Tackling Turnover at Taco Bell
The fast-food chain appears to have hit on a formula for controlling new-hire turnover.
By David Shadovitz
As you might expect, labor is a huge deal for fast-food restaurants such as Taco Bell Corp.
Making sure stores are appropriately staffed with engaged workers is a top priority for the Irvine, Calif.-based firm, which has 830-company-owned outlets and 30,000 employees (nearly half of whom are 22 years old or younger).
As Taco Bell Vice President of People and Experience Bjorn Erland explained recently during a session titled "Taco Bell Enhances Its People Strategy with a New Analytics Recipe" at last week's WorldatWork Total Rewards Conference and Exposition, controlling turnover is major challenge for the firm.
During the Great Recession, Erland said, Taco Bell's turnover rate decreased dramatically; but beginning in 2012, it began to rise again while engagement scores began to fall.
Leadership was hearing that pay was a major reason people were leaving. But in order to come up with the right game plan, HR knew it needed more data. So it brought in global consultancy Mercer to better understand the key drivers behind the high turnover and identify ways to address it.
When it looked at why workers stuck around, Taco Bell, a unit of Yum! Brands, found that a flexible work environment and strong culture were major drivers. As to why people were leaving, factors such as a high level of stress, lack of training and better opportunities elsewhere emerged as a big contributors.
In an effort to better understand the part pay practices were playing, Mercer studied more than 500 company owned U.S. restaurants and 20,000 employees over a 13-month period.
"We looked at workforce factors such as starting pay, pay levels and bonus payments," said Rick Guzzo, a partner in the Washington office of Mercer. "Then we looked at how long [people] were working at Taco Bell, their average age and external factors such as store size and where the store was located."
Well, the big "Aha!" for Taco Bell was learning that earnings were far more important to workers than their rate of pay. Were they working enough hours, including overtime, to bring home a bigger paycheck? (Erland noted that Taco Bell's pay was competitive with others in the industry.)
In light of these finding, Erland said, the company began to increase its use of slack hours to increase the amount of employee take home pay. Turnover improved when employees were able to bring home more earnings, he said.
Indeed, the study found that employees who worked 100 hours or more a month were 71 percent more likely to stay than those working fewer hours. "This was eye opening. It's not a guarantee, but it's almost like a guarantee," Erland said.
The research also found a strong correlation between poor store performance and regional general manager turnover.
"You can't stabilize team-member turnover unless you stabilize the turnover above the restaurant [level: area coaches and RGMs]," Erland said.
Erland noted that 600 out of its 900 company owned store managers had new supervisors in 2015. "That's just not normal," he explained. "So we put in place a process in which the COO and I approve any area coach moves" and added "a bonus plan for area coaches that was tied to RGM stability."
The other thing area coaches often did, he said, was take an RGM who was a superstar in an A store and put them in an F store to turn it around. "What you end up getting are two Cs," he said. "So we told them don't move them around; keep them at the A store and we'll figure out the F store . As a result, they didn't move RGMs around much at all last year."
Next year, Taco Bell is also looking to test the idea of applying variable pay to filling its late-night shifts. "It's hard to get someone to come in at midnight and work until 4 in morning," Erland said. "So we have to differentiate the pay [for those workers].
Hours before Erland shared his story, Taco Bell issued a press release that announced the second stage of a partnership with Roadtrip Nation. The partnership highlights various career paths within the organization, in order to make it easier for current and future employees to match their job needs and goals with the firms career opportunities.
Stories of current employees and alumni are featured on the Roadtrip Nation platform, so both current and prospective employees can gain a better understand of what needs to be done in order to achieve their career goals, whether its managing a Taco Bell restaurant, working in the marketing department at headquarters or taking skills to another industry all together.
The platform aims to foster networks and communities and empower team members by hearing about their lessons learned and career paths of others, according to the press release.
One alumni interviewed and featured is Fred Mossler, former senior vice president of merchandising at Zappos and an entrepreneur. Mosslers first job was cleaning dishes at Taco Bell, where he worked his way up to a supervisor.