Problem-Solving Case: At Pal's, Quality Is All about Service The quality of service at Pal's Sudden Service, the Tennessee-based fast-food chain, is so high that the company recently won the prestigious Malcolm Baldrige National Quality Award, joining the ranks of top performance-conscious companies like Ritz-Carlton and Federal Express. Pal's has taken many steps to streamline and improve the process of preparing and delivering food to customers in its 26 restaurants in the southern United States. In an industry where servers average one mistake every 15 orders, Pal's has narrowed its error rate to one in every 3,600 orders. That's an impressive record when you consider that a car rolls through a Pal's drive-through location every 14 to 18 seconds. The menu is simple, so food sourcing and preparation are streamlined. Customer satisfaction is at 98 percent, and turnover among assistant managers is at the other end of the scale, under 2 percent. Among front-line employees, turnover is 34 percent, less than half the industry average. With a psychometric test and a probing job interview behind them, new entry-level employees receive 135 hours of training (far surpassing the industry average of 2 hours of training). These front-line employees are thus empowered and confident enough to make their own decisions and act independently. Continual retraining also helps them remain "certified" in the skills they need to do their jobs well, including not just food preparation tasks, but also customer service (all Pal's customers interact with real people, not machines or microphones). Repeated perfect scores on periodic skills tests allow employees to become coaches who help train and retrain their co-workers. "Schools are usually satisfied with having a valedictorian in each class, a range of people they graduate, and those that don't make the grade," says CEO Thomas Crosby. "We want everybody that we hire to be the equivalent of a valedictorian if we are going to beat the competition." Crosby and all the upper-level managers at the company spend 10 percent of their time working with promising employees to help them improve their skills. Crosby wants his employees to remember what they learn at Pal's and take it with them to any future job or career they may tackle. Asked why he is willing to invest so much time and money in training employees who might leave the company one day, Crosby responds, "Suppose we don't, and then they stay?" 1. What forms does quality take in a fast-food restaurant? That is, what aspects of the food, service, atmosphere, and so on do you consider to be acceptable in terms of quality, and what would exceed your expectations? 2. Productivity efforts in a fast-food restaurant often include behind-the-scenes work in the kitchen. But in a service business, production includes interactions with the customer. Identify one or two ways in which Pal's supports its employees' productivity when it comes to working with customers. 3. Using Pal's as an example, work with one or two other students to develop a list of ways in which quality and productivity can interact. That is, do any of the steps Pal's takes to maintain productivity help to support the quality of its customer service, and vice versa?