Keeping talent is just as important as finding talent. In 2016, the annual employee turnover rate in the restaurants and accommodations sector was a whopping 73%, according to The United States Bureau of Labor Statistics’ Job Openings and Labor Turnover Program [JOLTS]. The cost of losing and replacing one hourly employee can be as high as $5,864, which means if your restaurant is maintaining a 73% annual employee turnover rate, you’re potentially losing $428,072 or more every year as a result.
Companies with high employee retention rates are successful because they focus on treating their employees well, making it easier and more valuable for them to remain loyal members of the team. Here are the key factors that we’ve identified in reducing employee turnover:
Culture informs value proposition and a company’s ability to follow through on it. Few corporations have demonstrated this better than Starbucks. The ubiquitous coffee shop chain’s success has frequently been attributed to its positive company culture, which invests heavily in its employees through competitive benefits offerings, trainings, and growth opportunities; most notably when it closed its stores nationwide for a day of racial bias training. The forward-thinking fast-casual chain &pizza, based in Miami, FL, has also grabbed headlines recently for its counter-culture culture, implementing text-message company communication to democratize the corporate structure. An indicator of their success? About 20% of their employees have the &pizza ampersand tattooed on their body.
Companies want to know if culture impacts their bottom line, and the answer is a resounding yes. Investment bank William Blair found that the data spoke for itself. “Our analysis suggests that qualitative attributes such as views of senior management and culture/values are much more important factors for employee satisfaction, with correlations of 91% and 89%, respectively,” said Sharon Zackfia, the report’s lead analyst. “As a result, we believe many restaurants may need to reexamine ways to highlight or alter the less tangible parts of their businesses to better align with the ‘stickier’ attributes that lead to higher employee satisfaction levels.”
Designing the best path forward.
To keep the talent you’ve hired, implementing the proper infrastructure to support their success and growth is essential. Employees need access to tools that will empower them to move forward, whether that’s through a reliable feedback loop, mentorship, or employee training.
At Kitchen United, we’re building a system that encompasses all three. “We’re in the process of rolling out our learning management system (LMS) through Wisetail that will help us create a one-stop shop, basically a social media platform, for our employees so that the information they need is always at their fingertips, even outside of work if they want,” said Brady Reid, Regional Operations Director. By establishing open lines of communication among personnel of all levels, our goal is to cement a culture of transparency and foster teamwork. “You have to listen and take feedback. This is why our new LMS is going to be so important in making them feel heard. I think that’s one of the most important things. If team members feel like they have a voice, they’re much more likely to stick around, especially if that voice is acknowledged in a formal way.”
We’ve also seen firsthand how employee retention improves when staff members are shown their opportunities for upward mobility – and the sooner, the better. “It’s important to us to offer a path to progression in their career,” Brady said. “So we’re thinking intentionally about creating an Assistant Operations Manager position so there’s not a huge gap between our hourly team lead and our Head of Operations so team members can see the path to get to Head of Operations from a supervisory level so it’s not pie in the sky. So I think laying out a clear path of progression and taking their feedback are the two main things we can do to make them feel valuable to us and stick around.”
This was the case for one Kitchen United team member who was given the path for promotion from dishwasher to team lead. “We were very upfront with one employee from the beginning that we saw him as more than the kitchen team member that he was at the moment, based on the fact that he was embodying our ‘United Best’ traits. Moving him into a team lead role was huge for him and for his career,” Brady said. “He’s been here a year and he’s very engaged and doesn’t show any signs of leaving because his career is progressing. He knows he’s valued. It’s communicated to him early and often that he’s valued. The feedback has been pretty consistent across the board with him. Hopefully we can repeat the way we’ve treated him throughout the company.”
Taking care of the whole person.
An important part of treating employees well also includes looking at ways to improve their quality of life outside of the workplace. At companies with high turnover, it’s common for workers to vocalize that they feel unvalued, unappreciated, or easily replaced. To resolve that, employers must take an approach that both cares for the whole person and promotes work/life balance. This can be accomplished in a variety of ways, including the development of company policies, trainings, and unique benefits packages that align with these values.
Shift scheduling, for instance, can have a great impact on hourly employees’ quality of life. New York recently passed a law requiring employers to put out shift schedules at least 3 weeks in advance. Los Angeles is quickly following suit with a new proposed ordinance. Kitchen United is being proactive and implementing this policy in all our locations by 2021, and we’re doing the same for our sexual harassment trainings across the board. “For our California locations, it’s mandatory that by 2020 all employees and managers have to go through harassment training,” said Janey Chu, Vice President of Human Resources. We know that creating a safe, inclusive work environment for our team members is one of the most prominent ways that companies can take care of the whole person, and other companies are doing the same. McDonald’s has recently taken steps to invest in the safety of their workers by launching an anonymous sexual harassment hotline. “ One of our initiatives is to roll it out across all our locations so that no matter what state we’re in we’re consistent with training so we are able to create a culture that ensures that we have a respectful work environment,” Janey said. “It’s something we communicate where we set expectations as part of our onboarding right now making sure that they understand that we don’t tolerate any harassment or discrimination of any sort.”
When cultivating a team with work/life balance, catering to different types of employee needs becomes increasingly important. Benefits are not one-size-fits-all, and can be a great opportunity for companies to get creative and listen to the unique needs of their staff. That’s exactly what Taco Bell did by offering student tuition discounts and education services after the company learned what Taco Bell employees truly value. “When we surveyed our employees, education support was one of the top three things they asked for. The barriers to achieving their education goals were time, money and support,” said Frank Tucker, Global Chief People Officer at Taco Bell.
“By having different options we’re able to offer benefits to employees who need minimal health benefits, while the buy up plan allows employees who have more health issues to have a more robust program,” Janey said. In fact, Taco Bell and McDonald’s both announced in recent weeks that they would expand programs to help employees pay for college tuition. And while tuition reimbursement is at the top of the list for many workers, it’s not the only solution. Cava, for instance, offers its staff time off to vote.
Ultimately, treating your workers well is the key to keeping talent. A welcoming workplace culture provides them an immediate reason to stay, and opportunities for education and career advancement give them a reason to continue. The data shows that when companies don’t spend upfront on programs to improve retention, frequent turnover ends up costing them a whole lot more in the long run.