LFTL: Effective Employee Compensation
In our talks with our clients one of the biggest challenges we hear about is the difficulty of hiring and managing staff effectively. An always competitive environment has become absolutely brutal with people leaving the industry which underscores the significance of efficient employee management and taking a holistic view towards competition.
The first step to effective restaurant employee management is understanding and implementing what's possible for your business. This evaluation is two-fold; (1) what is possible to offer employees given your budgetary constraints, service model, labor pool and (2) not all employees have the same skill set or pace, and trying to push beyond their capabilities can lead to stress and burnout, reducing overall productivity.
Labor management is about striking a balance between creating an attractive work environment and making/keeping the business financially successful. It's not an easy task, especially when corporate restaurant groups can have higher budgets for compensation but it's crucial to find a strategy that works for your restaurant. An effective strategy requires understanding the importance of creating a culture where employees feel valued beyond a paycheck.
Creating that culture requires an understanding that not all employees are the same. Each person comes with their own unique set of skills (and challenges). Pushing them beyond their capabilities can lead to stress and burnout, which will inevitably destroy their productivity. It's better to maximize their potential within their comfort zone – so many star cooks/servers/bartenders have been dragooned into manager roles only to fail in the new role. Understanding and allocating responsibilities correctly among staff is a powerful driver of satisfaction.
In line with doing what's possible, scheduling labor should also be a realistic process. We’re going to dive deeper in a subsequent newsletter but creating a labor schedule that meets your budget and distributing it well in advance is a cornerstone of effective employee management. Not only does a regularly updated schedule ensure that the restaurant is adequately staffed at all times, but it also provides employees with a sense of structure and stability. Scheduling in advance allows employees to plan their personal lives around their work commitments, reducing conflicts and last-minute absences.
When evaluating staffing levels for your labor schedule consider factors such as projected sales, the number of tables, the complexity of the menu, and the level of service expected by customers. Scheduling labor to what's possible ensures that every shift runs smoothly (and profitably). If your labor needs are consistently above your sales volume changes likely need to be made to core services.
The other trickiest lever to pull in allocating labor is compensation. Compensation is primarily market-driven (i.e. what other people are offering for similar jobs) and to retain employees compensation needs to be competitive. It’s gotten devilishly complicated to determine how to best compensate FOH employees in a “post-tip” world but a good compensation plan will be competitive and flexible to incentivize high performers and fit within your budget. Look for MUCH more from us on this front but in the interim don’t hesitate to reach out to your advisor.
While competitive financial compensation is the most important, incorporating “generosity” in the forms of unexpected gifts into your overall compensation strategy can have a profound impact on employee morale and loyalty. This could be something as simple as providing free meals during shifts (doing swaps or takeout occasionally), recognizing and celebrating employees' achievements and life cycle events, or even arranging occasional team-building activities. While everyone thinks they earned every dollar of their paycheck, effective generosity goes a long way towards making employees feel valued and appreciated, fostering a positive work environment and boosting overall job satisfaction.
Lastly, consider investing in other benefits as part of the total compensation package for your employees. These can be powerful differentiators and more cost effective than across-the-board wage increases. Popular benefits could include benefits such as health insurance, paid time off, dining allowances or even tuition assistance for further education. These benefits can make your restaurant a more attractive place to work, helping to attract and retain quality staff. It’s important to note that many jurisdictions are taking a proactive approach to requiring employers to offer these benefits in the future so getting a jump on setting up plans around retirement and healthcare could exempt you from more onerous requirements down the road.
It's important to communicate these benefits clearly to potential and current employees. By including them as part of the total compensation, you're showing that the restaurant values its employees' well-being and growth.
Every business is only as successful as the people that make it go. Whether you call your employees a team, a family, a gang of pirates it’s essential that you schedule, compensate, promote and manage them is part of a thoughtful and holistic strategy that incorporates the needs of all the stakeholders.
Last Bites
May 2023
Charge it to the Game
"A rose by any other name would smell as sweet” is a phrase so well known that the first part of this sentence was auto-completed. The current iteration “A tip by any other name would be just as neat” isn’t as catchy but the battle over the meaning/effect of using the word Service Charge continues to dominate headlines and dockets around the country. In Los Angeles, where the tip credit has been abolished, the city is investigating whether service fees made their way to employees bolstered by a 2019 court ruling that service charges belong to employees if customers could reasonably believe they are intended to function as tips. The Office of the Attorney General of DC has echoed that consumer belief could convert service charges into employee property. The New York Times reports that people are confused about service charges.
Domo Arigato Mr. Roboto
In other employee management trends, many of the larger companies are dreaming of a future where robots augment/replace human workers. Sweetgreen debuted the Infinite Kitchen, the first automated makeline in Illinois. Wendy’s is testing underground tobots to speed up delivery and generative AI powered chatbots to take your order, which every other major corporate player is getting into (with mixed results). McDonalds is using AI to make advertisements so robots may soon have a pincer/hand in the whole process from demand creation to order fulfillment.
#Scandoval
The above hashtag either inspires rage or confusion depending on if you are familiar with Vanderpump Rules, a reality show airing on Bravo about servers at former Real Housewife of Beverly Hills Lisa Vanderpump. Multiple news outlets have published explainers, the participants have been on every news outlet and attended the White House Correspondents Dinner. We’re less interested in the dastardly deeds of Tom and Raquel. What makes the show a guilty pleasure for many is the fabric of the restaurant industry – it’s the workplace where many young people find their identity and often grow from employees to owners (a theme among all the participants). Scandoval also has every hallmark of problematic behavior by people in the industry – review bombing from angry online mobs, business partners forced to deal with problematic behavior tanking business and the transgressor stepping away to work on themself.