Article
Overcoming HR woes
How major brands are tackling the challenge of hiring and retention.
September 8, 2008
When it comes to retaining employees and promoting satisfaction in the workplace, it should be a process that begins even before an employee's first day on the job.
"It literally starts with the interview," said Chet Kuchinad, executive vice president of Partner Resources for Seattle-based Starbucks Coffee Co. "We look for people who focus on customer service, who like team settings and who share our values."
Experts specializing in human resources endorse the notion that retaining good employees should begin before their first paycheck. Too often, they say restaurants treat the notion that they can retain their labor force as an unattainable goal.
"I call it the 800-pound gorilla in the room. No one wants to talk about it. It's just accepted to have a high turnover rate," said Todd Rogers, president of RealTime HR, a company based in Oklahoma City that consults on human resource issues.
He estimates that the average turnover rate among fast-casual restaurants is between 110 and 125 percent.
Replacing employees is costly, of course. According to a 2006 People Report, it takes $2,228 to replace an employee, including expenses related to recruiting and training them, taxes and other costs. For a company with a 125 percent turnover rate, Rogers said the total cost of replacing employees would amount to about $3.3 million a year.
That's why he recommends a pre-employment test that measures such qualities as a job applicant's ability or interest in providing superior customer service. He uses a simple 20-question test that rates people according to their ability.
Other ways to retain good employees includes getting to know them, making sure their needs are heard and addressed, and providing them with attainable career goals and clear paths to success and financial rewards.
Importance and structure
Getting to know your employees is crucial to keeping them, said Patrick Lencioni, author of "The Three Signs of a Miserable Job," and founder of The Table Group, a company dedicated to helping organizations function more effectively.
He identifies anonymity as one indicator of a miserable job.
"That's the feeling that employees get when they realize their manager has little interest in them as a human being and that they know little about their lives, aspirations or interests," Lencioni said.
Getting to know your staff or showing interest in them does not have to be expensive, however. As an example, Lencioni says a manager who knows about a staff member's hobby or interest outside the work place could get them a book or news article on the topic.
Another way to show the importance of stemming employee turnover is to place a cost on the problem and assign it to a manager's cost center. That way, Rogers said managers can begin to understand the financial implications of a high employee-turnover rate.
"If you don't assign it a value and assign it to a cost center, it doesn't have weight. People don't take it seriously," Rogers said.
Another way to encourage retention is to promote from within. That's an area where restaurants have generally been successful, said Annika Stennson, media relations manager for the National Restaurant Association.
"If someone commits to working in the industry, there's every reason to make it a great career choice," she said, adding that four of five salaried employees working in restaurants today got their starts as hourly employees.
Monty Moran, president and CEO at Chipotle Mexican Grill, said his company makes it a priority to promote from within its ranks.
"Our focus isn't just on turnover. It's on keeping top employees. We want to appeal to strong performers and retain them," he said.
A few years ago, Chipotle instituted a new career-path plan with steps to enable hourly crew persons to see promotions to a management position as attainable.
"Our managers tend to be better and we have less turnover among them if they come from the crew," Moran said.
Under its former staffing structure, a promotion from a crew person led to a larger jump to a position as a supervisor. But that responsibility seemed overwhelming for some.
"Few people felt confident they could make that leap," Moran said.
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Now, the hierarchy goes from crew person to kitchen manager to service manager to assistant manager to general manager to restaurateur. At the rank of restaurateur, employees have the ability to make about $100,000 a year including pay and bonuses based on gross sales at their restaurants, and based on such goals as promoting crew people to management positions.
The new structure is working, Moran said.
"Our internal promotions were 25 percent a couple of years ago. Now that number has more than doubled. Sixty percent of our managers come from the crew," he said.
He estimated that the company's turnover rate is about 100 percent, which he says is low for the fast-casual industry.
The importance of training and promoting from within also is emphasized at Starbucks.
The company took the unusual step recently and closed all of its United States locations for retraining baristas. The training provided a renewed focus on espresso standards and instilled in employees the Starbucks passion to deliver a high quality product. Kuchinad said the training was motivated by a desire to focus not only on speed, but on quality.
"We'd been focusing on speed over quality," he said. "Creating this training gave us the opportunity to show our partners our commitment to core values."
Of course, there are many other ways to earn employees loyalty and to minimize turnover, including the offers of flexible schedules, 401Ks, bonuses, pay increases, tuition reimbursement, training, health care and an encouraging environment.
Starbucks' Kuchinad said the company cannot expect to satisfy customers without a workforce of committed employees.
"There is no way we're going to exceed our customers' expectations if we don't exceed our partners," he said.
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