How to Keep Turnover from Eating Your Profits
Keeping a qualified, engaged team on staff is critical for any business. But before we get too far into that topic, can we interest you in a little data amuse-bouche?
• The 2013 turnover rate for employees in the restaurants and accommodations sector was 62.6 percent, versus 42.2 percent for the private sector overall, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover report.
• According to the National Study of Human Resource Practices, Turnover, and Customer Service in the Restaurant Industry, almost 50 percent of fast-food/quick-service workers quit or are fired annually; 40 percent in moderately-priced restaurants. Turnover is lowest in higher-end establishments, but per-employee turnover costs are higher.
Oh, dear. Ingesting data like that is sure to give even the most iron-stomached restaurateur a bad case of heartburn.
That’s probably why “a solid majority of operators across all segments said recruiting and retaining employees is a significant or moderate challenge for their businesses,” according to data from the National Restaurant Association (NRA). Here’s how you can address it.
Look for the “It” Factor
“When I hire, I look for people who have fun taking care of people and serving them,” says David Cantu, a former manager at PF Chang’s and now chief customer officer at Red Book Connect, a restaurant technology company in Austin, TX. “Once you have that, you can build a great culture. Empower your employees and they will want to stay.”
Action item: Invest time in good hiring. “Some managers see the hiring process as an inconvenience so they do what they can to avoid it — even if that means keeping employees who aren’t a good fit,” Cantu reports. That’s a mistake, he says, because “complacency can be a staff-killer.”
Work with the Demographics
Twenty-eight percent of people working in bars and restaurants are students and 31 percent are seasonal employees, according to the U.S. Census Bureau’s 2012 American Community Survey. “Students are often only employed for a summer, or a short season, and they are also quick to leave for a job or internship that’s closer to their career path,” explains Jonathan Erwin, CEO of Red e App, a Louisville, KY–based developer of employee communication tools for the restaurant industry, among others. “Additionally, this younger workforce wants to engage with technology in new ways. Most restaurant workers are social and mobile. Make an effort to provide your employees with digital tools that help them do their jobs better.”
Action item: Discuss exam schedules, sporting events, holidays and breaks, etc., at the start of each semester so you can plan accordingly and keep surprise shift changes to a minimum.
Provide Proper Training
One cause of employee turnover is a lack of key job skills. The NRA’s forecast shows that more than half of employers in casual, fast-casual and fine-dining establishments planned to spend more on employee training in 2014. “A specific example of a company doing it right is Brinker International,” Cantu notes. “When a new employee enters Brinker’s training program, he or she is taught how to do each job in the restaurant and knows how each job contributes to the overall success of the restaurant.”
Action item: Reduce employee turnover by developing core activities and related skills for each position in your kitchen, bar and dining room. Then train employees appropriately when hired and periodically thereafter to keep skills sharp, performance strong and job satisfaction high.
Invest in Your Employees
We’re all more inclined to stick around when we feel like our bosses care about us. That’s why managers with DZ Restaurants in Saratoga Springs, NY, get to know their employees’ goals. “These are both long- and short-term goals, within the company and outside the walls of the restaurant,” explains Nancy Bambara, the company’s vice president of operations. “We work with them to achieve those goals. Making a commitment to the growth of each employee is the most important thing restaurateurs can make to avoid turnover."
Action item: Engage employees by talking about their immediate and future plans, including what kind of support they need to achieve them. Then work together to determine what you can do. Only ask about the goals of your employees if you’re going to work with them to achieve them.
Make the Job Matter
“A lack of clarity around how an employee, in his or her specific role, impacts the business is a big reason for turnover,” Cantu says. “If a busser busses faster so you can get more people in faster, it provides more opportunities for financial growth and upward mobility. It gives the employee the clarity around why what they do is important and it makes the connection between the task and the bottom line.”
Action item: Sketch out how each position from bar back to sous chef affects the business in tangible terms so employees understand their role in successful operations and how that impacts wages and work environment.
Do an Exit Interview
"Employees leave a job in the restaurant business for a variety of reasons, and sometimes it's unavoidable,” Bambara says. “That being said, when an employee does decide to leave, a critical step is to perform an exit interview. Oftentimes it turns out the reason he or she is leaving is minor and easily correctable. On a number of occasions, we’ve had employees change their minds during the exit interview and decide to stay on with us."
Action item: If you don’t already have an exit interview process in place, create one. If you have one, review it to make sure insights gathered are put into practice.
Use this sage advice to keep turnover from eating through your profit margin.
Margot Carmichael Lester is a freelance journalist and the owner of The Word Factory, a creative agency in Carrboro, NC. Raised in her parents’ gourmet grocery, she’s written about food, beverages and the restaurant business for several in-flight magazines, Playboy, CitySearch.com and Monster.com. Follow Margot on Google+.
