist with respect to employment standards requirements in each jurisdiction. Again, this is to ensure employees are treated consistently with the best benefits required by legislation. The Human Resource Manager has tasked you with this project.

The class will be divided into groups to discuss the case. Each student will be responsible for submitting an individual case report with their interpretation of the case and their final recommendation.

Review ‘The Case Method’ in the Supplemental Resources and the course material on Decision Making prior to preparing your case report.

1. What are five (5) of the major issues to be addressed with this centralization project? Discuss why you have chosen each as a major issue.

2. Chose two (2) of the five (5) major issues you identified in Question 1 and provide an analysis of the situation for each issue.

3. For the two (2) major issues you chose in Question 2, what are the alternatives available for each issue? Provide an evaluation of each alternative.

4. For each of the two (2) major issues, state your recommendation for an action plan.