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Panera Bread is experiencing 100% employee turnover, annually!

Panera is not alone; it is an alarming trend in the fast food space. Employee turnover is extremely high and likely getting worse until solutions are in place. Or until we have no more fast food places to visit. CNBC calls it, “Fast Food Turnover Crisis.”

What is your current employee turnover rate? Is it costing you revenue and profits?

A turnover rate above 15% is detrimental to any organization’s top and bottom line.

I contemplated this trend after reading the recent article about Panera and its industry:
Will this transform the industry? (yes)
Are robots and self-service technology the solution? (yes and no)
What other industries are being impacted by excessive turnover? (small business and not-for-profits)
How soon will the robots take over? (I drank a little too much sangria while contemplating)

What is the leadership aspect of this ongoing problem? (my comfort zone)

Technology in the Food

The fast food industry’s immediate solution will be technology. McDonalds is spending almost $1 billion on kiosks and other self-service technology. Other chains are getting rid of an in-dining option and relying on apps for ordering. Your food will be delivered or picked up at their smaller footprint drive-through. The growth in mobile fast food (i.e. Taco Truck) is evidence of another adaptation.

Digital ordering is expected to increase 23% a year over the next half-decade according to NPD, a restaurant industry consulting firm. Launching your own food truck can cost less than $90,000 and this entity has a fraction of the overhead than a typical fast food outlet.

Automation and meals on wheels, however, are not permanent solutions. What is?

Training and employee development are. “No one who thinks of a job as temporary is motivated,” according to Abraham Pizam, the founding dean of Rosen College of Hospitality Management at the University of Central Florida. A well-trained employee is usually more motivated and will likely stay longer in your organization.

Build It and They Will Stay

This same truism works in leadership development. An employee who is groomed to be a leader is more motivated and likely to stay with your organization, if they believe there is a future for them in your company or industry.

This article explores why using leadership development to reduce costly employee turnover and ensure your survival makes economic sense. In fast food, the cost to get a new employee up to speed in their first 90 days, is between $2,100 and $2,600. And that’s only the tangible costs. The intangible ones like disruption and poor customer service can double or triple this investment.

For industries that employ smart and talented experts, such as professional & financial services, technology and medical, this cost can be as high as 60% of the employee’s first year compensation. You potentially lose between $30,000 to $75,000 each time a talented employee quits.

Can you afford this waste of money and resources?

If your employee turnover rate is more than a healthy 15%, you have a leadership problem!

Commitment to Leadership Reduces Losing Good Talent

The key to reducing turnover, I believe, is to start training your employees for leadership on Day One and to continue this grooming effort for their first five years. That makes leadership development Priority #1 for the organization’s leadership team. I recently interviewed Amy Essig Desai, CEO and Principle Scientist who extols the value of embedding leadership development in your culture. “One of the things I learned early on in my tenure at Farallon, and I’ve been here 17 years, is that leadership development was instilled as an absolute must, as well as succession planning is really critically important to the continued success of the firm. Farallon has always been committed and will continue to be committed to developing the next generation of leaders.

We really look to intentionally promote and develop from within. That implementation looks like opportunities across all levels. Whether it’s managing projects or people or clients or different strategic initiatives.

Just really having the opportunity for those up and comers to work with and shadow alongside those who have the years on them, to have the opportunity for growth. It’s really exciting for folks to be able to contribute to the company’s success and bottom line, and knowing that they’re a part of that, and are going to be a part of the continuing success of the company.”

Spending that much effort in developing future leaders can appear daunting if you do not have such a program in place right now. And the thought of starting a formal grooming program can feel overwhelming.

Because I want you to be and feel successful, I will break down how to jumpstart a Leadership Development process into digestible chunks. I encourage you to start putting a program in place immediately so that you can stay competitive and thrive in the disruptive future.

Culture Based Grooming

The plan to implement a leader development effort consists of 6½ Core Strategies. Each strategy has an overriding intention and major action steps. I will cover the action steps in future blogs.

Strategy 1: Shift Your Culture so that every employee has a leadership mindset. The intention is for every employee to define themselves as an influencer and believe that they will learn how to be a good leader.

Strategy 2: Define the Key Leadership Roles and Responsibilities for Tomorrow. Your intention is to travel to the future to determine the type of leaders you will need two, three, and even five years from now.

Strategy 3: Get the Right People on the Leader Bus Today. The intention is to capture and engage the talents of those who are or want to be influential immediately. Those individuals will collectively drive the grooming effort.

Strategy 4: Define the Skills and Commence the Training. Your intention is to shorten the time it takes to groom a quality leader from five years to three or less. You also intend to grow the skills of those already in a leadership role.

Strategy 5: Convert Your Performance Review into a Timely Feedback and Coaching Program. Your intent is to make growth and improvement the priorities, instead of raises and promotions/terminations.

Strategy 6: Provide Leadership Growth Opportunities Beyond Work. The intent is to make your emerging leaders well-rounded, so they become invaluable and you enhance your communities and industry.

Strategy 6½: Never Stop Grooming Leaders. The intention is to become an organization that has a robust pipeline of future leaders. You want to have leaders at all levels and you also need a deep bench, because good employees will inevitably leave.

Each of these strategies and the necessary action step will be detailed in future blogs. But…

You likely need to be convinced that this major effort is worth it. I understand. Here are specific payoffs from some action steps. If these are benefits you want for your organization right now, then you will understand why you must get started grooming tomorrow’s leaders today!

How You Benefit

  • A reputation for high integrity
  • Lower employee turnover rates than your competition
  • More consistent revenue growth
  • Stronger governance
  • Better care and attention to your customer
  • Improved employee productivity
  • Bottom-line savings
  • The ability to handle rapid growth safely
  • Greater employee empowerment
  • Improved ability to handle change and flex in changing conditions
  • Engaged employees
  • Become an employer of choice
  • Management employees have more time to do their primary job (less babysitting)
  • Stronger and widespread commitment to safety
  • A strong commitment to high ethical standards

 

Stay tuned for our continuing series that provides the nuts and bolts of a quality leadership development program. For tools you can use right away, be sure to subscribe to our 59 ½ Seconds Newsletter and tune in to my High Road® Leader Podcast, with new episodes available every two weeks.

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Kristal Baker of Express Employment Professionals

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