REDUCING EMPLOYEE TURNOVER: 4 PRACTICAL SOLUTIONS FOR ENGAGING AND KEEPING YOUR BEST TALENT.
When I was in college, sorority sisters would wear buttons during recruitment week, saying: “110% ADPi!” or “110% ZTA!” etc.
One year, one of my non-Greek buddies printed buttons that said: “100% Independent (because 110% just doesn’t make sense).”
That’s what I think of when I look at the turnover rates of quick-service restaurants (QSRs): 120 percent, 130 percent, even 150 percent! That just doesn’t make sense.
Except it does. These are real figures from the official Bureau of Labor Statistics, the International Institute of Foodservice Research and Education, the National Restaurant Association, and many others. Each year, the vast majority of QSRs are reporting a turnover of their entire workforce, and then some.
Even more telling is that this is considered normal, just the nature of the beast. QSR executives, founders, franchisees, operators know this, expect this, and consider any turnover stat under 100% to be a win.
As turnover rates continue to rise, the cost per employee lost is rising as well. Six years ago, Cornell estimated a cost of $1,600 per employee lost based on an extensive restaurant survey.
Now, as Seth Steinman of Restaurant Insider reports, “Just to hire and train a new restaurant staff member can cost as much as $3,500. Why are restaurants spending $3,500 on an investment that walks out the door more than 70 percent of the time?” Or 120 percent, 130 percent, or 150 percent of the time?
If you are in the restaurant business, you have your own facts and figures, metrics and costs. So instead of managing turnover, let’s look at solutions for reducing employee turnover and, dreaming big, even preventing turnover.
Strategy #1 – Hire right
The best way to attack turnover is to hire the right people in the first place. A common mistake among QSR operators is overestimating the impact of training programs on employee success. As restaurant consultant Jim Sullivan says, “Hiring is 90% of the equation and training only 10%. There is no way to develop the wrong person.” An unhappy and ill-fitted employee impacts everyone around them, bringing down team morale – which often leads to even more turnover.
“Even if you are desperate to fill a position, picking a poorly-matched employee is bad for you, your company and the employee.”
– Katie Martinelli, Learning and Development Expert
So, how can you be sure you’re hiring the right people? Here are a few tips to get you started.
Create an Accurate and Realistic Job Description.
Communicate clearly with your applicants what the job is like and what they will actually be doing on a typical day. Candidates who aren’t interested in those particular duties can weed themselves out of the process. And the new employees you hire will know exactly what to expect from the very beginning.
Use Job-Relevant Hiring Tools.
Gone are the days of relying on applications and résumés to tell you what you need to know about candidates. New technologies are available to help you narrow your applicant pool to only the most qualified. The most effective tools are the ones that relate directly to the job and provide a direct measure of performance.
Most QSR owners want to know these key things: Can this person think on their feet and solve problems that arise? How will they treat customers? Will they show up for work and go the extra mile to help out when needed? In looking for the right hiring tools, start by making a list of skills and behaviors that are most critical to success, then look for an assessment tool that measures those factors. The more realistic and job-relevant, the better.
See how this national QSR/travel chain cut their employee turnover in half by simply adding a job simulation to their hiring process.
Streamline Hiring to Keep Your Best Candidates.
Accuracy has always been a primary concern in selecting top talent. Yet, in today’s tight labor market, speed and efficiency are also critical. To expand your reach to the best talent, make sure your hiring process is quick, easy, and intuitive. If there are unnecessary steps or delays in the process, you’ll likely lose your best applicants to a competitor with a more engaging and smoother process.
Strategy #2 – Present a clear path for success
One factor outside of the restaurant owner’s control is the temporary nature of QSR employment. Thirty-one percent of the restaurant workforce is part-time. Twenty-seven percent of restaurant employees are students.
Eric Rosenbaum of CNBC notes, “Low wages, lack of career paths and an overwhelming belief among the working public that fast-food jobs should only ever be temporary all contribute to the worsening turnover issues.”
There are several ways to combat this ‘temporary’ mindset.
Equip Your Employees to Hit the Ground Running.
Employees who know what to expect are far less likely to quit. Well-trained employees who are prepared for challenging situations are set up for early wins on the job resulting in higher confidence and an early investment in their jobs.
Identify Leadership Talent Early.
Katie Martinelli states that opportunity for growth and development is very important for retaining good employees. “If an employee feels trapped in a dead-end position, they are likely to look toward different companies for the chance to improve their status and income.”
“There’s hardly a clearer route to turnover than overqualified employees stuck in entry-level positions.” – Seth Steinman, Restaurant Insider
Make sure your managers and supervisors are on constant lookout for leadership potential. “Instead of locking great employees into place, move them up the ranks faster,” says an expert from Snagajob.
That’s exactly what this restaurant group does, using an assessment specifically designed to measure and develop leadership potential. The assessment allows them to drill down to a candidate’s skills and leadership traits, then creates a personalized development plan, targeting where to customize training from the start.
Offer Ongoing Coaching and Development.
Co-founder of Fast Company, Bill Taylor tells of a small QSR chain, Pal’s Sudden Service, which has raised the quality bar to new heights. Pal’s ranks as the second-fastest QSR in the country with an unbelievable rate of accuracy: one mistake per every 3,600 orders. Back in 2001, Pal’s became the first restaurant company of any kind to win the Malcolm Baldridge Quality Award, which in the past has been won by companies like Cadillac, FedEx and Ritz-Carlton.
CEO Thomas Crosby credits Pal’s success to their rigorous employee development program. (Employees must complete 120 hours of training before working on their own and must be certified in each specific task.) And the training doesn’t stop there. “People go out of calibration just like machines go out of calibration,” Crosby explains. “So we are always training, always teaching, always coaching. If you want people to succeed, you have to be willing to train them.”
Pal’s leadership development includes a 21-book Master Reading List for all the leaders in the company. These books range from books on quality management to timeless classics like The Prince and Leadership is an Art. Every other Monday, Crosby invites five managers from different locations to discuss one of the books on the list.
And what’s the turnover rate at Pal’s? One-third of the industry average!
Creating a customized development plan for each employee whether through intellectual investment, certifications or regular skill checkups will help keep your people on the job and at the top of their game.
We’ll discuss Strategies 3 and 4 for reducing employee turnover in our next blog post. Subscribe to make sure you don’t miss it!