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It is no longer “if” but “when” staffing crunches will impact service sector operators in significant ways. The nation’s unemployment rate is steadily decreasing, and its effect on restaurant staffing levels is here to stay. Skyrocketing turnover rates along with minimum wage increases, increased regulations, and worker activism are forcing hiring managers into a tight spot. Workforce Intelligence (formerly People Report), a Black Box Intelligence (formerly TDn2K) company, recently released its annual Corporate Compensation and Benefits Survey (CCBS), designed to explore market trends and uncover the best practices that can help operators negotiate these tough times.

Turnover rates have increased for both managers and employees in every operating segment that Workforce Intelligence (formerly People Report) tracks. Additional insight from sister company Guest Intelligence (formerly Guest Intelligence (formerly White Box Social Intelligence)) indicates that turnover can have a significant impact on guest satisfaction. According to the data, companies for which less than 50 percent of Google reviews are negative have three percent lower turnover than their peers. On the other hand, companies with more than 50 percent of negative Google reviews have 11 percent higher turnover than their peers.

Not only does turnover cost a lot of money, it impacts the guest experience, and as a result impacts sales. Victor Fernandez, Executive Director of Insights and Knowledge at Black Box Intelligence (formerly TDn2K), suggests that a key way for operators to combat these challenges is to prioritize and focus on promoting company culture as a way to attract and retain employees. Snagajob, leading service sector job board and community for hourly employees, recently asked their job seekers to list the key factors that matter to them when seeking an hourly restaurant position. The perhaps surprising results reported culture, growth opportunity, and flexible scheduling as the top three criteria in choosing an acceptable position. Of course, compensation and benefits matter to employees, and having competitive pay is a necessary component of the employee value proposition. Savvy companies know however, that a key solution to retaining the best employees lies in a creating a strong company culture, centered on respecting and listening to their workers.

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CCBS likewise revealed that tying organizational rewards to those things hourly employees are searching for seems to have positive results. Said Fernandez, “we uncovered lower turnover levels in companies that offer benefits such as education assistance, profit sharing and flexible scheduling when compared with companies that do not offer them.”

Indeed, CCBS reported that comparatively, companies who offer flexible scheduling have 66 percent less turnover than those who don’t. Similarly, companies who offer profit sharing have 43 percent less turnover than those who don’t. Another important finding from the most recent Workforce Intelligence (formerly People Report) research is the relationship that exists between health benefits and retention. CCBS data established that in a sample of quick service restaurants, companies who cover over 70 percent of benefit costs have an average hourly employee turnover rate of 119 percent. Alternatively, companies who cover less than 70 percent have an average turnover rate of 136 percent. This 17 point difference clearly highlights that providing an overall better work experience for employees matters.

The data and insights from CCBS provide a clear direction for companies in 2016, and emphasize company culture and employee experience. Even in light of the labor challenges that face operators today, there are still best practices that companies should embrace going forward and that will make an impact in real dollars and performance. A company’s ability to attract, train and retain enough of the highest quality employees will require using a combination of good data and research, competitively benchmarking best and next practices, and finding ongoing ways to engage and listen to employees.

For more information about CCBS, contact Victor Fernandez at victor.fernandez@tdn2k.com or visit our Workforce Intelligence (formerly People Report) website.