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Employee turnover: What’s the worst that could happen?

Employee turnover: What’s the worst that could happen?

Jim Sullivan is a keynote speaker at foodservice leadership conferences worldwide. His newest book Fundamentals is available at Amazon or Check out his leadership video series at This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

Jim Sullivan chief executive Jim Sullivan
“If every other area of our operations remained at the current level of performance, what is one area where change would have the greatest impact?” –Chris McChesney, The 4 Disciplines of Execution

Last month, this column addressed the abysmal, 110-percent average annual turnover that our industry suffers. I detailed the astronomical cost in sales dollars, real dollars and managerial focus that this churn causes, and suggested specific strategies to reduce that sorry statistic.

In a nutshell: our industry’s CEOs and VPs and associations need to stop shrugging off the sky-high hourly churn as “the cost of doing business” and elevate the issue to the same importance as food safety. At the end of the day what is the foodservice industry, after all, if not a people business? I’d like to once again elaborate on the topic.

It’s no secret that most foodservice execs, owners and association heads ignore the 110-percent churn rate entirely and focus instead on another people-related issue: the $15 an hour minimum wage. Doomsday disciples warn that this will be the death of our industry. I believe it’s just another storm blowing through.

“Our industry meets challenges head-on,” Denny’s CEO John Miller said at the recent Global Best Practices Conference sponsored by TDn2K in Dallas. “We survived the smoking ban, numerous but errant views on nutrition and labeling requirements which were predicted to irreparably harm our industry. Yet today we lead in nutritional understanding and in many ways have come out the other side even stronger.”

He’s right. We will survive. And let’s not forget all the other issues that were predicted to kill our business, including the smoking ban, tip credit tax, menu labeling, 50-percent meal deduction, oil prices, stricter drinking and driving laws, and even the cholesterol-in-eggs hysteria. Each of those issues was surely going to shrink our industry smaller than the period that ends this sentence.

But it didn’t happen.

And we will certainly weather the current gale blowing our way. So here’s an idea: since the $15 an hour minimum wage seems inevitable at this juncture, what if we were to deploy the same amount of time, money and resources we’re investing in fighting that issue into building sustainable development programs that retain our staff and build more leadership capacity in our units and brands? What if we focused instead on cutting the 110-percent industry turnover in half and banking the six figures it saves each unit annually in recruitment and replacement costs? But we continue whistling past the graveyard, and soon the chickens will come home to roost.

Apologies for mixing metaphors, but that is exactly what’s happening. Younger workforce members now seem to prefer retail jobs over foodservice jobs because of both pay scale and work environment, a five-year pattern going back to 2011 that shows no signs of abating in 2016 and 2017. This aversion trend will ultimately prove crippling for our industry if we don’t do something now. Three suggestions:

Pursue the bright spots. Best-in-class operators exist relative to high employee tenure (and lower employee turnover) like Starbucks, Shake Shack, Chipotle, The Cheesecake Factory, Ivar’s Seafood Restaurants and Chick-fil-A, among others. They made conscious decisions to invest more in development, career pathing, pay, and building cultures of kindness between crews and supervisors. The results are striking compared to the rest of the industry. So take the best ideas from the best practitioners, then edit and amplify in your own company.

Eliminate FIO jobs. Re-examine and improve the process in which you orient and onboard new employees. Many entry-level (and even multiunit level) positions in our industry are “Figure It Out,” or FIO, jobs where the responsibility to succeed and grow in the role — after minimal “orientation” — is left up to the team member instead of assigning a mentor or manager.

How do you think restaurants can reduce the hourly turnover rate? Join the conversation in the comments below.

Use inversion to define the cost of inaction. The leadership process of inversion is a practice commonly used in Silicon Valley companies like Google and LinkedIn to assess the why of taking action and the cost of inaction. Take a problem like employee turnover. Instead of asking, “What can I do to minimize it?” ask instead, “What will happen if I don’t minimize it?” Make a thorough list with your leadership team:

• Employee churn will remain high
• Managers will have less time to lead teams and serve customers
• Service will suffer, sales will drop, costs will rise
• Training schedules will increase and be strained
• A bigger percentage of gross sales will flow to cover turnover costs instead of bottom lines and bonuses
• Management turnover will rise
• Team performance and productivity will drop due to constantly having to train new people

There is no guarantee that our future will be better, only that it will be different. Still, we have a choice: make the future happen or let it happen. Have a bias for action. Identify and minimize stress points in each job. Offer your employees clearer paths for better pay, recognition and responsibility. Preach what you practice and know that discipline is the key. In the words of the imitable Godfather of Soul, James Brown, “If you stay ready, you don’t have to get ready.”

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