M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 41

At Nick’s Pizza & Pub, working with pizza is fun, rewarding, and challenging. Much of the company’s success can be attributed to the strong management techniques of founder Nick Sarillo. When Sarillo started Nick’s Pizza & Pub in 1995, he knew from the beginning that he wanted to create an environment with a dedicated workforce and a culture defined by honesty, loyalty, and excellent customer service. Sarillo rejected the traditional “command and control” management style in favor of creating a company culture in which he could trust his employees to work hard and behave ethically. The result is termed a “trust and track” management style.

Although Sarillo continually tracks what is going on inside the restaurant, he gives his employees responsibility over certain managerial functions. New hires at Nick’s Pizza & Pub attend a two-day orientation, where they learn about the company’s culture and are certified for particular jobs. Employees are expected to take responsibility for tasks that might traditionally be part of the supervisor’s job. Sarillo wants his employees to feel like they are actively involved in the company’s success and treats his mostly teenage workforce with respect. Nick’s Pizza & Pub also cares for its customers. During the recession when unemployment was high, the restaurant gave customers half off on pizzas on Mondays and Tuesdays.

The result of the “trust and track” style is happier workers who choose to stick with the company. Whereas turnover is roughly 200 percent for the industry, Nick’s Pizza & Pub experiences 20 percent. The annual operating profit rate is also high at 14 percent, compared to the 6.6 percent experienced by competitors. Sarillo’s unusual but effective management style has created a corporate culture that translates into dedicated employees, satisfied customers, and over $7 million in annual sales.

How would you defend Nick Sarillo’s management approach from a financial point of view?

Step 1 of 2

A good management team is important for an organization but evaluating management is a difficult task. There are a number of aspects related to a job that are difficult to evaluate. Though, there is no fixed formula of evaluating a management style, but certain factors should be taken into consideration while evaluating a management style from a financial point of view.