Is Turnover Killing Your Bottom Line?
“The only thing worse than training your employees and having them leave, is not training them and having them stay.”
— Henry Ford
If you own or manage a restaurant, you know that turnover is a problem that you have to battle daily. You know that it’s bad for your bottom line, but it’s actually worse than you think. Is there something you can do to stop the bleeding? In fact, there are many things you can do, but first it’s important to understand exactly what is meant by “cost of turnover”.
The Direct Cost of Losing an Employee
When an employee leaves, your real costs include separation, recruiting expenses, hiring a replacement, and training the new staffer. Productivity loss during the ramp up time is a factor as well. So, if one server leaves, it will cost you close to $6000; over $17,000 if a manager calls it quits. If your restaurant loses 10 employees and 2 managers in a year, that is a direct hit to your bottom line to the tune of nearly $100,000.
Why People Leave
While the restaurant industry naturally has a higher level of turnover than other industries, our turnover levels are at their highest point in the last 10 years. (source: TDn2K)
Essentially, people leave managers more than they leave jobs. We have all known or worked for the “nightmare” supervisor – the jerky one who doesn’t know how to talk to people and plays favorites, the clueless one who spends time looking busy without actually accomplishing anything, or the firefighter who raises everyone’s stress level by constantly freaking out rather than preventing or handling the daily ups and downs in the service industry. The truth is, these folks aren’t inherently bad people, they just don’t really know what they are doing wrong or how to get better. Most restaurant managers lack not only experience, but training. Without time and guidance, their skills are left to chance and it only takes one bad supervisor to generate a whole lot of pain to your bottom line. And if the supervisor lacks confidence in their abilities, they, in turn, are more likely to become dissatisfied and leave – creating a horrendous cycle of turnover that is costing you money and time.
What to Do
Invest in your managers. The firefighter can be taught how to think strategically, manage their emotions and to create systems to prevent disasters. The clueless one can gain confidence and start getting things done. And even the jerky one can be taught how to communicate effectively and how to harness his leadership presence. When you compare the cost of training to the impact of turnover, suddenly training seems like a bargain. Try training and coaching targeted at key supervisory skills such as communication, delegation, giving feedback, hiring for hospitality and the like. If you can train, improve and retain just one manager a year, you will make a happier workplace, have confidence in your managers and save thousands by keeping your team in place.