Leadership and Organizational Studies, Dollar Tree


Dollar Tree is the nation’s largest single price point retail with over 3300 stores across the United States. Originally founded in 1953 by K.R. Perry under the name of Ben Franklin variety stores. Then in 1970 Macon Brock, Doug Perry, Ray Compton and K.R. Perry changed the name to K&K 5and 10 and a few additional stores were then opened. In 1986 the first Dollar Tree was opened and the K&K stores were sold to K.B. Toys. (Associate Handbook 2006) By 1995 Dollar Tree began being traded on NASDAQ and by 2009 Dollar Tree stores numbered over 3300 coast to coast and being headquartered in Chesapeake Virginia. In addition to the stores Dollar Tree also operates 12 distribution centers with the logistics being mostly contracted out to Swift Trucking.

During the four years employed by Dollar Tree several issues have been noticed that have lead to organizational and leadership problem. The first issue noticed is the rate of pay and lack of consistent pay increases. While many other retail organizations are starting associates with experience above minimum wage Dollar Tree does not. In addition other retail and no retail business to be competitive try and give wages above minimum wage and again Dollar Tree will not. Once someone is hired by Dollar Tree the method for reviews and raises is not set in writing and many store managers do not even bother to give part time associates reviews and raises when they are deserved. This has created some very poor job performance and job satisfaction. The is the hours kept by store management. The store managers are salaried managers and are required to work at least 48 hours. Many store managers have been told to work until the job is done or do whatever it takes to make sure your store is to standards. That can mean anything, store managers have worked open (7 am) to close (930pm) many times in one week because their stores were not up to company standards or a delivery was late or a sick call by an assistant manager. But mainly it is the attitude that the store manager will do whatever it takes that can and has ruined are marred job satisfaction. Job satisfaction is and was low also because of the procurement and logistics. Dollar Tree stocks their stores based largely on a computer assisted ordering system , which is when an item is sold in the store it begins to generate an order to restock that item. It sounds and should be an excellent tool, but there are other factors involved which confuse and complicate the restocking. Store size and sales also affect store’s orders. Procurement has not updated many of the stores data that affect these orders. For example the store I ran in Bedford Virginia was 13,000 square feet and should have a sales goal of 2 million a year. In reality the store began sales at 850,000 when I took over and when I left sales were at 1.25 million. While the 1.25 million was a bit more in line with the stores sales projection it was not enough to handle the excess stock that allocations were sending to the store. This created frustration because the staff was spending more time than needed unloading trucks. The unloading of trucks was another issue that caused frustration within management and with associates. All product was hand stacked on the trucks not palletized. This meant unstable loads, damaged product, ,long hours unloading trucks and at times late trucks forcing others to stay late or causing only management to unload to save payroll. Being a store manager meant 8 weeks of training and for assistants it meant 2 weeks of training. When I was hired I was in and out of training in 4 weeks and made to help train other store and assistant store managers. This was extremely aggravating to me and those I was training. So many mistakes were made by me and I was training them. In the end I was demoted from a DST( district store trainer) managing a high bonusing store to a store manager in a store that was struggling and in a bad area of Mesa, Az. Not only have I been unsatisfied with the company and my job because of training but so have many others I have tried to train as my assistants or regular associates. We were never given extra training hours to successfully train any new employee. We were forced to schedule them in a shift that was meant for regular production or cashiering, therefore, we were not able to successfully train them on true policies and procedures.

Lastly, Dollar Tree’s upper management was not consistent in following through on adhering to policies and procedures and making changes when needed. When changes were made, they were implemented suddenly and this caused frustration and poor job satisfaction. Also, when it came to discipline, what was done for one person was not done for someone else in the same type of scenario. There was also inconsistencies in salaries in the form of higher pay for males, younger experienced managers, and in some cases, higher pay for certain ethnic backgrounds.

According to Free Management Library - Job satisfaction is in regard to one's feelings or state-of-mind regarding the nature of their work. Job satisfaction can be influenced by a variety of factors, eg, the quality of one's relationship with their supervisor, the quality of the physical environment in which they work, degree of fulfillment in their work, etc. (free management library 2010) As stated in the previous paragraph, these issues are what caused employee job satisfaction at Dollar Tree to be so low. Job satisfaction at Dollar Tree had been fairly satisfactory over the years. Speaking to a long term store manager Kyra Fedec who had been a store set up coordinator based out of Colorado. Kyra had been employed by Dollar Tree for over 12 years until she ended her employment with Dollar Tree late 2009. Kyra stated that as the company has grown so has the lack of concern for their associates. This attitude and seeing store managers being hired with less experience and higher pay persuaded Kyra to re-evaluate her career with Dollar Tree. Examples of why associates are disgruntled are poor wages and the company taking an attitude of “if you do not like it go work somewhere else”. (Fedec 2010) This dissatisfaction is not just at a single store level. It is multiple stores, in multiple states. It affects everyone from store manager to cashier at each store. It also has been noted to have affected district managers in some states. Poor job satisfaction affects stores in several ways:
a. understaffing- no one wants to work for a company that is not paying at a competitive rate nor are they are consistent in giving raises and benefits.
b. work not being done - poor job satisfaction means poor job performance. Associates will not want to work at their peak performance if they are not happy with their job.
c. high turnover- Because of low job satisfaction associates will not want to stay at their jobs very long. Creating high turnover rate in many competitive markets were there are other jobs to be found.
d. stores are not well stocked and recovered- as understaffing occurs store conditions and customer service diminish. All stores should have trucks unloaded and new stock to the sales floor within 48 hours. In addition every night items that have been misplaced throughout the store need to be picked up and placed in the area that they belong. Also product should be pulled forward on the shelves to give a full appearance. These occur not just because of understaffing because of poor job satisfaction but also because of poor job satisfaction. No one wants to give 100% when they are not happy with their jobs.
e. poor customer service- Customers are any businesses life blood . Organizations are in business to provide some service or product to a customer.
If there is a lack of staff or lack of job satisfaction customers will not be treated to standards that are set by the company. Even if the company does not have a set customer service standard program a negative attitude will be shown on the faces , in the tone and the overall attitude of Dollar Tree associates.
f. loss prevention issues- A big problem is loss prevention challenges. I have caught many associates as well as assistant managers stealing because they were not happy with their jobs. It was either poor wages, lack of concern for the associates by previous management, poor work conditions, and management just not monitoring the checks and balance that are in place to deter employee and customer theft.

Much of Dollar Tree’s problem centers around their business model. They are a single price point retailer, they cannot raise their price from 1.00 to 1.50. This causes the organization to put tight controls on those expenses that are controllable, the biggest being payroll. In addition Dollar Tree must purchase very aggressively and when certain extreme values come procurements way they must take advantage even if it means overloading stores. In keeping with deliveries Dollar tree also saves money by not loading product on pallets because this give the warehouse the ability to stack product from floor to ceiling utilizing as much of the trucks as they can. If Dollar Tree was able to raise prices then we would have seen deliveries palletized as store orders and allocations would be decreased as the quantity of product sold would have decreased.
The studying of employee satisfaction and how it affects an organization began In the 1980’s with Benjamin Schneider and his research on employee satisfaction.(Corporate Leadership 2003)Other studies have indicated that there is a link between employee satisfaction, customer satisfaction, productivity, and financial performance:
• Unhappy employees are less productive and more likely to have higher absence rates
• Satisfied employees are more productive, innovative, and loyal
• Increases in job satisfaction lead to increases in employee morale, which lead to increased
employee productivity

• Employee satisfaction leads to customer retention
These points have been witnessed at Dollar Tree , any new store that I had taken over morale was low and so was productivity and absences were high. Once morale was increase by various methods associates wanted to come to work and productivity was higher than company standards. In an article on American Psychological Association’s website APA PsychNet it is also stated that there is a direct relationship between job satisfaction and customer satisfaction, productivity, profit, employee turnover, and accidents.(Harter 2002) One of the biggest reasons for low employee job satisfaction is related is the rate of pay or lack of pay increases. According to Colin Green and John S Heywood, pay is directly related to employee job satisfaction, job performance and satisfied with hours scheduled. (Green Heywood 2007)This means pay covers many problems an employee may have. Poor schedules can be fixed with a more solid hourly rate, poor job performance can be fixed with a raise. This is such a shallow finding, that people would place all they care about second to money and it also means people can be bought. This is a poor attitude for so many organizations that have employees that will sell their soul for a higher wage. Though they may have a high productivity rate what of the quality of their work? It never seems to measure the quality only the quantity though in my experience someone who is very satisfied with their career not only has a high productivity rate but the quality of the work is generally flawless. That’s because those employees take ownership and pride in their careers. Unsatisfied employees skate by doing the minimum standard of their position.
Retaining our employees is very important, and a high turnover is one area that has been noticed with poor job satisfaction at Dollar Tree. In an article entitled The satisfaction and retention of frontline employees: A customer satisfaction measurement approach by Roland T. Rust, Greg L. Stewart, Heather Miller,and Debbie Pielack, it is stated ”that employee turnover is highest among employees who are not satisfied with their jobs. Because qualified employees are becoming more scarce and difficult to retain, organizations need to focus on increasing employee satisfaction.” The suggestion they give is treat an employee as customer. This illustrates how a customer satisfaction measurement approach can be applied to the measurement of employee attitudes. What a great idea if organizations would stop and think that employees are just as important as the people they sell too then employee satisfaction would grow. Retailers like Safeway spend so much time and money tryi ng to give world class customer service that they forget the employee is the one that has to deliver this service and they should be treated just as equally important. Instead they get rated on how bad they do not how good they do when a mystery shopper comes in. (Graziano 2010)Their wages are cut and benefits are held back until they reach some ridiculous amount of hours worked. (Safeway union contract 2010) This to me does not promote job satisfaction it supports fear and a sense of let us just do enough to get by no more. In 1985 Heneman and Schwab used a PSQ Pay Satisfaction Questionnaire and studied 1,007 of a manufacturing firm and 95 employees from a healthcare firm. Depending on the job structure each of the 4 aspects, pay level, pay raises, pay structure-administration, and benefits affected employee satisfaction in some way. (Scarpello 2003 )So what Safeway had done with the union contract and what has been observed with Dollar Tree this research backs up that some of these if not all of the 4 factors will affect employee satisfaction.
In observing what Dollar Tree has fell short in doing or providing to it’s associates, there is one main solution that needs to be accomplished. That is to be consistent in everything that they do. This sounds easy but all of their problems stem from not being consistent in following policy, pay structure, discipline, procurement, or to boil it down overall operational standards. In fact on a large level organizational restructuring has a positive response on employee satisfaction according to studies.(Howard, Frink 2010) We are not asking for a complete restructure just rethink and reintroduce new policies and procedures that will benefit the work force that is the front line service to the primary end user of your product and service. In speaking to an old District Manager out here in Arizona Rich Norkus Dollar Tree has begun to become more aware of their failing pay structure and has begun using a more consistent structure based on store volume or estimated store volume and experience. It seems each store has a salary for a store manager budgeted into it. That salary can fluctuate a few thousand dollars per year based on experience. (Norkus 2010) In addition the company is becoming more aware of reviews and raises with recent class action law suits against Wal Mart. Dollar Tree does not want to seem biased toward one class or gender and they are becoming more diligent in getting associates what they deserve and are entitled too.
While the store managers are still working uncanny hours that is also being looked into as a law suit has been filed by several thousand current and ex store managers claiming unfair wages . In summation the claim goes after the excess hours store managers work during the holidays that is not currently laid out in the store manager’s job description. This would aid in some store managers having poor attitudes if they would get compensated for the 6th day they work and the loose of time with their families.
The allocations and procurement has also been worked out according to Rich Norkus and Mike Moore my old district Manager in Virginia. The stores allocations and procurement needs have now been more closely linked to stores actual sales not their size or projected or supposed sales goal. It has been noted that load sizes have decreased slightly but the biggest issue is product being delivered that is not sellable in that area or store and the amount of excess product has decreased. The logistics department has been working harder at getting truck drivers to get loads thrown faster by giving help to the driver. This speeds the rate of unload time and more stores can be delivered in shorter period and earlier in the day. Managers no longer will work later to unload trucks and it alone. As a an ex store manager nothing irritated me more than waiting for a truck or waiting for a truck driver to unload the truck. Wasted time standing around I could have been home hours ago if the truck was on time.
These steps that Dollar Tree has taken may in time solve some of their problems. I have spoke to several managers and they feel less stressed about their jobs and they sense associates are as well. They are beginning to feel more like a family again. The way it was 5 years and 1000 stores earlier. The growth of Dollar Tree is what hurt them in seems. They forgot where they started and really who helped them get to where they are now. That is why I no longer with the company some Human resource managers forgot what I did for the company for 5 years and when I needed help the door was shut on me. Maybe that will change but for now the path they are on will at least begin to help those currently employed.
The problem and issues that have caused the problem discussed did not hinder my professional development. In fact it strengthened my leadership abilities. I had to compensate and be creative to keep employees motivated to be productive and friendly to customers. This issue caused me to step up and be a leader and motivate those employees who felt underpaid and who had poor job satisfaction. As I became better leader because of the problem the long hours worked because of high turnover impacted my school work and home life. Grades slipped, assignments were not done to the best of my ability. My family missed out on dinner together gatherings and other social events.

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