The exhilarating pace of technological innovation over the last decade has transformed the restaurant industry, but one long-standing problem remains: high turnover.
There are many reasons for the problem. Analysts trace its roots back to faulty hiring practices, inadequate training programs, compensation packages that fail to earn worker loyalty, and many restaurants’ failure to retain good employees by not providing them with exciting career opportunities.
Whatever the cause, high turnover in the restaurant industry persists even in a weak job market. In 2011, the turnover rate was just above 95 percent for hourly workers and approached 39 percent for management-level employees in the quick-service sector, according to the restaurant research firm People Report. Those numbers are down from 2007, the year before the financial crisis that sent the national economy into a tailspin, but they are still high compared with the rates in other service industries.
Some human resources professionals, however, believe they’ve found the answer to high turnover. Nate DaPore, president and CEO of PeopleMatter, a talent management software company based in Charleston, South Carolina, calls it “hiring 2.0.”
“The hiring process in the restaurant industry, up until really the last 24 months, has been what I would call ‘hiring 1.0,’” DaPore says. “It was the old process where an applicant walks into a restaurant and requests a paper application, fills out the paper application, hands it to the host … or the manager, if they’re lucky enough to meet the manager.
“It was a very inefficient process that was oftentimes laden with a lot of errors,” DaPore says. “Applications or resumes get thrown in the trash accidentally, or they wouldn’t get to the right hiring manager, or hiring managers get inundated with applications and they have a hard time sifting through to find the right person. They would spend a lot of time chasing their tails.”
Hiring 2.0, on the other hand, leverages talent management software, the Internet, and smartphones to help businesses find the right people, DaPore says. PeopleMatter’s platform, for example, allows applicants to submit forms online, facilitates electronic background checks, screens applicants’ aptitude for specific positions by evaluating employee-assessment tests, and helps identify applicants who qualify for tax credits. The end result, DaPore says, is that restaurants end up sifting through far fewer bad applicants, spend more time considering high-potential candidates, and ultimately hire better people—which adds up to lower turnover.
“We’re seeing substantial reductions in turnover,” DaPore says, “because the restaurants are hiring better people.”
The numbers back up the claim. One of PeopleMatter’s clients, Carl’s Jr. franchisee Star of the High Desert, says its turnover rate has dropped by 100 percent since it went to a Web-based hiring model. Blaine Wiles, vice president of Star of the High Desert, which runs 26 Carl’s Jr. locations in Southern California and New Mexico, echoes DaPore when he talks about the issues his company was grappling with before transitioning to a talent management system.
“The previous way we were doing hiring was a paper application in each restaurant,” Wiles says. “There were a lot of problems with that. Applications would get lost … and a lot of times [when it came time to hire a new employee], managers would just look at the applications from the last week, maybe interview one or two people, and hire somebody.”
The biggest benefit of a Web-based hiring system is the ability to “get a better feel for applicants before you even meet them,” specifically through electronic personality assessments, Wiles says. Weeding out applicants via personality assessments used to be prohibitively expensive, he says. Now it is an integrated part of the application process and he can receive results immediately.
UpMo is another HR company trying to capitalize on the restaurant industry’s turnover problem. The mobile application aims to help companies retain valuable employees by identifying and promoting them before they get disgruntled and leave for greener pastures. The app allows employees to map out a desired career path and alerts them whenever new opportunities within the company arise. It also helps them find mentors within the company, and makes it easier for hiring managers to find them when a position opens up.
The premise of the app is that it is often better to promote an existing employee than to hire a new one. “There’s an overwhelming wealth of resources for anybody to find a job … and there’s nothing for companies to fight back to keep [employees] engaged,” says Rob Garcia, UpMo’s vice president of product.
ClearFit, another mobile app designed to make hiring more efficient and effective, is integrated with 16,000 job websites, including Monster.com and CraigsList. Applicants go through a brief application process that includes an assessment gauging their skills, experience, and compatibility with company culture. Hiring managers can use this information to make their hires based on the application’s rating system.
ClearFit cofounder Ben Baldwin says the app is trying to address a problem that businesses have been facing for a long time now.
“It’s not just a problem in the restaurant industry; turnover and retention in business in general haven’t improved in 30 years,” Baldwin says. “Most [businesses] still don’t know how to find the best candidates. And they don’t know how to hire them.”
The next frontier, the experts say, is fully integrating Web- and mobile-based hiring systems with popular social networks. Operators, they say, could benefit by using social media–based tools and employees to get the word out about newly opened positions.