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Retaining good staff

With the hospitality industry being renowned for its high staff turnover at all levels, Gareth Ogden, partner, haysmacintyre, offers advice both on how to attract good staff and then keep them once they are in place

Gary OgdenGary OgdenThe Great British Menu, MasterChef, Hell’s Kitchen – reality TV is as big in the hospitality arena as anywhere. The UK’s obsession with food and the enormous media interest this has attracted has spawned increasingly creative celebrity-led cookery programmes – all vying for the public’s attention.

However the hospitality industry is not all about celebrities enjoying their five minutes of fame on TV. It is about hard work and survival in an increasingly competitive arena. In her recent TV show – Chefs on Trial – Alex Polizzi explored one of the less sexy aspects of hospitality as she took on the challenge of recruiting head chefs for restaurateurs struggling to fill this key vacancy in their businesses.

Financial rewards

Naturally, financial rewards are fundamental both to attracting and retaining key staff. The basic salary offered must be competitive and should therefore be benchmarked against rival employers. A negotiable salary level (within reasonable limits) can often heighten applicant interest at the interview stage and, more importantly, encourage buy-in from the candidate if they are made to feel they have had an input into the agreed terms. Bonuses, regular pay reviews, a good pension and other sundry benefits should also be explored in order to maintain morale and encourage loyalty.

Incentive schemes

One way of motivating staff, while at the same time aligning their effort with the goals of the business, is to offer a welltargeted incentive scheme. There are a number of important attributes to consider here.

  • An effective incentive scheme is clear and understandable, challenging yet achievable. There must be buy-in from the individual concerned who should feel that they genuinely have the capacity to influence the outputs by which their performance is measured, within the agreed timescale. Delegated responsibility can be important for head chefs in achieving these targets including allowing creative freedom in the design of menus, recruiting their own team and being personally involved in the branding of the restaurant, even being the focus of that branding themselves
  • The key metrics upon which any reward is based should then be synchronised with the interests of the business owners – be it maximising site EBITDA (operational profitability) or improving gross margins. The metrics may also extend beyond the financial – for example the number of covers or the quality of customer feedback
  • The scheme’s structure and targets should be reviewed regularly and amended if appropriate. Continual nonachievement under an incentive scheme, due to unrealistic demands or circumstances beyond the control of the individual, can be demotivating and counterproductive.

Bonus scheme

A basic salary bonus scheme is a simple and effective means of remunerating performance. The benefit is little or no upfront cost and the ability to set relatively short-term objectives for more immediate improvements. Regardless of performance outcome however, a salary bonus scheme is only effective for the period to which it relates. As the measurable timeframe expires, so might the commitment of the head chef.

Bonus SchemeEquity-based remuneration

An alternative way of giving employees a vested interest in the company’s performance, while promoting longer term commitment, is to offer them a stake in the business. A share option scheme can provide individuals with the opportunity to purchase a certain number of shares in the business at a fixed price, sometime in the future. The rights to buy shares can be based on certain performance criteria – as with a salary bonus scheme. However, by providing the opportunity to acquire equity, the individual is tied into the maximisation of the long term ‘market value’ of the business until such time as this value can be realised by a sale of shares. While there is an upfront cost for setting up these schemes, those such as the Enterprise Management Incentive (EMI) can be pre-approved by HMRC and attract generous tax advantages for both individual and the company.

Non-financial incentives

Once you have incentivised your staff to think like business owners by aligning their goals with those of the business, it is equally important to create a first-class working culture and environment. This is both an internal and external consideration. Keeping the restaurant and the brand at the forefront of its market, by means of an effective social media platform and a focused marketing resource, is a motivating force to the staff by association. Regular and high-quality training and the maintenance of exemplary standards is also a pre-requisite for a happy and effective team.

One of the most regular complaints of restaurant owners is that they invest heavily in the training and development of their key staff, only to see them move on to new opportunities as they leverage off their new-found skills. The deployment of some or all of these incentivisation methods should enable a restaurant to retain its key individuals, thereby realising the longer term potential of the business.

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