He was intrigued by the prospect of developing and implementing human capital strategies for his business that would help improve overall operational results and increase profits for his 22 restaurants. When I first met with him, he indicated one of his biggest cost drivers was the level of turnover his organization was experiencing, which was hovering at an average of about 250% annually. Although I noted that turnover rates in the restaurant industry are traditionally high, our objective for the following 12 months was to reduce that number down below 150%.
As is the case with most turnover problems, the primary source is almost always rooted in poor hiring practices, so we immediately targeted that area to look at first. Our first plan of attack was to better define the job descriptions so as to not only define the job tasks, but also the necessary competencies and skill sets that are necessary to perform that work at exceptional levels.
Next, we developed detailed interview questions that were designed to evaluate whether the applicant possessed those skill sets, then trained the managers and supervisors how to conduct an effective interview. Poor hiring practices are the single biggest contributor to high turnover rates. When organizations fail to carefully design their hiring process so as to weed out applicants that are not a good fit, then a domino effect of problems ensue related to poor performance, loss of productivity, employee conflicts, higher exposure to legal liability and loss of business.
It would be analogous to professional sports teams wondering why they continually have losing seasons, but fail to address the fact that the athletes they continually recruit are historically poor performers with limited athletic ability and no work ethic. It’s no wonder they’re perennial losers! If you want to lower your turnover rates, begin by analyzing and improving your hiring practices.
By the way, after one year, the Subway stores that we helped are currently experiencing an annualized turnover rate of 44%.
Nothing feels better than helping a client improve his bottom line.
