For the sake of studying knowledge management purpose we have chosen pizza hut as our organization. Pizza Hut is one of the brands of Yum Restaurant Int. which owns other known brands like KFC, Taco Bell, A&W and Long John Silver’s. It’s the world’s largest pizza chain with over 12500 restaurants across 91 countries. We have visited pizza hut Multan so we will discuss things with the perspective of pizza hut Multan.
We have chosen
Pizza Hut for better understanding of concepts of “Knowledge Management. . They have maintained their position because they have excessive knowledge of today’s competitive environment. We want to know how they are managing and implementing this knowledge. Pizza Hut is always trying to come up with some innovative way to make a pizza into something slightly different -different enough that customers will think it’s a whole new product. It shows they are continuously updating their knowledge.
There are many business processes that are taking place in Pizza Hutt. These are main five business processes in Pizza Hutt. All of these are connected with each other. At branch level business processes are divided in to two parts. 1: FOH (Front of the house), 2: BOH (Back of the house) with other sub processes like customer order, maintaining facility and product delivery. There are four functional departments at pizza hut Multan those are knowledge centers, their main knowledge center is office from where they control all the operations of pizza hut only top managers
Works there, other knowledge center are Dine In area, Kitchen and Delivery. we have focused on “kitchen “as knowledge center. Importance of knowledge management is very high in the kitchen because employees working at pizza hut are not trained to-do only one specific work at pizza but everyone can perform all the work from door cleaning to making pizzas. Kitchen is divided in different areas bar, store, freezer, dishwashing, ice making and main cooking area. All these work areas have small printing device so when a customer place order they enter that in the computer in dine in area that automatically received by the people who work in the kitchen. Any related knowledge to working in kitchen is displayed on the walls of kitchen according to the need. Managerial level staff is hired by country head office and the minimum qualification for managerial staff is masters. Selected candidates then have to go through training session and are given the orientation about the working environment and their colleagues and organization in which they have to work. They communicate their goals to their employees in the orientation program and training programs. They also emphasize on knowledge sharing and cooperation among the employees because their philosophy is “How We Win Together".
Pizza hut is a technology oriented company they are using a well structured IT infrastructure. They are having a web based system through which they interact with their regional offices and they handle customer services through this web based system. All branches and regional offices are connected through internet with their main organization i.e. Yum International. Technology used in kitchen is standardized i.e. used in all branches throughout the world. In the portion of metrics development we have observed cultural, financial and customer service metrics. While making cost benefit analysis a company like pizza Hut is to require facing different types of costs like software development, its operating and updating costs. But before that a company has to suffer knowledge survey and its inventory and mapping management cost.
Employees and chief knowledge officer’s (CKO) needed training as well as their salary costs. In reward Pizza Hut enjoys both explicit as well as implicit benefits which would be lifelong benefits. In conclusion Pizza Hut is in transitional phase towards a knowledge centered organization as they are currently trying to reap maximum benefits out of their employees, customer feedback and learning from their competitors. Fast food and pizza’s culture is rapidly promoting in Pakistan as well as in Multan, so Pizza hut must also consider the stakes of its different stake holders. They should take every stake holder on board and develop a new knowledge management system which will replace their current web-based system and give more autonomy in terms of decision making to its local franchises. This will really help them to sustain their competitive position in the market
For the sake of studying knowledge management purpose we have chosen pizza hut as our organization. We will start by discussing its little introduction and profile of the organization. Pizza hut (corporately known as Pizza Hut, Inc.) started in 1958 is an American Restaurant chain and international franchise it brings different styles of pizza for its customers with that it also offers dishes including pasta, wings, breadsticks, garlic bread and shakes. Pizza Hut is one of the brands of Yum Restaurant Int. which owns other known brands like KFC, Taco Bell, A&W and Long John Silver’s. It’s the world’s largest pizza chain with over 12500 restaurants across 91 countries. Its main head quarter is located in Dallas, Texas in America. In Pakistan pizza hut was launched in 1993.its head office is in Clifton Karachi and now it is in almost all the 9 big cities with 36 outlets in Pakistan. As we have visited pizza hut Multan so we will discuss things with the perspective of pizza hut Multan. In Multan pizza hut started its operations on 27th December 2003.its located in Gulgasht colony, Bosan Road which is considered to be a very attractive location as all the educational institutes are nearby and youth is there target market so location is good in this regard. There is only one branch of Pizza hut in Multan which is a very successful one, employed over 70 people. In Multan pizza hut is following all international standards in terms of quality, rules, decisions, training but with the consideration of local strategies in terms of management and taste offering special variety of pizza. The Local HR SYSTEM is decentralized and the management hiring is centralized. The hierarchy of the organization starts with Head Office leads to CEO, COO, DEPUTY CEO, SENIOR OPERATION LEADER, AREA SALES LEADER, GENERAL MANAGER (BRANCH) & ASSISTANT MANAGER (BRANCH) then supervisors and lower staffs.
We have chosen Pizza Hut for better understanding of concepts of “Knowledge Management” for several reasons like:
Pizza Hut is not only the acknowledged leader of pizza industry worldwide, but it is also the world’s largest pizza chain, with over 12,000 restaurants across 100 countries, employing more than 300,000 people, serving 1.7 million pizzas everyday to more than seven million customers. Its leading position depict that how nicely they are managing their operations worldwide. They have maintained their position because they have excessive knowledge of today’s competitive environment. We want to know how they are managing and implementing this knowledge. Pizza Hut is always trying to come up with some new and innovative ideas to make a pizza into something little bit different enough that customers perceive it as new tasty product. It shows they are continuously updating their knowledge. Pizza Hut has always valued customer service and satisfaction and manages knowledge about their customers. In 1995, Pizza Hut started main two consumer satisfaction programs: customer hotline and a customer call-back program. Such programs make sure that customers are happy, and always wanted to return. Pizza Hut is providing good taste, quality products with qualified staff, good atmosphere and hygienic environment. They are specialized in pizzas. Motivation level of staff is very high which make the organization more prosperous. . Workers are also told to do things in a particular order. , the speed is set by international standards Employees have to follow scripts, wear uniforms, and perform their tasks in a very specific way. Training is given to employees to share new and better knowledge for better practices. Competitive Advantage the fact that they have full service restaurant as well as delivery services.
There are many business processes that happen in Pizza Hutt. It includes
These are main five business processes in Pizza Hutt. All of these are connected with each other. Therefore Pizza Hutt managing all the functions carefully to get higher demand and earning high profit. At branch level business processes are divided in to two parts. 1: FOH (Front of the house), 2: BOH (Back of the house).
Customer Order: This process has three dimensions customer home delivery, take away and Dine In.
BOH: Includes sub processes regarding kitchen, raw material/inventory, quality of foods, product operations.
Product Delivery: Satisfying customer as they want is Pizza Hut`s first priority, to meet this challenge they have a well organized product delivery process.
FOH: It includes sub process like customer order and delivery in dine in, front desk, customer feedback, IT, Management and finance.
Maintain facilities: This process ensure that all above mention processes are performed in an organized manner.
Managers need to know whether their employees are performing their jobs efficiently and effetely or whether there is need for improvement. Performance of employees at pizza Hutt is appraised on daily bases. They area appraised on the bases of following ten points. 1: Greeting, 2: Sitting, 3: Take Order 4:Serving Starter, 5: Serve Main Course, 6: Follow after main course, 7: Desert offer, 8: Take Desert Order, 9: Deliver Desert, 10: Bill and Good bye Gesture. If any employee is not fulfilling all these responsibilities effectively and efficiently, a verbal warning is given first. In which top management assign task to their employee and check their performance. If employee do not perform their task than written warning will be given to the employee, if again not perform better then employee will be suspended. The management asks what the reason is. Why you did not perform this task. If employee explain the reason and accept their mistake then employee restored.
There are four functional departments at pizza hut Multan those are knowledge center, their main knowledge center is office from where they control all the operations of pizza hut only top managers works there , other knowledge center are Dine In area , Kitchen and Delivery .
Knowledge Centers in Pizza Hut |
Knowledge Center | Office | Dine In | Kitchen | Delivey |
Knowledge Content | Employee record | Customer Greeting | Cleaning | Order receiving |
Sales record | Sitting Arrangement | Store Management | Delivery boy |
| Sales forecast | Cleaning | Temperature | Delivery Ride |
| Financial | Temperature | Pizza recipe | Customer Feedback |
| Planning | Order receiving | Hand washing | Time management |
| Staffing | Customer care | Proper Dress | Order Placement |
| Problem solving | Time management | Pasta Making | New Deals |
| Maintenance | Salad bar | Dough Making | Trade area |
| Performance | Wash room | Daily Purchases |
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| Purchases | Customer Feedback | Raw Material |
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| Order Receiving |
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| Preparing Pizza |
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| Dish washing |
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Importance of knowledge management is very high in the kitchen because employees working at pizza hut are not trained to-do only one specific work at pizza hut like one employee who is making salad in regular routine may asked to make pizza if the employee who makes pizza in normal routine is busy in some other work. An employee who works in kitchen is known as Back-of-house employees because all the time they work only in kitchen.
Any related knowledge to working in kitchen is displayed on the walls of kitchen according to their need. The time when we visited pizza hut first thing I noticed was information related to cleanness and the things we have to do for working in kitchen first thing was to wash hand, how to wash hand was displayed on the wall in detail. Everything was written like how you must clean your hand and then cover your head. Kitchen is divided in different areas bar, store, freezer, dishwashing, ice making and main cooking area. All these work areas have small printing device so when a customer place order they enter that in the computer in dine in area that automatically received by the people who work in the kitchen.
Knowledge update in kitchen is normally done by the pizza hut head office. For example if there are some new rules or some new pizza recipe that is given by the head office to Multan pizza hut. Here they have online system which is used to solve problem, if manager have any problem they will put the problem in the system and will get the solution. Internal source of information update is customer and employees, every say hundreds of customer say a lot of things about the pizza hut so management give them importance and try to make everything according to the need of customer. Regularly they have brainstorming session where every employee is free to share their ideas, all the good ideas firstly gives some reward and then implemented in the pizza hut.
People Dimension
When talking about the people of Pizza Hut, they follow criteria when selecting any person. This criterion depends upon the nature of the job. Selection is based on the qualification and experience. Lower level staff is hired by branch managers. Minimum qualification for the lower level staff is matriculation and preference is given to the experienced person. Managerial level staff is hired by country head office and the minimum qualification for managerial staff is masters. Selected candidates then have to go through training session and are given the orientation about the working environment and their colleagues and organization in which they have to work. They communicate their goals to their employees in the orientation program and training programs. Pizza Hut also focuses on developing skills and expertise’s of their employees because their employees are directly indulges with customer dealing activities. The purpose is to make them familiar about their work. They also emphasize on knowledge sharing and cooperation among the employees because their philosophy is:
“How We Win Together"
From this philosophy we can understand the importance of cooperation and knowledge sharing at Pizza Hut. For this purpose they took customer feedback and also employees are encouraged to give positive suggestions about serving the customer in a better way In order to increase efficiency and decrease turnover, training sessions are organized for the low level employees and management so that they can cope with changing business environment. After training, the trainee performance is appraised by their immediate supervisors. Pizza Hut also considers the customer feedback about employee performance in order to bring quality service improvements.
Pizza hut is a technology oriented company they are using a well structured IT infrastructure. They are having a web based operating system through which they interact with their regional offices and they handle customer services through this web based system. All branches and regional offices are connected through internet with their main organization i.e. Yum International. Technology used in kitchen is standardized i.e. used in all branches throughout the world. Every portion of their respective branch is given the required international standard temperature e.g. 25 C in kitchen, -10 in freezing portions, etc… The bags in which home delivery is made keeps a specific temperature so that in home we could enjoy the real Pizza Hut’s taste. These bags are having a built in electrical heating system.
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Methods for culture Learning | Time for Learning | Collaboration |
Norms & Values | Courage | Openness |
Employee's Turnover | Common Language | Trust |
Reward & Recognition | Tolerance for Mistake | Team work |
Job Rotation | Empowerment | Leadership style |
Knowledge sharing |
| Risk taking |
Philosophy of Pizza Hut is “How we win together”, to achieve this they have developed a culture by applying KM in their organization in which employees enjoy team work, rewards for their innovation and job rotation. Management of Pizza Hut tolerates for employees mistakes up to a standard level. Employees enjoy a shared culture in which they have a shared language and norms & values.
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Reduction Of operational Cost | Economic Value Added |
Increase of Market Share | Earnings per Share |
Increase Of shareholder Equity | Growth Rank In Industry |
Increase Of Patent Income | Total Share holder Return |
Managing finance in an efficient and effective way is the back bone of managing process; Pizza hut is managing their finances by applying Knowledge Management in their organization. With the help of KM Pizza hut has reduced their operating cost resulting in increase in their market and new patents.
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Lead time | Grade Of reduction on rework | Average call hold time |
Sale | Average time to sole problem | Call Monitoring |
Staff Behavior/Productivity | Grade of reduction of Customer Complaint | Call handling time |
Innovation | Customer feedback | Market Share |
Product/service availability |
| Customer Turn Over |
Serving customers as they want is the first priority of Pizza Hut, so they are doing this with the help of applying KM and innovative products and taking customer’s feedback. They made their customer care centers efficient in a way that customer turnover rate is low. Pizza Hut proactively deal with customer to solve their problem.
Pizza Hut Inc. |
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Cost | Amount | Benefits | Amount Y1 | Amount Y2 |
Technology Infrastructure | Explicit Benefits |
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K.M Software development | 1,000,000 | Excessive sale | 1,000,000 | 1,350,000 |
Setup & Maintenance cost | 250,000 | Increasing in new Licensing | 750,000 | 800,000 |
Annual Updating cost | 500,000 | Increase in new franchises | 100,000 | 125,000 |
Annual Operating Cost | 300,000 | Increase of Pizza Hut's Patents | 100,000 | 125,000 |
Communication Cost | 50,000 | Reduce employees turnover cost | 250,000 | 300,000 |
Fixed Operating Cost | Owner's Equity increases | 350,000 | 375,000 |
Salary of CKO | 1,000,000 | Investment value increases | 350,000 | 370,000 |
Salary of KM Team | 500,000 | Increase in Financial Reserves | 50,000 | 70,000 |
Patents & legal charges | 100,000 | Total Explicit Revenue | 2,950,000 | 3,515,000 |
Knowledge Audit Cost |
| Total of 2 years = 6465000 |
Knowledge Survey | 300,000 | Implicit Benefits |
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Knowledge Inventory | 75,000 | Competitive Advantage |
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Knowledge Map | 50,000 | Reduce Financial Cost |
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Human Resource Cost | Innovative products & Services |
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Training Cost (Out Station) | 250,000 | Increase org's existing knowledge |
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Training Cost (Local) | 100,000 | Emergency Response |
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K.M Incentives | Improvement of Staff quality |
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Annual additional incentives | 150,000 | Improvement of customer satisfaction |
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Misc Expenses | 400,000 | Readiness for change |
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| Increase Market Share |
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Total Investment = 5025000 | Business Reputation |
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| Smarter Problem solving & Decision Making |
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While making cost benefit analysis a company like pizza Hut is to require facing different types of costs like software development, its operating and updating costs. But before that a company has to suffer knowledge survey and its inventory and mapping management cost. Employees and chief knowledge officer’s (CKO) needed training as well as their salary costs. In reward Pizza Hut enjoys both explicit as well as implicit benefits which would be lifelong benefits. These advantages help company to maintain their competitive position in the market. This is why pizza hut is so successful so far and they are keep on working on their knowledge management system by using their employee’s as well knowledge from outside sources as a result they are harvest many benefits.
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Initial Investment | 5,025,000 |
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First Cash inflow | 2,950,000 |
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2nd Cash inflow | 3,515,000 |
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Period | 1.59 year |
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| Amount | (k,t) | NPV Amount |
First Year cash inflow | 2,950,000 | (11%1) | 2,657,950 |
2nd year Cash inflow | 3,515,000 | (11%,2) | 2854180 |
Total NPV Amount |
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| 5,512,130 |
Less: Initial Investment |
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| 5,025,000 |
NPV |
| | 487,130 |
TACIT AND EXPLICIT KNOWLEDGE
Tacit knowledge is embedded in the human mind through experience. It is more like subjective in nature .It includes intuition, values, and beliefs that help to create explicit knowledge.
In contrast explicit knowledge is codified and digitized in books, documents, and white paper and spread sheets. It is more likely objective knowledge. Tacit and explicit knowledge are basically expressed in terms of knowing-how and knowing-what.
There are four modes of renovation:
Tacit to tacit: Employees discus company strategy in brainstorming session. This is called socialization. In pizza hut all the time knowledge seeking occur through discussion between employees. If one make mistake his colleague helped to get better results. Mistakes are taken as a part of experience
. Tacit to explicit: Expert showing them how to solve a problem. This is called externalization. In pizza hut manager walk throughout the organization during his duty time in order to solve and fix problems. If there is any deficiency he listen his employee carefully and try to fix his problem. At the start and end of the shift time he made special walk through the organization then handover it to his colleague.
Explicit to tacit: Learning how to drive. It is called combination. In pizza hut problems are solved within office. For manager and employee’s help on line system are available. Tools and technique are available to cope with the sudden problems. Manager show empathy in order to solve the problems. There is job rotation and flexibility of time.
Explicit to explicit: Learning in a workshop or observing in a demonstration. It is called internalization. In pizza hut knowledge is updated through training. Regional general manager (RGM) visits twice in a week. Every month a workshop is conducted on different topic related to current issues.
Quality assurance came from regional office who gives them demonstration how to assure quality. On job training is giving to low level employees and top level employees are giving training in training centers(Y block defense Lahore)
PIZZA HUT MANAGERS REMARKS
After taking interview and visiting the Pizza Hut premises we evaluate Pizza Hut’s operations and management we come to know that they are successfully dealing with their organization’s tacit as well as explicit knowledge. Tacit knowledge is embedded in the human mind through experience. It is more like subjective in nature .It includes intuition, values, and beliefs that help to create explicit knowledge. In contrast explicit knowledge is codified and digitized in books, documents, and white paper and spread sheets. It is more likely objective knowledge. There are four modes of renovation:
In first tacit to tacit employees discuss company strategy in brainstorming session. This is called socialization. In pizza hut all the time knowledge seeking occur through discussion between employees. If one make mistake his colleague helped to get better results. Mistakes are taken as a part of experience. When we visit assistant manager told us that now a day their regional managers and regional audit team just visit their branch and have a brainstorming session in which every employee gives his/her input in form of suggestions and action planes.
In tacit to explicit expert show how to solve a problem. This is called externalization process. In pizza hut manager walk throughout the organization during his duty time in order to solve and fix problems. Manager before taking charge from previous shift manager first check the attendance, Make table as well as essential items required for day to day operations. In case of any deficiency/problem with its staff manager listen his employee carefully and try to fix his problem. At the start and end of the shift time he made special walk through the organization then handover it to his colleague.
In explicit to tacit or combination process pizza hut’s problems are solved within office. For manager and employee’s help on line system are available. Tools and technique are available to cope with the sudden problems. Employees are facilitated with technology as well as emotional support from their respective managers. Manager shows empathy with his subordinates in order to solve the problems. There is job rotation and flexibility of time for the employees also.
In explicit to explicit learning is achieved in a workshop or observing in a demonstration. It is called internalization. In pizza hut knowledge is updated through training. Regional general manager (RGM) visits twice in a week. Every month a workshop is conducted on different topic related to current issues. Quality assurance came from regional office who gives them demonstration how to assure quality. On job training is giving to low level employees and top level employees are giving training in training centers (Y block defense Lahore).
Employees in Pizza Hut are appraised on the bases of following ten points. These 10 points are carefully monitored while serving the customers and giving them a unique experience. These ten criteria points are 1: Greeting, 2: Sitting, 3: Take Order 4: Serving Starter, 5: Serve Main Course, 6: Follow after main course, 7: Desert offer, 8: Take Desert Order, 9: Deliver Desert, 10: Bill and Good bye Gesture. If any employee is not fulfilling all these responsibilities effectively and efficiently, a verbal warning is given first. In which top management assign task to their employee and check their performance. If employee do not perform their task than written warning will be given to the employee, if again not perform better then employee will be suspended. The management asks what the reason is. Why you did not perform this task. If employee explain the reason and accept their mistake then employee restore.
Every good performance from employees and management is appreciated. For example achievements of an employee are announced in ceremonies to the other fellow employees. Such performances are highlighted and displayed where other employees can look at them; such as on the display boards and intranet etc. Employees are given appreciation cards which they ware as medal during their job. It shows that Pizza Hut’s more emphasize on knowledge sharing and their policies that reward those who share knowledge. Roles and responsibilities of each employee are mentioned in their job description. All the tasks that will be performed by a person are mentioned in the job description. However cooperative projects across departments and possible employee rotation of the employees are helping Pizza Hut to create a knowledge sharing culture. Employees are having multiple skills at Pizza Hut for example their assistant manager has the skills to work in kitchen as well as serving a customer.
In conclusion Pizza Hut is in transitional phase towards a knowledge centered organization as they are currently trying to reap maximum benefits out of their employees, customer feedback and learning from their competitors. Every outlet receives direction from regional as well as from its parent company Yum International; there are few areas which are still centralized e.g. product development and H.R & Finance. Pizza Hut is using standardized methods of baking, washing, and distributing technologies throughout the world. There is always little room for product customization according to local needs like Tandoori and Tikka Pizza. Pizza hut normally promote its international standards of cooking, operating, delivery and distribution. So, we can say that their policy is a bit “ethnocentric policy”. One more issue which we observed in Pizza hut was that low level staffs have only limited chances to promote to middle or lower level management. According to company policy such people can only be promoted to supervisor post only. Fast food and pizza’s culture is rapidly promoting in Pakistan as well as in Multan, so Pizza hut must also consider the stakes of its different stake holders. They should take every stake holder on board and develop a new knowledge management system which will replace their current web-based system and give more autonomy in terms of decision making to its local franchises. This will really help them to sustain their competitive position in the market.