How the 'fake KPI system' contributes to lack of talent in UAE's restaurant leadership (part 3)
Having seen many employment offers over the past 11years, I can honestly say that a major disappointment occurs when employers dangle the "KPI carrot" in front of non-qualified candidates. It happens when promised a bonus if they meets certain KPIs. They do this to justify one of two scenarios.
The first is to avoid paying the candidate a high salary. The second one is to make sure that the new hire is motivated to be a magician. Very seldom do companies reward performers based on KPIs, however. They always try their best to prove that one did not meet them. That way, they do not have to pay extra money.
Having said that, when writing the offer, leaders don't often outline the KPIs. Instead, they write: "You will get a percentage of the net profit based on KPIs that will be set prior to your starting date." The employee has signed the offer without knowing how much more money they will get (If any). In addition, they rarely even get the KPIs.
Keep in mind; they hired the employee because they are struggling and needed a savior. To tell that employee that they will make more money if they are a magician, is only to get them excited about the company. They are, of course, willing to part with a percentage of ZERO.
Who ends up signing an offer for a small salary hoping to make a bonus based on KPIs? The non-talented person who can't even figure out that they will never make more money based on the financials.
BTW, most employers don't share the financials with said employee during the interview process. They expect them to improve something in which they do not know anything about prior to starting.
How the KPI issue leads to a lack of talent
You may ask, "What does the KPI issue have to do with the lack of talent?"
Let's explain. As long as the industry leaders keep hiring at a low salary, while promising extra bonus based on KPIs, they will never be able to attract good talent. Then, most companies end up with non-talented leaders. Those leaders can never develop others. We end up with the case of non-talented leaders, leading non-talented followers, who they can never develop. How can we build talent if we cannot hire talent? How can we attract talent when we end up offering the talented leaders small salary and think that we can fool them by offering them more money based on non-achievable KPIs? Making KPIs dictate part of the salary is a good idea as long as we apply it correctly.
How should companies apply the KPIs?
To apply a proper pay structure based on KPIs; certain criteria must be met.
First, the person doing the hiring should disclose the current situation of the company in which needs to be improved using KPIs. This way, the candidate can decide if the KPIs are achievable and if they are qualified to achieve them.
Second, companies should structure KPIs using the (SMART) format. Specific, Measurable, Attainable, Realistic and Time bound. Then and only then can one evaluate the reality of making more money. Very often, companies design KPIs in such a way that it is impossible to achieve. The expectation of what is acceptable when delivering performance from the employer and the candidate are not even close. Therefore, do you blame good talent for not falling into the KPI trap?
In addition, we need to focus the majority of the KPIs on non-financial accomplishments, which in turn would increase the financial rewards for the company. Examples of things that should be on the KPIs are: Guest satisfaction (Both internal and external)
- Proper representation of company core values.
- Team members turnover.
- Food safety
- Involvement with the community
- And managing cost, not controlling it.
These are all things one can measure to decide if the leader is truly a good one and should receive extra compensation. Anyone can try to meet KPIs that are 70 percent based on the financial results. One can increase menu prices, charge huge amount for local bottled water, cut on portions, use inferior quality raw materials, save on napkins, not pay overtime to team members and, renting far away accommodations to save on rent. Doing so, will never be a long-term plan for success.
It is evident that the use of KPIs in this region is used to show how progressive the company is, but companies use them to tell others that the company is following international standards of pay, and to impress the few that even understand what a KPI is.
Let us stop the madness of the fake KPI system
While performance-based compensation is a great motivator, I do not think this region is ready for such a system. Candidates are used to a system where companies guarantee income and are not dependent on vague systems for compensation. No one wishes to move to this region and base income on a target that is set so far that one cannot hit. To stop the madness, let us think of how we can utilize the KPI system correctly or not at all. Keeping a system that is not applicable will cause both the employer and the candidate lots of frustration, and loss of financial rewards.
Professionals are never looking for handouts. Professionals want to fulfill commitments. Professionals do not want to depend on the kindness of the company leaders. They want to feel that they earned their bonus. Not applying KPIs correctly causes the company to depend on the generosity of its leaders to make talented and good professionals stay. Unfortunately, leaders lose sight of the fact that talented professionals are often offended when they have to depend on their generosity rather than on a well-developed compensation system.
Let us declare that the KPI compensation system is on life support, and that is why we have a huge problem lacking talent in the GCC region.
Cover photo: istock
Topics: Franchising & Growth
Murad Alnasur / Mr. Alnasur is a veteran of the F&B industry. Prior to arriving in the GCC region, and for over 32 years, he operated international brands in the US. He is currently serving as the COO of FranchiseME and Managing Director of Restonalysis FZE in Dubai.