Case 2
Store 24

Maastricht University, School of Business and Economics

Course: Management Control EBC 4154

Introduction
Most of the executives of Store24, a New England based convenience store, were gathered for an important meeting to discuss a way to increase store level employees retention. Some of the suggestions were to increase wages and bonuses, training enhancements or career development programs. However, top management lacked sufficient information available that would explained the relationship between manager and crew tenure on store level financial performance. Hence, the purpose of this paper is to shed light on the “employee tenure-store level performance” relationship as well as to discover how managerial skill, service quality and profit are related.

1. The Relationship between Employee Tenure and Operating Performance
Before exploring the relationship between store level financial performance and other relevant site factors, it is essential to establish a measure for store level performance. Internal analysis collected sales and profit data for 75 stores. Based on Appendix A, one can conclude that these variables are highly correlated and significant (i.e. r = 0,924, p-value = 0,000) Ultimately, profit is used as a proxy for store level performance, since it takes into account both, the costs as well as the revenues of making the sales.
Despite the lack of objective evidence on the importance of employee tenure, Store24 has awarded managers for increases in employee tenure in the past. Hence, the first question posed by CFO Doucette asks whether employee tenure is a driver of store level performance. A first indication is retrieved from the correlation analysis in Appendix A1, in which it is found that management tenure has a 0,439 (p-value = 0,000) correlation (p-value = 0,000) with profit, whereas crew tenure has a 0,258 (p-value