Management Models that Benefit Employees

According to the U.S. Bureau of Labor Statistics, 4.5 million Americans quit their jobs in November 2021, with the hospitality industry posting the highest quit rate at 6.1%, followed by healthcare and other industries. Restaurants have always carried high employee attrition due to low pay, lack of benefits, and burnout. The pandemic only made it worse by adding new issues to the mix, like fear of contracting the virus, additional safety protocols, and dealing with irate customers who refused to wear masks or keep their distance.

This ongoing staffing shortage has led restaurant owners to re-think their management models, because it has a significant impact on their staff and on their ability to hire and retain. It is time to re-invent how restaurants manage, compensate, and reward their teams, and to make a career in the restaurant business sustainable and rewarding.

Before you choose a management model, it helps to understand the root cause behind this acute manpower crisis. Let's start there.

Why is there such an acute manpower crisis in restaurants?

Working in restaurants is no cake-walk, with long shifts, unpredictable schedules, and high-stress situations for both front and back of house staff. The pandemic intensified these concerns. Restaurant employees had to navigate covid protocols and customers who paid them no heed, and unlike other industries, they could not work from home. That meant less time with family, and many took extra shifts to cover for coworkers who were laid off or resigned early in the pandemic. They worked long hours in restaurant kitchens to keep the business running, risking their health, often for modest pay and no security. Numerous reports have described how overburdened these workers felt while their employers did little to address it.

Revising pay scales is one way to retain employees, but is that alone enough? The simple answer is no. Employers need out-of-the-box solutions and management models that have tangible benefits for both the employer and the employees.

Management models relevant in the new world

Traditional staff management models are not enough to address the challenges of the new-age restaurant industry. The challenges restaurant employees face today are very different from what their predecessors encountered. Consider these emerging staff management models if you want to create a sustainable and happy workplace for your restaurant teams.

1. Open book management
2. Employee profit sharing
3. Safe and inclusive workplace management
4. Employee stock ownership plan (ESOP)

Open book management

Open book management has become popular over the years and is being adopted by many restaurant owners. In this model, owners give workers access to the company's financial details. Doing so makes workers feel more accountable, since they can see how their actions, salaries, and mistakes affect the profitability of the business. The model also involves employees in decision-making and gives them a chance to learn the basics of running a restaurant. Open book management brings benefits for owners too:

• An engaged workforce
• Employees who optimize their own productivity and efficiency
• A more dedicated working staff
• New perspectives and ideas
• Transparency in day-to-day operations

Restaurant owners are adopting this style because it resonates with modern transparency expectations. It also makes employees feel more vested in their place of work. They feel important and valued.

Employee profit sharing

Employee profit sharing, more commonly known as revenue sharing, is an incentive-based system where employees receive an additional payment from the profits, over and above their regular salary. Profit sharing and open book management often co-exist, though not always. A profit sharing model is widely seen as a fair and equal way to reward employees. It helps boost morale, nurtures loyalty, and works as a retention strategy. Employees are motivated to do more, because they know the more profit the restaurant makes, the better their year-end compensation.

Safe and inclusive workplace management

We live in an era where customers are demanding, seek instant gratification, and can sometimes be unreasonable. Restaurant employees are always under pressure to deliver excellent service. Delivering a stellar customer experience matters, and so does making sure your employees feel safe. Restaurant owners are now building policies around harassment to create a safe work environment. Inclusive hiring, policies that put employee safety and well-being first, and protection against harassment from customers, colleagues, or supervisors are areas many employers now focus on.

Employee stock ownership plan (ESOP)

An ESOP is a strong way to reward employees and instill a sense of belonging and ownership. It gives employees a stake in the company, which raises their status from employee to partner. They feel more involved and committed to the organization. ESOPs are becoming a popular way to manage and retain employees in large food chains with outlets across multiple locations.

Why switch to these unconventional models?

Any management strategy that opens a channel of communication, brings transparency, benefits both employee and employer, and fits the changing business environment is good for a business. Acknowledging and adapting to change is healthy for any business. Today, money is not the only factor that attracts job seekers. They are looking for something more meaningful.

Which management model is best for your restaurant?

The way you manage your staff determines how your restaurant performs over the long run. It also shapes hiring, retention, and engagement. Choose a model that aligns with your business goals and your way of thinking, and stay flexible depending on the situation. Discussing the options with your employees, and asking which benefits them most, is a good starting point toward this change.