The Human Ingredient: Reducing Turnover and Managing Labor CostsNovember 29th, 2011 | Posted by in Labor & Operations
Despite McDonald’s well-chronicled hiring of 62,000 new employees on its April 19th “National Hiring Day,” surveys of restaurant human resources departments and recruiters, summarized in the People Report Workforce index, continue to indicate increased pressure on restaurant employment in Q4. After rounds of drastic cuts during the recession – resulting in more hours, heavier workloads, and reductions in performance-based incentives – restaurants are once again recognizing the need to invest in labor.
Operators increasingly concerned about recruitment, retention and management of their workforce must deploy a combination of strategies to address a few key questions:
1. What initiatives are effective at reducing turnover?
High turnover should not be accepted as simply “the nature of the business.” In many cases, excessive turnover rates can be as expensive as escalating labor costs. As restaurants implement new employee incentive programs to increase retention and reduce tardiness and absenteeism, they must go beyond looking at only changes in labor costs and carefully analyze the bottom line impact across days of the week, dayparts and individual stores before making the decision to go nationwide.
2. How should staffing levels and shift schedules be determined?
A variety of approaches, ranging from staffing forecasting software to special posting boards where employees post requests for extra hours to limiting hiring to only flexible shift employees, can, in principle, improve staffing efficiency. However, understanding the full attributable effect of those strategies on retention, operations, labor costs, and overall profits requires a deep understanding of how those variables interact in a dynamic setting. A comprehensive strategy which addresses all those questions provides opportunities for tailoring the initiative on a store-by-store basis for maximum impact.
Human resource executives and operators face difficult decisions when trying to balance increasing labor costs with retention and employee satisfaction. Strategically testing in a group of stores prior to full implementation is the most effective way to choose an optimal labor strategy which addresses all of the critical needs of the company.
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