Island Crust Bakery: Who Decides What?
Island Crust Bakery is a family-owned business in Castries, St. Lucia, selling bread and pastries from one shop. Owner Merle employs 16 people: four bakers, two apprentices, six counter staff, two delivery drivers and two cleaners. Weekly sales average EC$18,000. Merle handles purchasing, staff rosters, pricing, customer complaints and disputes, working about 70 hours a week. She plans a second outlet 6 km away and has hired an operations manager, but her brother and cousin still take problems straight to Merle. The new manager says he has no authority to order flour or discipline staff. Two experienced bakers resigned last month, and the apprentices now need close supervision. Counter staff complain that simple decisions, such as approving a refund, take days. Merle is considering piece-rate pay for bakers to raise output but worries about quality.
1. Identify two organisational problems at Island Crust and recommend a specific structural change for each. Justify your answer using the case.
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- Problem 1: over-centralisation. Merle makes every operating decision, so refunds and flour orders wait. This creates delays and overloads the owner. Recommendation: a simple functional structure with the operations manager responsible for daily purchasing, rosters and staff discipline up to a written limit, for example EC$500 per purchase. Merle keeps pricing and major capital decisions.
- Problem 2: unclear reporting lines and family bypass. The manager has responsibility without authority. Recommendation: publish an organisation chart and a one-page authority list; Merle directs family members to the manager for operational matters. This gives unity of command and reduces role conflict.
- Justification: the second outlet will increase coordination needs; delegation must be real, not just a title, or the manager cannot control quality and costs.
2. Advise Merle on how she should delegate for the second outlet. Include what should and should not be delegated, and one control she should use.
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Delegate routine, repeatable tasks with clear standards: ordering within a budget, weekly rosters, receiving stock, first-line customer refunds up to a limit, and apprentice supervision. Do not delegate final pricing, bank sign-off, or hiring and firing without review. For the second outlet, appoint a supervisor under the operations manager and set a weekly control report: sales, waste, stock variance, staff hours, and customer complaints. Use management by exception: Merle reviews only variances above 5%. Train the manager in the bakery's quality standards before opening. This protects Merle from overload while keeping financial control.
3. Evaluate whether piece-rate pay for bakers is suitable. Give a recommendation.
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Piece rate pays bakers per loaf or batch. It can raise output and is easy to calculate, but baking is interdependent: speed can raise defects, under-proofing, and waste, and staff may resist cleaning or helping. Demand also varies, so piece rate can create high pay in busy weeks and low pay in slow weeks, causing turnover. Given the recent quality worry and apprentice training, a straight piece rate is risky. Better: a base hourly wage plus a small quality and output bonus paid only when waste stays below an agreed limit and customer complaints do not rise. Pilot for one month and compare output, waste, and defects.