Why Improving Managers is the Key to Reducing Turnover

    Instead of focusing on “fixing” the employee issue, restaurants may fare better by fixing the management issue.

    Manager holding tablet.
    Adobe Stock
    According to Black Box Intelligence, turnover cost (which includes separation, replacement, and training) is $1,956 per hourly employee.

    An often-cited Gallup study reported that 50 percent of employees said they left their jobs because of their managers, and 70 percent reported that managers are responsible for how engaged they feel at work. The conclusion that workers leave managers, not companies, may provide a clue to help address employee retention issues that have been plaguing the restaurant industry for years. 

    Limited-service restaurants are struggling with record high employee turnover rates, according to Black Box Intelligence. In an industry that has historically suffered poor employee retention, the 133 percent turnover rate for quick service and fast casual restaurants in 2019 has soared to 173 percent in 2022. In the face of this continuing challenge, restaurant leaders cannot rely solely on things like wages and benefits to get turnover under control. They need to look deeper to find new ways to help address this debilitating and costly issue.

    While there are multiple causes of high employee turnover, restaurants often overlook this “boss-quitting” phenomenon as a potential contributor to their retention issues. Instead of focusing on “fixing” the employee issue, restaurants may fare better by fixing the management issue. Here are three ideas that can help improve employee retention by improving the management ranks.

    Invest in Leadership Development

    According to the National Restaurant Association, 9 out of 10 restaurant managers started in entry-level positions. While this is a good indicator that career paths do indeed exist in this industry, in some cases individuals are promoted into leadership roles without much management experience. Particularly during the pandemic as the “Great Resignation” took hold, we saw a rush of internal promotions as operators struggled to keep their restaurants staffed at every level. 

    In many cases, newly promoted managers received little or no training in preparation for their new role. Without training on how to successfully lead a team, a newly promoted manager stands little chance of engaging and inspiring their team members. Being the best cashier or cook does not mean that person will be the best manager. On the contrary, it’s more likely that an inexperienced manager will underperform from a leadership perspective, contributing to higher employee turnover.

    By investing in soft skills training in areas like communication, coaching, and conflict resolution, restaurants can prepare managers (and aspiring managers) for leadership responsibilities. This will not only improve their success in their core responsibilities but will also improve the chances that they will retain their employees. 

    If you’re thinking you don’t have time to put a full manager development program in place, there are some shortcuts to getting this done more quickly than you might realize. Restaurant-specific online training programs are readily available for every level of restaurant management, from shift leads to GMs all the way up to multi unit managers. By leveraging off-the-shelf training in combination with your own brand-specific content, you can quickly deploy a training program that addresses important soft skills while incorporating your brand values and culture.

    Improve Manager Engagement During Onboarding

    While online training is a great way to deploy development programs to employees and managers alike, it should never be the only training approach in a restaurant. During the rush to onboard new team members as quickly as possible, there is a tendency for managers to rely too much on online training or on other team members to take the burden of training the new hires. This can be a costly mistake as the first few days of an employee’s experience on the job are critical to their short- and long-term retention. 

    Instead, restaurants should look for ways to improve manager engagement during the onboarding process for new employees. In particular, if the general manager is not leading new employee orientation, the employee is far more likely to churn in the early going. By engaging directly with the new team member, the GM demonstrates that they are important to the business right from the beginning. They also have the opportunity to communicate the brand’s values, build a relationship with the employee, and discuss performance expectations and career development—all of which are factors in positive employee engagement, which leads to better retention rates. 

    Do the Right Thing When They’re Not a Good Fit

    Of course, none of these efforts will make a difference if you have a bad manager. Not everyone is cut out to be a manager, and according to Gallup, only about 1 in 10 people possess the talent to manage others. Sometimes it’s better to just do the right thing and fire a bad manager than to spend endless cycles trying to improve them.

    How do you identify if you have a bad GM? If you’re focused on analyzing turnover, one starting point would be to look closely at locations that are consistently at the top of the turnover board. Turnover is certainly not the only measure of a GM, but in these days of staffing challenges, and with the impact labor has on the success of the business, a pattern of higher-than-average turnover (for your organization) should definitely prompt further investigation.

    When you think of the cost of employee turnover, the decision to fire a bad manager becomes fairly easy. According to Black Box Intelligence, turnover cost (which includes separation, replacement, and training) is $1,956 per hourly employee. Thinking about a location with 50 employees with 150 percent turnover, the cost of turnover is $146,700 annually. For a location with a bad manager that is running at 200 percent turnover, that’s an additional $48,900 in turnover cost. This additional cost doesn’t include the negative impact on employee engagement and productivity likely experienced by those who stay in a location with a bad manager.

    In order to make those tough decisions, you need to have a bench of manager candidates in place so you can replace the fired manager without delay (see “Invest in Leadership Development” above). With an ongoing development program that continuously builds the leadership skills of your top performers, you can be prepared to replace managers much more quickly. 

    So, it seems we’ve come full circle. Turnover is such a pervasive problem in the restaurant industry that it makes sense to attack it from multiple angles. Rather than focusing only on the employees, take some time to look at the impact managers have on turnover rates. By investing in development, encouraging manager engagement, and removing bad managers, you can reduce boss-quitting and have a positive impact on retention of your valued team members. 

    John Poulos is the VP of Customer Success at CrunchTime Information Systems.