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The grand compensation experiment at our first store.

C

Charles

New member
Our goal is to pay higher wages, have higher productivity, lower total labor cost, and lower turnover than the market. I realize this is a tremendous challenge. My partner and I are the owners/investors and should get a fair return for our risk. But we recognize that the valuable contributions of our employees make this possible. We will reward those that help us to reach our goals and dismiss those who do not.

Our thoughts so far…

  • Base wage:
    Every employee has a base wage set at minimum wage. This is because new employees actually hurt productivity during training.
    As they demonstrate their mastery at different aspects of the business to the satisfaction of both managers and their peers, they will receive a specific raise amount for each skill. When they have “mastered” the entire store, they will be significantly above market wages and are then considered for management.

    Productivity bonus:
    Employees will share a shift bonus based on meeting or exceeding labor expectations. Our POS will have a “dashboard” display in the kitchen displaying the real-time labor cost. We hope this will encourage employees to work harder and clock out sooner.

    Tips:
    All tips on delivery, dine-in, or carryout will be shared.

    Delivery:
    All employees must be qualified to drive even though we will have our own delivery vehicles. In the event the employee is asked to use their own vehicle for delivery, we will compensate them.

    Financial Transparency:
    We believe in open books. Every employee will know and understand the finances of the business, including what every employee, manager, and owner is earning. They will feel that they are fairly and equitably compensated. They will understand that this business and their jobs will only last as long as we work together.

Many may consider this unrealistic. But we will give it a real try and can modify it if it does not produce the talented, long-term employees we are looking for.

Any comments? (Be gentle)
 
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Do you have any experience in this business?

There is a big difference looking at a business from the outside to inside.

Drivers will not share tips. If i open my books, your opening up yourself to more theft.
 
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I have several successful years as a pizzeria general manager, years as a small business owner, and an MBA (for what it is worth to some).

I have spoken to several owners whose employees share tips. We will not have dedicated drivers. It is simply another position in the store. We will also have our own vehicles. On busy nights, those best at delivery will deliver. On slower nights, others will deliver to gain experience. We are opening as dine-in and carryout. We will add delivery in a few months after instore operations are running smoothly. The mindset will be one that all are responsible for whatever tips are generated so all will share. This will raise the average wage for all hourly employees instead of having low paid inside personnel and high paid drivers (which leads to division). In addition, we should be able to have more flexible scheduling if people are able to work all positions.

I am not sure how opening the books encourages theft. I am not giving them access to the register or bank. I will simply posting the revenue and costs of the business as well as what everyone’s hourly rate is (based on demonstrated knowledge and productivity).
 
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Whoa… my head hurts after reading that plan.

Keep it simple brother.

Drivers drive.

Cooks cook.

Managers manage.

If you want to ‘share’ info with everyone I’d go as far as posting sales and that’s it.
 
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Good luck. Count me as an unbeliever.

After 9 years in this game and a lot of other profesional experience my belief is that your employees will never understand what a fair rate of return is for the investment and risk you undertake as an owner let alone the higher order responsibilities you shoulder in the business. If it is more than they make individually it will seem like too much to them and justify theft as the other poster suggests. Don’t even try to explain why it is fair that you should make 4X what they do.

After you get tired of this approach, try paying a dollar an hour more than the competition, treating employees with basic respect and fairness and giving bonuses based on profit (without opening the books!!)

Forced sharing of tips is another non-starter. Getting the drivers and floor staff to tip out the kitchen for some beer money is one thing but a full split is not a fair shake for the tipped employees. I have never seen it work.
 
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i agree with all the others,you will never get anyone to participate as a whole,there will be “cheating” and if not, they all will
think the others are not complying…bad deal.
 
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I wish reality could work like theory, mostly it does not
the “sharing” tips may become “lying”…tip sharing has never worked right for me…
you can always add those ideas on after you get going and get trustworthy employees in place,
until then, I would keep it simple,
Otis
 
Although I am not surprised at the responses, I do respect them. There is most likely a reason no one compensates according to what I have outlined – because it will not work. Perhaps it is just a utopian view.

Your responses generated an important thought. Though I do think outside the box, not everyone working for me would appreciate my ideas. Their eyes may glaze over after my explanation and they would repeat, “Okay, so how much am I gonna be paid?”

However, some of the ideas have worked elsewhere so I will have to differ with the conventional wisdom of not sharing tips. We will not have a wait staff as this will be a QSR. So no one is being paid $2.13 an hour and depending on tips. Same with whoever delivers the pizza. They are not depending on tips to pay the expenses of our company-owned vehicles and they are first and foremost instore employees. It takes the entire team to promptly deliver a hot, fresh pizza without errors.

I appreciate the help. And if anyone is interested, I will share what we decide to do and the results, good, bad or disastrous.
 
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$2.13 an hour for tipped employees !
here in AZ, my bookkeeper told me it was $3.37 per hour minimum,
I have people here willing to do it for the tips alone…
all market are different,
OTIS
 
The federal mandate is $2.13 or $2.35 and they must make with tips at least minimum wage. However, states can have their own minimum wage as well.
 
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I have to pay drivers $6 an hour plus tips to get people. Tips here are good. Our driver average about $15 an hour and up to $25 an hour when we are slammed. That is driving my car and burning my gas. If they drive their own car they get mileage on top of that.

Otis is right, all markets are different.
 
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dewar:
Although I am not surprised at the responses, I do respect them. There is most likely a reason no one compensates according to what I have outlined – because it will not work. Perhaps it is just a utopian view.

Your responses generated an important thought. Though I do think outside the box, not everyone working for me would appreciate my ideas. Their eyes may glaze over after my explanation and they would repeat, “Okay, so how much am I gonna be paid?”

However, some of the ideas have worked elsewhere so I will have to differ with the conventional wisdom of not sharing tips. We will not have a wait staff as this will be a QSR. So no one is being paid $2.13 an hour and depending on tips. Same with whoever delivers the pizza. They are not depending on tips to pay the expenses of our company-owned vehicles and they are first and foremost instore employees. It takes the entire team to promptly deliver a hot, fresh pizza without errors.

I appreciate the help. And if anyone is interested, I will share what we decide to do and the results, good, bad or disastrous.
Click to expand...
even if you do own the car…delivering pizza is a hard job. Dangerous as well.

You seem to be missing that point.
 
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not a practical plan IMHO - looks good on paper, but is too far out there to succeed in a $500K operation…you need the best staff doing what they do best so operations run smooth…the idea of make it/bake it/take it will work in part w/some staff members, but not all…in my college store, the drivers run the cut table…wouldn’t work any other way…in the new store, w/an advanced menu, drivers just deliver and answer phone…don’t try 2 re-invent the wheel, just fine tune some of the spokes…
 
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Actually, I did not miss the point. They are just not problems here. The town we are in has very little crime and an average household income of over $100,000. It is not a college town though one is about 10 miles away. The population is mostly professionals with children.

And delivering is “hard”? I don’t agree. Again, this area is homes only (no apartments), well-lit concrete streets, and easy to find addresses. So you take the order (and if necessary the map directions), drive to the house, be nice, collect the money and drive back. I have years of delivery under my belt and in my opinion if someone cannot handle delivery, they would be even more worthless in the store.

In talking to potential employees, the main concern they have with delivery is using their own car. They do not want it to smell like pizza. Otherwise, consider it a break from the hectic kitchen.

One last misperception I may given. I did mean that everyone will be doing everything every shift. On any given shift, those driving will not be doing anything else in the store unless they don’t have an order. Each person will have their primary position. I am just saying that on other days they may be working inside instead depending on need and someone else driving. This is contrary to the other stores in the area in which drivers are always drivers and in store folks never drive.

Thank you.
 
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That was the next one I was going to adress.

I actually had a boss (my first pizza boss) say to me…

“Umm Mat why don’t ya clock out and come straight back to the line, you know we are still busy but as a manager you need to be watching that labor”

Not gona happen.
 
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