Motivational Strategies at Dunkin\' Donuts

¶ … Motivational Strategies at Dunkin' Donuts

Dunkin' Donuts is well-known for its blue-collar appeal and working-class messaging in addition to its market dominance throughout the Northeastern United States including Boston, New York, and other major metro areas. The company is also well-known for its aggressive approach to managing expansion, going through a period of adding franchisees and employees often without going through validation checks and interviewing processes adequately. As a result, the company has added in franchisees that had or continued to participate in illegal activities including tax evasion (Martin, 2003) which resulted in Dunkin' Donuts having to initiate over 150 lawsuits since 2006 alone. The mindset of hire-and-fire also has pervaded their human resources strategies, with McGregor's Theory X management styles (Pojidaeff, 1995) pervading the chain during its first decades of operation. Throughout the first three decades of the company's existence, the managerial styles were more authoritative, oriented towards Herzberg's maintenance factors (Pojidaeff, 1995) and less focused on intrinsic motivational strategies and rewards. The intent of this analysis is to evaluate management's philosophy of motivation focusing on the progression from reliance on extrinsic to intrinsic factors over the 58-year history of the company.

The Launch of Dunkin' Donuts: Working Class Coffee and Donuts

The first Dunkin' Donuts coffee shops were located near the manufacturing and assembly plants in Quincy, Massachusetts. As the majority of customers were from these plants, the hierarchical, extrinsic reward-based systems of those manufacturing centers eventually influenced the management thinking of Dunkin' Donuts founder and CEO Bill Rosenberg. Mr. Rosenberg was known for his exceptional work ethic and continual pursuit of excellence in customer service, food and coffee quality, and delivering exceptional value for customers (Cornell University, 1986). The high value the founder and CEO of Dunkin Donuts placed on work ethic permeated the organization and was responsible for the use of metrics to measure performance and quality of service and product delivery. This focus on results was so strong that stores would openly compete with each other on key measures of performance, focusing on the extrinsic rewards of performance. The intrinsic motivators to performance were not a consideration during the rapid growth years of Dunkin' Donuts. Theory X-based management styles that emphasized external rewards and punishments, and the use of rein forcers or consequences was the dominant management style during this period (Pojidaeff, 1995). The use of instant rewards and punishments over time left employees frustrated and lacking a sense of ownership about their jobs. While praise and competition were used to nurture inter-store rivalries, there was still resistance to change as employees were not satisfied with just being provided with purely the Herzberg-based "maintenance" factors (Pojidaeff, 1995) and wanted to see more intrinsic rewards including personal growth and promotions. As Dunkin' Donuts faced greater competition globally it would need to reconsider its management philosophies for greater performance over time.

Slow Growth and Competition Forces a Change to Management Styles

In 1998 when CEO and founder Bill Rosenberg retired (Cornell University, 1986) the company had grown to be a global chain and also attracted a set of formidable global competitors as well. Instead of relying on relatively simple approaches to managing franchises, the business processes and models had correspondingly grown more complex. As a result, Dunkin' Donuts realized that it needed to manage more for intellectual contributions and insights from employees on how to better the many increasingly complex processes that went into running the global chain.

As a result of the increased competitive pressures on the company and the need to increase the speed at which they generated new drink, food and service ideas, the senior management team following Bill Rosenberg began focusing more on the will and instinct of workers over the use of extrinsic rewards. Instead of transactional leadership approaches that relied purely on extrinsic rewards, Dunkin' Donuts was evolving more in the direction of transformational leadership and a focus more on intrinsic rewards and task ownership. In conjunction with this shift in mindset was one that centered on increasing the quality of operations which led to many franchisees being let go due to not meeting the new minimum requirements (Martin, 2003). Most significant was the shift from relying on a tight chain-of-command organizational structure and the adoption of one that was more oriented towards allowing franchise, team and division leaders the freedom to be more transformational in their leadership and management strategies. What Dunkin Donuts was attempting to achieve was the development of many leaders throughout the organizations through the internalizing of job goals and responsibilities. It has been shown through empirical research that the greater the level of learning supervisors, leaders and managers facilitate, the greater the level of customer centricity and motivation to serve customers at or beyond their expectations as well (Lin, 2008). This research specifically found that those managers who are more oriented towards creating an organizational climate that nurtures learning also create the foundation for greater levels of customer service (Lin, 2008). The senior management team at Dunkin' Donuts as a result have moved away from the purely transactional leadership approaches and moved towards creating a more transactional leadership culture. This has in turn created more of a focus on intrinsic rewards and the approach of Theory Y-based management styles (Pojidaeff, 1995). In addition there is greater focus on how to create more balance in the lives of employees to ensure they don't get burned out. These work-life balance benefits are mentioned on the company's website. HP and many other companies are also focused on these strategies to ensure their employees stay health enough to contribute for the long-term (Cole, 1999).