Dell Computer Inc.: Company Analysis

Interim Report

The company selected for analysis is Dell Computer Sales. The main facility is located in Austin, Texas. The manager selected for the interview is Rita Fae, who manages a team of approximately twelve persons continuously, although the number does fluctuate with seasonal changes and turnover rates.

Dell Computers is an international computer sales and assembly company that deals in multiple aspects of technology, including home theatre systems, computers, printers, and digital cameras. Dell does not manufacture parts, specifically, the parts are purchased from manufacturers and assembled at Dell facilities, in the same manner, that automotive manufacturers purchase parts and assemble them at separate facilities. It is also important to note that Dell also acts as a sales facility for already manufactured items, such as Kodak cameras or Sony plasma televisions.

Although Dell operates as an international facility, there are strict regulations regarding shipping. Rita’s team, for example, is allowed to sell to the continental United States, Alaska, and Hawaii. The US-based sales team cannot sell to Canada, Mexico, Guam, or Puerto Rico. Furthermore, other international sales facilities exist for off-continent nations such as in Europe and Australia.

The market scope for the manager in this interview report is the United States-based home consumers. Because Dell Computers is segmented by home, corporate, small business, and educational sales, it would be impossible to gain a strong and indicative look at all these areas.

Preliminary research on the Internet and with Rita Fae shows that the critical external factors that Dell faces are socio-economic, particularly in regards to recent economic slowdowns due, in part, to the American concerns within the Middle East. The recent economic slowdowns have forced the closure of the Dell Roseburg, Oregon sales facility which operates as a call center. Other critical external factors include competitor technology, particularly Toshiba and Hewlett Packard.

The critical internal factors that impact Dell management are direct sales support, supply chain logistics, and changes in technologies. These are also strongly related to Dell’s operational and organizational strategies, and without a strong strategy and leadership guidance, Dell would not be the affluent company that it is today.

The interview process will take place over the telephone as a semi-structured interview. The telephone interview was selected because of the geographic distances to be overcome. A semi-structured interview allows the interviewer to change or alter the line of questioning based on the interviewee’s responses, which is the best way to gain new information regarding organizational leadership strategy.

Executive Summary

Dell Computers is one of the largest and most recognizable giants in the computer industry. The company has faced strong completion from Hewlett-Packard but has been able to initiate a customer-focused strategy to overcome recent market fallings. The following examines Dell as it functions within the market, which will show that one of Dell’s greatest weaknesses is poor internal controls.

This is followed by an examination of Dell’s external factors, which will show that litigation from consumers and employees is causing disruption in the Dell attitude, which has previously been a strong culture of continuous improvement.

The last section examines Dell’s internal factors. Dell’s internal leadership structure is very straightforward. Management focuses strongly on employee motivation, rewards and recognition, and employee training. However, the negative feedback from management shows that weak internal control has lead to multiple changes in policies, pay structures, and overtime hours. These portions of Dell’s management strategy have created a high turnover rate, which in turn creates low employee morale.

Final recommendations for Dell are to focus on employee needs of consistency and a guarantee from Dell on a temporal basis regarding pay structure and overtime hours. Constant changes in schedules and paychecks lead to employees not understanding what the company’s commitment to them is, and this creates bad employee engagement. Once Dell is able to make a solid commitment to employees, then employees can become more engaged with their jobs. This effort can be measured by benchmarking previous turnover rates (prior to implementation) and post-implementation turnover rates.

Executive Report

Dell Computer Inc. Overview

Dell is one of the world’s largest suppliers of personal computers and related products (Datamonitor p 5 2007). Dell Computers designs, develops, manufactures, markets, and services a range of computer systems (Datamonitor p 5 2007). Despite a receding market share to high-end service competitor Hewlett-Packard Company in the recent past, Dell continues to have a strong market position in the computer hardware segment, a platform from which it could launch a campaign for regaining the global market leadership in the personal computer segment (Datamonitor p 5 2007).

However, intense competition in the PC industry could further erode the company’s margins and reduce its market share (Datamonitor p 5 2007). Regardless of recent falls in market share, Dell’s “second-quarter 2007 financial performance of Dell released on August 30, 2007. The results exceeded analysts’ forecasts and suggest the computer maker’s turnaround is gaining strength” (Lee p 9 2007).

Dell’s strengths are in its recognizable brand name and wide product portfolio which creates a strong market position (Datamonitor p 5 2007). The company has established a growing presence in high growth rate nations, namely India and China (Datamonitor p 5 2007). However, the company’s weaknesses are weak internal controls, product recalls, and weak customer service (Datamonitor p 5 2007).

The nature of Dell’s business is in computer technology, services and support, and peripheral sales. Dell’s primary products are it’s made to order personal computers (PC), and its primary services are computer technical services (like at-home warranties) and Dell financing (monthly payment plan). According to Mark Jarvis, “Dell’s big revolutionary model in the computer business is when you go online, you can pick the PC that you want and we then go and build it and deliver it to you. So it’s a build-to-order model. Which means customers can have an infinite choice of what technology goes into that PC.” (Brandweek p 10 2007).

Dell customers are extremely loyal, explains Mark Jarvis in an interview with Business Week Online. “Customers are focusing on cool,” [Jarvis] says (Lee p 11 2007). “Consumers are increasingly conscious of the brand itself. People say, ‘I’m an Apple (AAPL) person, I’m an HP person, I’m a Dell person.’ We’re reflected in the brand we use.” (Lee p 11 2007). This focus on customer’s perception has led to ads which “drawing heavily on color, music, and images suggesting fun and whimsy. The ads, which use the tagline, “Yours Is Here,” publicize Dell’s recently launched line of Inspiron computers, which are available in bright colors designed to boost their fashion quotient” (Lee p 11 2007).

Dell’s service market is international in scope, but the company is segmented by type of computer and region, as shown in the following diagram:

Dell’s vision and culture are to be consistently moving forward. Bernard Charland, a communications consultant working with the Dell Computer Corporation (Strategic Communication Management p 6 2007). He describes his role at Dell and the drive he conducted in 2007 to develop a new digital media strategy for the company (Strategic Communication Management p 6 2007). Asked about the corporate culture of the company Charland cites the action-oriented requirements of the company, as well as the flexible nature of management and its focus on constant improvement (Strategic Communication Management p 6 2007).

Dell Home Sales External Environment

To analyze Dell’s external environment, the PESTLE method was used. This method is comprised of the political, economic, social, legal, and environmental landscapes within which Dell must function. The sector of Dell used for this analysis is the Dell United States Home Consumer Division, because that is the main focus of this report. It is important to note that Dell International and Dell Corporate Sales may have different factors. The Dell external environment is constantly in flux, especially considering that the legal, social, and environmental concerns change as the local, national, and global focus changes. The following focuses only on the current events that Dell must navigate through to function viably in the United States. The following is based mainly on primary research interviews conducted with manager Rita Fae unless otherwise noted. This allows for a special look into the information that may not be available through secondary research sources.

Political

Dell Home Sales USA division must function under multiple political restrictions, including but not limited to employment laws, fair business practices, shipping and receiving regulations, manufacturing component regulations, IEEE, and technology standards compliances. There are many regulatory boards that Dell must maintain constant vigilance to prevent legal fees.

Dell is also involved in national politics. Dell’s Public Policy (2007) states: “Dell Inc. and its employees are active and engaged in their communities. Whether it’s charitable activities or political engagement, employees are informed and involved in the decisions that affect their company. Dell Inc. believes that supporting candidates who understand the Company’s legislative initiatives and policies is appropriate and in the best interest of its customers, employees, and stockholders.”

Dell restricts the number of donations it is involved in, stating “Consistent with federal law, Dell Inc. does not contribute to federal candidates, national political party committees or other federal political committees” (Dell Public Policy 2007).

However, direct Dell team members are rarely involved in national politics, therefore the political landscape, other than direct legally abiding rules and regulations, has little impact on Dell Home Sales employees, and therefore Rita Fae did not have any information the regulations, such as shipping regulations.

Economic

Dell Computers is a major manufacturer of computer technology, with a direct-to-the-customer sales strategy. This has allowed Dell to ‘cut out’ the middle man, but also means that Dell’s supply chain logistics must be constantly reviewed and controlled. Dell purchases parts from multiple manufacturers, for example, most Dell computer hard drives are manufactured by Maxtor, and then assembled into the Dell computers. While this method has allowed Dell’s strategy to be quick, efficient, and economically viable, it has also created some concerns with supplier demand and technology. Since Dell does not have a warehouse of units, it basically operates as an on-demand manufacturer. Thus, Dell’s viability as a manufacturer relies on the supply from parts manufacturers, the supply chain’s ability to assemble parts, and communication between consumer sales and the assembly line.

Dell has numerous competitors, but their on-demand strategy has kept computers affordable. The main concern Dell faces in competition is in the service offerings. Service and support in Dell have been under increasing scrutiny, websites such as describe the service and support of Dell as being ‘Dell Hell.’ However, as Rita Fae explains Dell’s telephone support and home, services are free for one year with all computer purchases. Many customers complain that other companies offer better services, but these are paid additions to the services. The majority of competitors with ‘better’ services are mail-in service warranties, and it can be months before a computer is returned. This is the largest service area that Dell competitors are stated, by consumers, to be exceeding Dell’s quality.

Labour is not hard for Dell to acquire, base floor sales representatives can make in excess of sixty thousand dollars a year – their first year. The hours can be long and demanding, as Rita Fae puts it “From August to February we work from seven A.M to ten P.M., it is a hard schedule that a lot of families can’t keep up with.” Because of the long hours, these months have a high turnover rate. Hiring bonuses bring in new employees, but at the end of the back-to-school and Christmas “slam season” sales are not as lucrative, which causes layoffs. Hours during the season can be long and tedious, which causes resignations. This creates a high Dell turnover rate. It is also important to note that Dell offers an excellent health care program and three months a year paid medical leave that can be “extended for serious family illnesses”. According to Rita Fae, this also extends to ‘domestic partnerships’ that most health insurance do not offer.

Social

Dell’s public image is very important. Rita Fae describes numerous charities that Dell Teams are involved in, and Dell encourages team members to come up with new socially inclined ideas. For example, during the Christmas season, Dell Teams will go shopping for impoverished children, spending “literally thousands” for donation Christmas toys. Dell teams are also involved in book drives, coat drives, canned food drives, and recycling initiatives. Nearly all Dell employees are involved in one charity or another, and most participate in the annual American Cancer Society walk-a-thons. Rita Fae explains that if an employee has an idea for a charity, Dell will support them wholly.

Legal

Dell’s legal landscape has had some upsetting press in recent years. Litigation from California and New York Attorney General’s offices on behalf of consumers have included the following: illegal financing tactics; false advertising; over-selling (charging customers for items they did not want); incorrect billing statements.

Litigation from employees includes a current lawsuit citing that Dell did not pay overtime for team meetings, extra work hours, and missed lunches.

Rita Fae cannot comment on these lawsuits other than to say that the majority are still in the process of going to court and that Dell has not ostracized any employees for joining the employee lawsuit. However, Dell refuses to sell to any customer named on any customer-related lawsuit, which is well within the rights of a business to refuse service.

Environmental

The environment is very important to Dell Home Sales. Dell is involved in many environmentally sound charities and knowledge-based information. According to Rita Fae, Dell is always looking for ways to develop a better environmental future. Some of these that are related to Dell Home Sales USA include “Plant a Tree for Me” and “Dell Computer Recycling.” Plant a tree for me program is an environmentally sound initiative Dell has initiated to plant trees. Dell computer recycling helps prevent old and unwanted computers from increasing already overflowing landfills. Dell has also won several environmental awards for its products. Rita Fae states that Dell is continuously trying to reduce its impact on the environment while increasing environmentally sound initiatives.

Dell Home Sales Internal Environment

To analyze Dell’s internal environment an interview with Team Leader Rita Fae was conducted. This interview is semi-structured, which allows for the line of questions to alter as the comments of the interviewee change. The following descriptions are based on a telephone conversation with Rita Fae. Rita Fae is thirty years old, a working single mother of three, who has been a Team Leader with Dell Home Sales USA division for three years. The following is a summary with direct quotes from Rita Fae, which allows for a correlation between secondary research and the interview to be used in constructing a final recommendation.

Organizational Structure

Dell’s organizational structure is very straightforward. According to Rita Fae, she manages a team of twelve base floor sales representatives. Rita is managed by a team of three call center managers. These managers are lead by Dell’s corporate team, consisting of Michael Dell, Kevin Rollins, and Paul Bell. This is a direct leadership strategy that, according to Rita Fae, “cuts out a lot of the communication problems you see in other companies.” If an employee or manager has a problem that cannot be resolved by the call center management team, they are welcome to contact corporate management directly and without negative responses.

Organizational Culture

The organizational culture at Dell places a strong emphasis on developing a “Winning Culture.” Dell places great importance on being communicative with a desire to win in sales and customer satisfaction. Rita Fae states that “The culture inside Dell is one of support. If you have a problem doing something, you can ask anyone for help. We have mentors and leaders from all walks of life. It is a culture of social acceptance and working together for a common goal—in a sense, it is a culture of winning as people and as a company.”

Critical Skills and Employee Capabilities

Employees receive ongoing training, part of Dell’s Winning Culture. There is a strong emphasis on being a knowledgeable employee, where employees can gain free training in anything from how to use Microsoft Word to becoming a manager. Training is always at no cost to employees. The critical skills Rita Fae says are most important for sales representatives are a strong work ethic, a desire to learn, and a desire to succeed. She explains that critical skills for sales representatives are always taught by Dell, right down to typing classes and how to use Dell’s web-based infrastructure.

Critical Employee and Management Resources

Resources for employees and management are very important. Dell provides training, computers, software, and other office supplies. There is not a lack of resources for employees and management at Dell. Many Dell facilities also offer daycare and carpooling services. Dell is a company that prides itself on having the most knowledgeable and resource-heavy employees. The worst resource lack that Rita Fae notes is “being out of printer ink.” This shows a strong commitment of Dell to its employees and management teams.

Performance Measures

Performance measures for Dell Home Sales USA call center employees can be frustrating. Rita Fae explains that performance measurements of team members have six main sections, and are graded according to a five-point structure, as follows: Customer service; Telephone Aux Time; Training; Sales; and Attendance. Customer service is graded based on third parties monitoring several telephone calls with customers at random. Telephone Aux time is the amount of time an employee is supposed to be taking incoming sales calls but are not available. Sales are based on the number of sales to the number of calls, which is explained further in the reward structures.

Rita Fae explains that every manager follows the same path for reviewing employees, and each manager’s review is based on 360-degree feedback from employees. Thus, the manager is responsible for the employees and the employees are responsible for the manager. This creates a cyclic process where each person must communicate to succeed. It also prevents management from playing favorites or acting out of context because the manager’s evaluation is based on how the employees perceive them.

Reward Structures

Reward structures for call center sales are exactly the same for each employee. Employees are paid a baseline salary, starting at 17,000 USD per year. They are then paid a commission, which is based on the number of sales made and the type of sales. The type of sales is based on several metrics, including the type of computer sold, service warranties sold, peripherals sold, customers who purchase on Dell financing. These sales metrics are paid out based on percentages that fluctuate monthly, including added bonuses. Rita Fae is rewarded based on the entire team’s performance. This means that if the team as a whole is not selling to the high standard Dell sets, then her commission pay reflects the negative margins. On the other hand, if the team is motivated and selling above the standard, then her commission pay reflects the positive margins.

There are always contests and special awards being handed out to employees and managers. Employees with low return rates or who receive positive responses from customers (often emailed to the manager, Rita Fae says she loves hearing how great her employees are) then they will be called to the manager’s weekly meeting and given an award. There are also fiscal year awards, fiscal three-month awards, and fiscal month awards for both employees and managers. However, as Rita Fae puts it “what we are supposed to sell to earn the best commission changes monthly, sometimes weekly. Our commission pay structures change frequently, and in truth, we are often not sure what we are getting paid and why. This is confusing to the employees and me as Dell constantly alters the pay structure based on stakeholder value, and rarely does it occur for the employees’ benefits.”

Policies and Office Politics

Policies are a constant source of stress for Dell employees, as they change frequently. Reasons for policies changing is lawsuits, changes in regulations, and changes in the economic outlook. This means that every time policy changes, such as scripting for shipping or Dell financial services, employees must be trained, tested, and monitored. It becomes a source of frustration for managers, although Rita Fae states that she understands the reasoning, it seems like there is too much scripting and not enough selling. This is especially important when one considers that the sales metric or “close rate” metric is based on number of sales made versus number of calls received, and employees must receive a certain number of calls per day. Too many scripts due to policies creates longer call times, takes away from sales times, and thus, means that sales representatives have fewer chances to ‘make a close’ and to keep up with the number of calls per day required for quotas.

Management Style and Behaviours

Rita Fae’s management style is to treat every employee like her equal. She states that it is important to “give both intrinsic and extrinsic motivation verbal recognition and physical rewards.” She has an open-door policy, because she understands that Dell hours can be long and ‘frustrating’ to some employees. “If my employees have someone they can talk to about anything, they will be able to focus on their job.” This shows that she is committed and engaged with providing her employees with an open door policy and strong rewards and recognition.

She also explains that it is important to focus on her employee’s strengths while using each other to lift up weaknesses. “I have one employee that can sell computers fast, and another that sells slowly, but fills the boxes. Using them together helps keep the metrics and quotas even.” This shows that she spends time getting to know her employees and their work styles, which helps her to maintain a solid foundation for a sales team.

Rita Fae also understands how important her employees are. “My sales team is the voice of Dell. If they don’t know their job or disrespect a customer, it is not the employee that the customer thinks is doing a bad job, it is Dell. And that means that each employee has to hold themselves to the same standards the company does in communications and ethics.”

Interviews with co-workers/superiors and employee of Rita Fae

Dell Corporation utilizes various practices for conduction interviews with employees and candidates for different open company’s positions. Among them the interview methodology for assessing leadership skills is regarded as the most important in terms of developing human capital and staff performance. The example of ‘leadership interview’ conducted to co-worker/superior is presented here.

1. You have taken the decision to reorganize a department or work units that you lead. Tell how do you make this reorganization?Adequate Answer: The worker/candidate is required to provide with comprehensive analysis of organizational process in terms of company’s resources, capabilities and priorities. His creativity, company’s knowledge and critical thinking capabilities are evaluated.
2. Have you ever been the member of the successful team? If this is the case, what role did you play in its activities.
   Adequate Answer: Positive experience of working in team is required for attaining good leadership skills.
3. Describe the cases when you play leader’s role in the process of different projects, events realization. What did you do and how did people respond to your leadership.
   Adequate answer: I had positive experience and played leader’s role in various circumstances.
4. What if your co-workers and other representatives were asked to present your leadership skills they are likely to respond?
   Adequate answer: Only positive qualities.
5. Tell us about the situations when you built positive support or created agreement between different people who significantly differed in their opinions, etc.
   Adequate answer: Tell about different conflict situation in your department in Dell and outline your steps to resolve it with benefit for company’s interests.

The main result of this interview is to define if candidate/employee has sufficient leader skills and is congruent with company’s culture and the existing climate among the employees.

Interview with the employee of Rita Fae

Interview defining interpersonal skills are relevant in the organization such as Dell Corporation since it places primary emphasis on the developing of human capital and good communicational climate between employees.

1. How did you behave when you worked with collaborator that you don’t like or have communication problems? What did you do to guarantee company’s interests?
2. Tell several situations when you did disagree with managements decisions. How did you approach to this situations and what outcome did this have?
3. Did you ever collaborate with your friend in a company? What did you to ensure that friendship had positive effect on your performance and the results of the company?
4. Define the most relevant approaches to conflict resolution and what are your concrete steps in terms of maintaining friendly atmosphere in the company.
5. When you were working in your previous company how you did create and installed relationships with your co-workers and managements.
6. How did you implement your communication strategy on various meetings, working groups and round-tables taking place in your company.

Dell’s Privacy policy

Dell Company has a right to withhold information and data which constitutes its commercial classified information and is necessary for realization its activities. Moreover, another definition of privacy policy is reserved in this company, i.e. the protection of personal information and privacy of its customers. The privacy of customers’ personal information is maintained on different levels of company-costumers interactions – on-line purchases, telephone conversation, immediate business contacts with company’s representatives, technical support etc. Both on-line applications and software application are protected in line with private policy outlined in Dell’s warranty statements and various service contracts. Privacy rights are protected on Internet and can be learned through the consumer education campaigns which are called E-ssentials which are developed in partnership with National Consumers League.

Privacy Policies of Dell are realized on the global level of its operation including its affiliates.

Dell’s Return Policy for instance guarantees that all personal information located on returned hard-drives and other products is not used and disseminated.

Personal information is used for maintaining communication, providing safety information, transaction status, products’ info and many other things that are necessary for providing the customers with services but this information is not used in other ways than these. Personal information is needed to customize company’s activities and prevents fraud and unauthorized intrusions.

The types and scope of personal information used by the company is customized by both Dell’s representatives and customers. They can select and exclude some types of personal information. Dell Corporation utilizes the variety of security procedures and technologies to protect the personal information from the unauthorized use, access and disclosure. Personal information of customers can be shared with company’s affiliates and other company’s that help Dell realize its transactions but these companies have concrete commitments that go in line with Dell’s privacy policies. The company prohibits dissemination of customers’ personal information to any third parties unless their consent is provided.

Conclusion and Recommendations

The management’s leadership strategy is aligned with Dell’s vision and culture, which focus on knowledge based resources and continuous improvement. The leadership style is definitely effective, and leans towards a strong indication of a positive company atmosphere. Dell resources seem to be abundant, so there is no lack of employee learning and critical skills. The encouragement of employees to gain training and support is excellent in the facility; however there is some concern about the confusion of changing pay structures and long hours employees work under ‘mandatory overtime.’

The explanation that Rita Fae gives shows that Dell employees often work more than the legally allotted overtime hours because they are salary employees. It seems as though, in Rita’s words “Dell takes a lot from its employees—time away from our families, time away from our homes, and time away from ourselves. The only thing Dell returns is a financial reward, but that changes all the time and isn’t enough for many people.”

At the management level, it would be beneficial to provide a more structured approach to changes in pay structure and hours worked. Constant alterations in commission and schedule are not only disruptive to employee’s lives, but also create a poor working commitment to the company. These result in a high turnover rate.

The goal therefore would be to reduce the high turnover rate. If Dell were to create a contractual agreement with employees regarding hours worked and pay structure, where employees were guaranteed not to work over a certain amount of hours and receive a specific commission for a guaranteed amount of time, pending a review at the end of that time period, then Dell would likely have a much lower turnover rate.

The method to develop the effectiveness of the above recommendation where Dell makes an effort to create fair pay and hourly work practices would involve examining previous turnover rates with post-initiation turnover rates. This would benchmark previous month’s conditions with current month’s conditions and explore if the recommendations are effectively impacting Dells high turnover rate.

References

Brandweek Editorial. You’re Getting A Serious Image Overhaul, Dude! 2007, Brandweek Vol. 48 Issue 28, P10-10, 1p, 2c.

Datamonitor SWOT Analysis Dell, Inc. 2007, P1, 9p. Business Source Complete Database. Web.

Lee, Louise. Dell’s In-Progress Recovery Business Week Online; 2007, P9-9, 1. Dell’s Marketing Makeover. Business Week Online.

Strategic Communication Management Editorial (2007). Developing Dell’s Digital Media Strategy. Strategic Communication Management Vol. 11 Issue 2, P6-6, 1p.