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V. James Catalano, Jr., Ph.D.

"Let’s go out to eat." Music to a restauranteur’s ears. In 1998, Americans will spend $922 million dollars per day on food prepared outside the home amounting to total sales of $336 billion dollars. On any given day, nearly half (47%) of all American adults will dine in a restaurant. Many establishments offer typical fare and a simpler atmosphere. Other organizations may build their business around a theme and a unique product. Frequently, the product is emphasized with much less attention paid to the staff. Thus, the people side of the organization may be given short shrift. Selection of quality personnel is the initial process of weeding out unqualified individuals, but more importantly, weeding in talented personnel. Organizations need talent that contributes in times of growth and expansion but also helps maintain viability in more challenging economic times.

Almost 10 million people will be employed in the restaurant industry in 1998. Many will seek to tap this sector's reservoir of opportunity for progression to management. Three out of five restaurant managers will begin their tenure as hourly staff. While ability and promise are certainly factors leading to promotion, how long you stick around typically plays a key role. Frequently, people evolve into managers due to longevity, rather than having been selected and actively developed. This bears the quality of a hit-and-miss operation that smacks more of winning the lottery than running a successful business. In economic terms it is simply inefficient. Good people will not wait around for their turn and poor performers will cost you too much money. Active selection, retention, and targeted development will help you build the competent, agile and adaptable work force that will launch the growth of your organization.

One of the undesirable consequences of poor selection and “leave-em-alone” development, is turnover. A secondary, but nearly as fatal consequence is underutilization of talent and stagnation. The cost of employee turnover in any industry is the great unseen consumer of profits. In a purely accounting sense, a body is a body is a body. Thus, people can be replaced. Of course hidden costs such as the impact on staff morale and customer loyalty exact their price as well. However, at a comparatively low rate of $50,000 in sales per employee, the margin for error is slim and unforgiving. The dollar cost due to turnover in restaurant management position ranges between 1.2 to 2.0 times the annual salary with an average cost factor of 1.5 times the annual salary. Do the math. The replacement cost of a manager paid $50,000 is $75,000. Replacing an hourly worker is estimated to require an investment of .75 times the annual wage rate. Moreover, a company recognized as one that is blind to the aspirations and capabilities of its staff also does not keep talented people for long. In this present economy, talented people have options.

Here is a plan of attack.

1) Solidify your organization’s grasp of what predicts success in a given position. In other words, know what you’re looking for!

2) Make sure you have a clear comprehension of the specific abilities, and liabilities, of the individual that you are considering for hire or promotion. Ask these questions. What are the qualities that make a good restaurant manager? What are your unique organizational requirements? Is there consensus among your management team as to the characteristics and work habits that constitute success in a restaurant manager? How does this individual compare with the "ideal?" How can we keep her or him?

Have a developmental plan tailored to the specific motivators, drives, needs, and capabilities of each of your managers. Identify your HPP (High Potential People) and generate a plan to retain and grow them. Ability and willingness to learn may be more important than previous experience.