When
Despite the rise in the hourly rate, some of its workers are actually paid less. That has provoked bitter resentment among its employees.
Background
Regarding the condition of MWL
According to the labor ordinance, Wage is defined to include basic wage/salary, commission and tips not of gratuitous nature, guaranteed allowances and overtime payment paid to an employee in the survey period. Number of working hours is the sum of contractual/agreed working hours (excluding rest time and meal break if no work is done or to be done) and overtime (worked at the direction of employers) hours. The wage law has been passed, and the hourly rate set. The Labor Department is drafting a practice code for all to follow. But the code is not going to say whether meal time and days off should be included or not. Instead, it's going to say this should be sorted out by employers and employees based on mutual accommodation.
But the calculation formula was released at the beginning of April, causing the conflict between the employer and employee on the paid meal break.
The action of Café de Coral
In order to lessen the impact of the new law on his company, Cafe de Coral chairman Michael Chan Yue-kwong proposed raising workers' pay only if they gave up their right to a paid lunch break. For instance, the food chain said earlier it would offer staff an hourly raise of HK$2 to HK$3.50 on the condition that workers need to forfeit their paid meal break of up to 45 minutes. The employees said to the unions, they worried that other than their official working hours – 8 hours, under the new system also detained in a private time for meals. Therefore, despite the rise in the hourly rate, some of its workers are actually paid less. That has provoked bitter resentment among its employees.
The discontent of the employee
As a result, the Café de Coral bears the blame as an unscrupulous employers and lack of social responsibility. Social responsibility itself is no accepted definition, simply pointed out that in general; SR refers to the mode of operation at or beyond the moral, legal and community requirements of the standards and expectations.
But the media and public only focus on the different angle of information. Break meal saga by Café de Coral is that they have not good knowledge management to provide the clear information for the public to understand the real situation including the condition of the term of new law and the effect of it.
Knowledge Management
The conflict between the employer and employees is the problem of knowledge management.
Terminology | Situation | outcome |
Explicit Knowledge | No clear restriction on paid meal break from the new law | Conflict between the employer and employee |
Implicit (Tacit) Knowledge | -informal & Uncodified àmeal break as working hour due to common practice -Values, Perspectives & Cultures àcorporate Society Responsibility | |
Too much data | Information released by the government, the Federation (employer), the | misleading |
Communicating Tacit Knowledge cannot be accomplished with literal training | Due to there are lots of data, causing misleading àdifficult to understand the situation | conflict |
Conflict Resolution
What is the conflict?
We define conflict as a process in which one party perceives that his or her interests are being opposed or negatively affected by another party. (Tjosvold, 2006; Wall & Callister, 1995). Within this simple definition applied in this case, there are conflicts generated out from three parties concern:
(i) In principle, the Government enacted the MW law to force the employer to pay the minimum wages of $28/hour to employee. However, the law contains grey area of whether ‘include’ or ‘not include’ the meal break.
(ii) Café de Coral’s management unilaterally used the loophole of the law to trade off the basic salary $28/hour by deleting the meal breaks and to alter the hourly salary from $23 to $28 to the frontline staff, and change the unreasonable contract term before the cut off day 1 May 2011 . It is because the consequence of such move has decline in revenue from 5 to 4 million per year. The relationship between employee is getting poor.
(iii) Employees were no power to negotiate with the employer but unwilling to sign the new contract.
The Kinds of Conflict
Dimensions | Intentions | Behavior | Outcome |
Organizational structure conflict | Avoiding | Employer use authority to issue a new contract and ask the employee to sign however, employee has no power to say ‘no’ | Employees were unintentionally sign the contract during the time when the supervisor convince them to do so, because they avoid from being fire and losing the job |
Dimensions | Intentions | Behavior | Outcome |
Personal variables conflict | Competing | The Government did not clearly define the calculation formula and did not communication good with the employer. The employer assumes that the meal break excluded is lawful. However, the employee assumes that the meal break should be included because it is a common practice. | The employer only wants to protect their own interest without considering the impact on the employee’s interest such as decrease their salary and benefits. |
Dimensions | Intentions | Behavior | Outcome |
Communication conflict | Accommodating | The lack of communication. At the first instance, the Café de coral did not communicate or consult the employee whether they accept the new contract term. They only force the employee to sign the contract | The employee did not have such knowledge about the MW law and they were originally have perception that they have increased their salary, so they willingness to sign the contract in order to accommodate the employer’s interests |
Methods for resolving conflict
Café de coral CEO used the preventing conflict to solve the problem because he think to protect the good image of the brand name is better than the on-going arguments about the new issues. (BATNA method)
The government used the Passive conflict resolution ‘just ignore the conflict’ to avoid themselves more confrontation between the employer and employee. Up to now, the government still pass the final decision on the meal break term to the employer and employee to give them freedom to choose. So the problem is still unresolved.
As concluded, quoted from the Managing organizational conflict that “there is no one-best-way to manage organizational conflicts.”
Guess what is it?
Negotiation
The problem is related to lack of clear information of the Minimum Wage Law and calculation format. Based on the following five approaches, it is to define out two different positions have two different perceptions:
Employer | Employee | ||
1. Valuation | - New law--wage based on the working hour rather than meal break | - Common practice--Also count on the meal break | |
2. Expectations | - Lawful is ok | - Being Social responsibility | |
3. Risk attitude | - good employee leaving - affect team spirit | - bad image - lose support from the public - find a new job | |
4. Time preferences | - Not serious later | - Count the meal break immediate | |
5. Capabilities | - Have more coercive and award power | - | |
False conflict | Due to different valuation, capabilities and expectation, it is difficult for employer and employee to make a compromise with each other | ||
Competition – Distributive (win-lose) bargaining | Ø No compromise between the employer and employee(union) Ø No negotiation each other at first |
Collaboration – Integrative (win-win) | Ø Sharing the profit with subordinate Ø Image restoration |
Organizations without Accountability = Sure Failure
Accountability – The relationship between the individual and the body in question, accountability describes the mechanism by the failure to exercise responsibility may produce sanctions such as warnings, disciplining, suspension, criminal prosecution or deregistration from professional status.
Café de Coral has more than 10,000 employees in Hong Kong . According to 2010 Café de Coral Annual Report:
CORPORATE SOCIAL RESPONSIBILITY
The Group is conscious of its role as being a responsible business entity and ensuring to make a positive contribution to the communities where it operates. The Group has performed certain social activities during the year which have gained recognition from the community.
Although the legislation does not clearly stipulated that whether employers should give employees salary in meal time, in general, based on the humanitarian and moral, employers offer a paid lunch break. However, when Café de Coral implemented the cut wages plan, café de coral leading salary cuts, causing of social criticism, it seems like that the Management did not adopt the commitment of “CORPORATE SOCIAL RESPONSIBILITY” and they withdraw the plan because of public pressure.
Furthermore, as per Dr. Jaques of “In Praise of Hierarchy” wrote that:
- Organization - can enable a company to employ large numbers of people and yet preserve un-ambiguous for accountability for the work they do. And that is why, despite its problems, it has so doggedly persisted.
- Responsibility and Time – responsibility in any organizational role, whether a manager's on an individual contributor's - can be objectively measured in terms of the target completion time of the longest task, project, or program assigned to that role. The more distant the target completion date of the longest task or program, the heavier the weight of responsibility is felt to be.
Employer
Café de Coral Management explained that because Christmas and New Year season will be hired each year nearly a thousand part-time, October and November is the peak of recruitment, but the cafe de coral hourly rate includes meal time compared with the other fast food chain does not include fast food meal time low, thus, the Management in order to attract Candidates made a raise, but less time hourly meals decisions. However, this decision actually seriously distorted the spirit of the minimum wage.
If an Organizational only of accountable to stakeholders, and abandoned corporate responsibility are ultimately doomed to fail. This event, café de coral needs to review their commitment to social responsibility.
Trade Union
Other than the employer, the Unions also should take the Accountability. A major function of trade unions and staff associations is to resolve conflict in the workplace. Employees' representatives are there principally to smooth working relationships rather than to ruffle feathers.
Unions to accept $ 28 per hour minimum wage, but without negotiated with Government for the best interests of the details, leave a controversial legislative provisions for the tail, not simply in the minimum wage legislation, the same significant impact on competition law also appears similar situation.
Government
Careless Government Policies, legislative loopholes often. In fact, today is not the beginning of the minimum wage legislation is not the only example. The previous copyright law, anti-terrorism law last year's policy address as well as compact fluorescent light policy, which had a loophole, the joke goes, even secretly recovered, it failed miserably.
As at 1st May, the Statutory Minimum Wage will be implemented, the Government officially announced outsourcing of services to 40,000 government workers subsidizing wages and MPF contributions, estimated several hundred million dollars of public funds. In addition, the Government has stipulated that the new legislation after the implementation of the tender contract, the contractor must pay, paid holidays, however, without the requirement to pay of meal break time.
At present, many government departments, such as FEHD, LCSD and the Housing Department, etc., employing a total of about 40,000 outsourced staff, primarily engaged in cleaning and security work, these jobs pay in the past hourly rate $23-$24 only. With the implementation of minimum wage legislation, the Government was announced that it would subsidize contractors employ them, so that hourly employees to reach the statutory level of $28, 1 day vacation weekly, but does not require a paid for meal break time.
A legislator and labor groups criticized the government outsourced workers cannot enjoy the meal break time, to open a bad precedent.
Crisis management
It is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public. Three elements are common to most definitions of crisis:
(a) a threat to the organization
(b) the element of surprise, and
(c) a short decision time.
At the same time, the public nervous if the employees would feel unsatisfactory and affect the hygiene of the food.
Once the announcement has been reported, the stock price of Café de Coral (341) dropped to $21.6 compared to the week top price of $22.5, which caused a fall of 4%. This is a great loss to the company.
Three criteria of success:
Ø to restore the organizational capacity (no one go on strike, turnover rate didn’t increase)
Ø to minimize the losses (take immediate action, to avoid the boycott action)
Ø to learn the lessons (never take the lead, will not layoff, will not reduce the meal time)
Image Restoration
Café de Coral uses brand names, brand logos, brand symbols, brand slogans and brand characters that are descriptive, persuasive and interesting in order to attract the customers.
To fulfill their motto of "A Hundred Points of Excellence", the frontline personnel make "customer satisfaction" a top priority. They pay close attention to the preferences of individual customers in order to fulfill their actual needs.
The company is also determined to sustain customer loyalty by continuously improving the products, the ambiance of the restaurant and maintaining a high level of service quality. Café de Coral has developed a reputation of being both the best place to eat, best taste and value meals and a place where from different backgrounds and social levels can meet and mingle.
After the unpaid lunch break issue has been raised, the public assigned a negative nickname of ‘Café de Cruel’ to them. It is definitely a very bad nickname to the company and it strongly destroy the ‘friendly’, ‘quality’ and ‘professional’ image of Café de Coral. A good reputation has to be built with many years but it could be destroyed by one day. This is definitely more loss than gain even if they can maintain the financial figure by enforcing the new wage system.
Image Restoration Strategies:
1) Denail
2) Evasion of Responsilability - Provocation (responded to act of another)
² New policy because of Minimium Wages Law
² Similar organizations act the same
² New policy because of Minimium Wages Law
² Similar organizations act the same
3) Reducing Offensiveness of Event
² Stress they are a care organization
4) Corrective Action
In concern with the harmony of the society and to releases the public fear and misunderstanding, Café de Coral decided to withdraw the original policy.
The Group Chairman, Michael Chan said that ‘A good catering company should value staff morale and welfare most, whatever its decision.’ To stick to his point of view, Café de Coral finally revised the new wages system such as to meet the law of the minimum wage policy and also satisfy the needs of the empolyees.
5) Mortification
When organizational boundaries begin to melt away, the benefit are, well, priceless. from The DHL EuroCup: Shots on Goal,
Now, no particular special blame to Café de Coral again, the employees feel satisfactory and the customers keep enjoying the signature products of "Baked Pork Chop with Rice", "Hot Pot" and "Mike Tea" at Café de Coral everyday.
Why do people blame Café de Coarl, but not the other same industry organizations?
² Paid meal break from YES à NO.
² No sufficient communication with employees.
² No sufficient time for employees to think before signing the new contract
² Take action before others do
If…………………
¯ Do not offer paid meal break at very beginning
¯ Better communication with empolyees
¯ Act as demoncracy, give sufficient time for employees to think
¯ Be passive, see other organizations’ action as an example before action
Conclusion
Knowledge-based trust is grounded in behavioral predictability, and it occurs when a person has enough information about others to understand them and accurately predict their behavior. Whenever informational uncertainty or asymmetry characterizes a relationship, it provides opportunity for deceit, and one or both parties risk exploitation.
To be fair, everyone has done is to love music or not, but according to the law valid, and Michael Chan as a merchant according to the law, cannot say no reason, because, as the Secretary for Labor and Welfare Matthew Cheung said that there is not required by law in Hong Kong Employers must pay wages for staff meal-time, unless required to work during meal-time employees, the employer will be required to pay.
In fact, according to international practice, the implementation of the minimum hourly wages, for employee meal breaks, employers are not required to pay wages. For example, McDonald's work 4 hours each of its employees after a rest time, during which there is no pay, the Café de Coral sudden uproar, in fact, reflect the minimum wage legislation, the relevant authorities to consider not considered thoroughly comprehensive, so exhaustive, so deliberately use employers take advantage of loopholes.
After Café de Coral to rescind the order, in accordance with legal requirements to increase the minimum wage hourly to employees, also pay the meal break money, this action has a significant peer pressure. Worse, labor and poor people organizations will point to the original meal-time without payment of wages for employees of the chain, certainly this social disputes would be nonstop. More reason to believe that part of the original monthly payment of salaries to the catering industry, in order to save money, may also be converted to an hourly wage, while less time and between meal break reduce the expenditure, as a result, many employees due to increase minimum wage, end up is less, the actual income may be even less than the original, is caused by the social controversy, certainly almost every day, forever.
Recommendation
Building Trust Collaboration
Collaborative partnerships are the mechanism for designing comprehensive strategies that strengthen children and families.
Although the effort takes time and requires careful attention, it’s essential to creating strong, viable partnerships that produce lasting change. It addresses the work that collaborative partnerships typically engage in as they being and they move toward action.
Minimum wage legislation is the SAR government's economic, labor and a major shift in social policy. This is an opportunities for the Government to set up a good society welfare protection for lower income people. The Government could set up the based trust systems at the beginning, trust exists between people bases each person understands, agrees with, empathizes with, and takes on the other’s values, because of the emotional connection between them; thus, they act for each other.
The process of building a collaborative partnership is multidimensional. It involves:
Mobilizing people and resources to create changes; before the commencement of the statutory minimum wage, the Labor department should actively publicize and promote, so that employers and employees understand the legal minimum wage in their respective responsibilities and rights under the system.
Developing a vision of long-term change; the Government should deliver the message when in the development of the economy, protection of vulnerable workers and promoting social harmony are equally important social policy objectives.
Seeking support and involvement from diverse; in order to obtain a high degree of acceptability, when form the group member of the temporary Minimum Wage Commission, the Labor Department, Unions, Employer and Employee should nominate the representatives in the taskforce.
Developing learning opportunities for partners; no pay lunch time and the rest days in the pay issue is caused due to lack of existing employment contract, the statutory minimum wage only made the problem emerge. For employers and employees should recognize their interest before legislation, furthermore, the Government cannot rely on the guidance of vulnerability to resolve the dispute, and must through legislation to clarify the long-term meal time and rest days should be whether including salary.
In this incident, the government has the full responsibility to ensure the new ordinance is enacted in a clear and fair situation. The government aims to balance both side of employer’s profit and the employee basic salary so there are one grey area reveal in the ordinance. It is whether ‘count’ or ‘not count’ the meal break into the MW law. In fact, it is very difficult for the Government to make clear decision. It is because they also concern about the small to media size business that they may not be affordable to pay the minimum wages. As a result, it would either be layoff or close down the business. It is a chain reaction of the effects from the Government to the union. The consequence will be increasing the price and to charge the customers, the economy become overheating, lastly the Government needs to upsurge the interests to bank etc to reduce the inflation. The five factors inside the red circles are relevant to our case Café de Coral.
Reference:
Stephen Denning, Telling Tales, Harvard Business Review
Stephen A. Greyser, November 2009, Corporate Brand Reputation and Brand Crisis Management, Emerald Group Publishing Limited
Paul Hemp, The DHL EuroCup: Shots on Goal, November 2003, Harvard Business Review
Tony Jaques, Elsevier Public Relations Review 35 (2009) 280-286
C. Brooklyn Derr, Managing Organizaional Conflict, Collaboration, Bargaining, and Poer Approaches
Robert S. Kaplan and David P. Norton, Measuring the Strategic Readiness of Intangible Assets
Elliott Jaques, in Praise of Hierahy, Harvard business review Jan-Feb 1990
Leigh L. Thompson, The Mind and Heart of the Negotiator 4th Edition
C. Brooklyn Derr. Managing Organizational Conflict – Collaboration, Bargaining, and Power Approaches. University of Utah
http://www.youtube.com/watch?v=jbiq_2PdinU
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