Corporate Retention, Compensation and Behavior

In the past few years, a slow economy and shaky job market have actually helped keep key personnel on staff. A secure position was enough to overcome the temptation to leave for higher pay or new opportunities.

However, in the past six months the calls from single-unit, independent operations have risen sharply compared to 2010 and 2011. These operations are hungry for talented staff. The “Indies” do not have corporate recruiting resources at their disposal, so when they cannot find needed staff through networks or job postings, they offer higher salaries to attract already-trained talent. That would be the staff that you trained.

Many in the hospitality recruiting and HR space expect a widespread mutiny of the under-compensated as the reality of the talent shortage takes hold within the next 12 months.

To prevent this from effecting your operations, consider two fundamentals: benchmarking and behavior.

Benchmarking

To assess your own division, make sure your human resources department is benchmarking compensation. Compensation includes salary plus bonus or incentives, benefits and perks. Include a detailed analysis of insurance coverage and employee out-of-pocket costs or your assessment will be worthless. If your managers are underpaid, you run a high turnover risk.

Do your managers have reasons besides compensation to work for you? If your culture is not compelling, you are especially susceptible to turnover. Is your company passionate about more than making money? Employees should be loyal for reasons far beyond their paychecks, like professional fulfillment, self-realization, philanthropy, and environmentalism.  

If your staff cannot see growth and potential for promotion on the immediate horizon, they will be more prone to leave for better opportunities. In 2009 and 2010, those who were spared from RIF’s and layoffs were asked to work much harder with less support. They did, elated that they had a job. As your company has stabilized from the recession, have you added adequate support, or are your leaders still overworked and short-staffed?

Behavior

We are seeing a growing trend of small and mid-sized restaurant and lodging operators offering significantly-lower base salaries plus detailed bonus packages. Combined, these beat competitors’ compensation packages by 20% to 50%. While this makes sense on paper for both sides (operators limit their salary liabilities and employees have the opportunity to earn much more than their peers), it has a major flaw: There are enormous differences in the natural human behavior of an entrepreneurial leader and a stellar unit or multiunit manager.

In his groundbreaking book Entrepreneurial DNA, author Joe Abraham breaks business behavior into four distinct areas. Abraham’s simple assessment tool determines your DNA:

Builder Start-up entrepreneur tendencies, calculated risk-taker, forward-thinking, scalable system creator, visionary approach to strategy. Driven by power and influence.
Opportunist Rainmaker/deal-maker, quick-flip transactional tendencies. Wants to be at the right place at the right time when it comes to making money. Driven by incentives.
Specialist Steady, risk-averse personalities who become experts in one trade or industry for the duration of their career. Expert service providers. Driven by steady income.
Innovator Mad scientist type. Inventing, tinkering, designing and creating all the time. Limited business leadership capacity. Drawn to the “lab” or “kitchen” rather than the cash register or business office. Driven by a mission to impact their corner of the world.

Here’s the point: Have your finalist candidates take the Entrepreneurial DNA assessment so you can gain real insight as to whether your compensation plan is a behavioral fit.

Specialists build their careers on honing their craft, whether hotel manager or pastry chef, food service director or financial officer. They become seasoned experts as a result of their Specialist DNA. (If they were driven by Builder DNA, they would be founding restaurants or accelerating to the top of the management team; if Opportunists they might be brokering hotels or focused on catering sales;  and if Innovators, they will be executive chefs with breakthrough menu items and no desire to manage or lead.) Opportunists may risk their base salary for high commissions, and Innovators may risk everything on their quest for breakthrough, but Specialists are not wired for either scenario.

Specialists who sign up for a high-risk compensation package in a high-pressure job are set up for failure. Unfortunately, neither they nor their employer know it! Nobody sees that such a situation conflicts directly with one of their most basic needs: security and consistency. As soon as the pressure hits at work, they’ll see the risk they have taken and start looking for the escape hatch.

On the flip-side, a compensation package of a median-to-competitive base salary with very little or no bonus potential, while soothing to a Specialist or Innovator, will certainly back-fire with Opportunist or Builder types in the long run. Opportunists and Builders seek higher rewards for their contributions. They may also be prone to shorter job tenures or resigning if their big ideas aren’t given a fertile ground to germinate.

In this highly competitive talent market, you must deploy the most effective and breakthrough tools to get an advantage. Strategic Hospitality Search and StrategicFIT leverage BOSI to empower you to win the war for talent! For more tools and a free consultation, contact Joseph D’Alessandro at 630-837-0400 or joe@shs.jobs.

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Tags: Abraham, Bosi, D'Alessandro, DNA, Entrepreneurial, Hospitality, Joe, Joseph, SHS, Search, More…Strategic, StrategicFIT

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Comment by James on June 29, 2012 at 2:00pm

Geat blog, Joseph.  I liked hearing your take on turnover, culture, and benchmarking. I believe you have nailed some primary reasons for high turnover.  We may run into each other somewhere, as our focus is on web-based restaurant staff training.  I watched a couple of videos on your site as well.  Good stuff.  Thanks for a look at the Abraham's assessment tool.  I'll keep your site handy in case it comes up.

Have a great weekend!

James

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