Higher Minimum Wages and Success in the Hospitality Industry

The state of California and several of its cities have been on the forefront of raising the minimum wage.  The arguments for (people cannot live on the current minimum wage) and against (it will cost jobs because business will need to lay people off) it are familiar.  But now there is some data that makes a very interesting link between quality and the impact of raising wages.

This study looks at the impact of raises in the minimum wage and restaurant employment in the San Francisco Bay Area.  Don’t be fooled by the academic nature of the paper—the authors do a good job of explaining things in English before digging into the math (though you can get another explanation here with an eye towards the political).  The main takeaway from the article is that well run restaurants (in this case, defined by high Yelp ratings) are not impacted by minimum wage hikes.  Crappy restaurants (based on quality, not menu price) saw their already higher closure rate go up with the increases.  So, what does this mean for HR?

  • Well run businesses can absorb higher wages when their competitors cannot. This may mean higher prices (in some instances people will pay for quality) or that these businesses can survive on lower profit margins.  HR can contribute to this through good hiring (brining in people who can deliver high levels of customer service) and training (developing a learning culture) practices.
  • Use data to improve quality. The study shows that online feedback (in this case, Yelp reviews) is strongly correlated with business success.  This customer input should be used to improve service and quality.
  • If we presume that the vast majority of the workers at the restaurants are at minimum wage (as the paper does), this research tells us that paying more is not an indicator of quality or success. If restaurant A is getting a rating of 5 and restaurant B is getting a rating of 3, it is not due to wage differentials.  Rather, it is likely based on the quality of the product and the level of service.  HR may not have much impact on the former, but it certainly does on the latter.

What the paper really tells is that that business can succeed without necessarily being the one that pays the highest wages.  When wages are held constant, hiring the best people from the available labor pool may lead to higher service delivery.  This, in addition to a good product, can keep a business successful, even if wages are forced to go up.

When Even Tech Job Training Lags Behind Need

In any employment market there are going to be jobs in high demand and those that go unfilled.  In our tech driven economy, the jobs that are hard to recruit for range from utility lineman (long hours, hard work, and fabulous pay) and, strangely enough, cyber security.  With all of the hype and news around hacking, I was surprised to learn that these $80k/year jobs are readily available.  But why?

From a selection standpoint, good cyber security engineers need an odd combination of skills.  Of course they need to be great programmers with high levels of critical thinking.  However, they often need to have a criminal’s mindset (“How would I get into this system without someone knowing?”), which makes them a risky hire given their access to sensitive data.  And makes them attractive on the black market.

The incentives for prevention jobs are also difficult.  After all, they are performing well when nothing goes wrong.  But, when someone breaks into the system…

This is an opportunity for industry and universities to work together.  College students want tech jobs (sorry to those of you who recruit linemen), but they tend to want to work in the sexier product/app development area. Tech companies can show higher education how to make the field more “fun,” perhaps through gamification and appealing to the cat-and-mouse aspect of the work.

My sense is that they pay for these jobs will also need to rise to fill them.  If it is true that good cyber security engineers have good hacking skills, there needs to be a sense of doing the right thing pays at least almost as well as breaking into systems.

What we see is that even tech companies need to be thinking about how to get future workers trained and recruited for jobs that are not that appealing.  As our economy constantly evolves, companies will still need “legacy” employees (yes, some day, app development will be boring compared to what is hot then).  And it is possible that the cycle of job obsolescence will become shorter.  This makes the challenge for schools to provide the skills to future employees even greater.  Industry and education will both benefit if they work together in that venture.  I just hope in the meantime no one has hacked my blog.

Learning to Manage

I cannot tell you how many times I have worked with a client who has told me some sort of story about how they promote from within, but have a problem with the supervisors and/or managers not being able to let go of wanting to do the technical work instead of managing the technical work.  It is not hard to understand.  People get into a field because of their interests or passion, rarely for their desire to manage others.

An organization’s challenge is to either create technical career opportunities or help those who are technically proficient to successfully move into management.  But how?  Here are some tips:

  • Clearly identify the skill sets required of managers and note how different they are from those required of technical workers. One of the places I would start is with Delegation and Holding People Accountable.
  • Make the management skill sets part of your internal recruitment AND learning and development process.
  • Require internal candidates to demonstrate management skills before being promoted through an assessment center or other valid selection process.
  • Start people at an appropriate management level, regardless of how technically proficient they are.

While I’m not one to think that sports are necessarily a good analogy for the business world, I found this article to be an exception.  It describes how John Elway,

a multiple Super Bowl winning quarterback with the Denver Broncos, learned management skills from the ground up.  He wasn’t made a Vice President of the team after he retired.  Rather, he honed his business skills in another field and then transferred them to a low level of football.  It wasn’t until he demonstrated success there that he was giving the big opportunity.  The time spent out of the spotlight clearly led to many learning experiences.

What makes the story powerful is the understanding that while there were some technical skills which would translate for him from the field to the front office, Elway (and his bosses) understood that others would have to be learned.  The organization was willing to let him take the time to learn how to manage and lead in a non-technical role.

The lessons for the rest of us are that:

  • Management skills are different from technical ones (e.g., the best sales person is not necessarily the best sales manager). We can use valid tools to identify which of our technical experts possess them.
  • Management development is a journey, as is the acquisition of any skill set.

Why Change is Hard and How To Make it Easier

Organizational development specialists always tell us that change is difficult. They say that people are resistant to new things, are too comfortable in existing processes, and that we really need to be pushed or coddled to leap into the new. Others feel that change is natural and welcome and that it’s “fake change” that we resist. So, which is it?

This article leads us to believe that it is the former. It describes how there are many people who want to buy electric cars, but that many dealerships are reluctant to sell them. There seems to be a choice here: Dig in your heels against change and continue to reap short-term profits or invest in some training and embrace a new market.

The automobile was one of the most disruptive technologies of modern history. Yet, the automobile business is one of the most reluctant to change, whether through a history of fighting federal fuel efficiency standards Download DraStic DS Emulator For PC (which the industry always meets after whining and crying) or suing to prevent new distribution models. Resisting change when the consumer wants it is futile—electric cars will be sold through dealers and new distribution channels. It’s just a matter of when.

So, how do we get our organizations to embrace disruptive change? Here are a few (not exhaustive) useful guidelines:

  • Gather meaningful input. Big changes should not be implemented until you know the potential impacts on all shareholders. Not everyone will be happy with change, but it should be a cultural imperative that you hear from those affected before making a decision. People are more likely to embrace change that they author. So, if you are a dealership, how can we make the sales cycle for electric cars closer to that of existing ones? How can we quickly educate ourselves and consumers about them?
  • Show firm leadership. Once a decision has been made, top management needs to be clear in its resolve and describe the benefits of the change, while acknowledging any negative affects. Management needs to be open to small tweaks, but committed to the direction. The dealers are afraid that more electric cars will lead to less profit in the service department. That should be acknowledged as well as the benefits of change (we can be the go-to dealer for this new technology; this gives us the opportunity to develop lifetime relationships with people who are eager to try new things, etc.).
  • Make the people part of the change the first priority, not the last one. Whatever your great new process or technology, it has to be implemented by employees. Have your communication and training in place before the change is implemented. Part of resistance to change is that people are afraid that they won’t be as good at their jobs anymore. You can alleviate that by putting employees before technology. This could be realized by providing the sales and repair staffs with training about the new technology before being asked to sell or work on it. Build their confidence rather than making them frustrated.

Organizational change is complicated and messy. I’m sure several of you have other tips and experiences with it besides what’s listed above. I’d love to hear your ideas!

Are we receptive or resistant to change? That all depends on the change and what we think is in it for us. As change agents, we need to embrace the person dynamic of accepting the new in order to be effective.

 

 

The Fish Stinks From the Head

Whether or not you are a soccer fan, you’ve likely heard about the scandal at FIFA (the world body that oversees the sport). The long and short of it is that executives in the organization, leaders in some country soccer committees, and sports marketing companies are accused of accepting bribes. They alleged payments were made to FIFA to ensure that tournaments were played in specific locations, including perhaps for votes for the site of the World Cup (the international soccer championship held every 4 years).

Things like this can happen for two reasons: Lack of transparency/poor governance and support by the organization’s culture. The latter comes from the top executives, which is why the President of FIFA resigned yesterday. Many feel that he jumped before being pushed by sponsors (it always comes down to the money) or the FBI. This culture he established led the organization to be arrogant and be closed to scrutiny.

How does one change a culture which is damaging to the brand? There is not any good science behind this, but one train of thought is that a sick patient cannot heal itself. In the link above, it’s suggested that there be a mea culpa through a truth commission so that all of the dirty laundry can be aired. Another thought is to have the bylaws and governance policies be rewritten by an outside organization. Both of these remedies would perhaps satisfy (to an extent) outside observers, but they also paint those who remain (and didn’t participate in unethical activities) with a brush of suspicion. This could lead to the exodus of top talent. However, in a sport as large as soccer, I have to believe that there are talented people outside of FIFA who could run it well.

I believe that a commitment from a top executive to change may help a culture shift in some cases. I’ve been working with a client on their team building. One barrier to them moving forward is a terrible mistake made by the president last year. It genuinely affected the trust between her and her team an among the team members.

When presented with this before a planned offsite, her first reaction was surprise that people were still bothered by it as she had previously apologized. At the time I thought this attitude would be a significant barrier in improving the team’s performance. Something must have clicked in her mind because at the beginning of the offsite she addressed the issue head-on. She took ownership of the error and for being the reason for the break in trust. Without being defensive, she outlined a path forward and what she would be doing to win back the trust. Her statement lifted a dark cloud and allowed the group to make progress during the session.

Does culture change in a day? Of course not. But this leader had the courage to shift it and, just as importantly, modeled accountability and humbleness to her staff. It’s a good beginning.

For more thoughts and insights into organizational change and employee engagement, contact Warren Bobrow.

 

 

Back to Class

The blogs and postings have been on hiatus for a couple of reasons. One is that I like to take occasional breaks so I don’t repeat myself too much. Second, some change in LinkedIn has stopped me from receiving notifications of when people read what I’ve written. That’s still not resolved, but I’m tired of waiting for them.

In the meantime, I have had a chance to lead some training sessions with a variety of clients on different topics (motivation, leadership, collaboration, negotiating, team building, etc). While consulting is my passion, I have enjoyed exercising some different intellectual muscles and hearing the perspectives of many different people in different roles.

The participants’ attitude and engagement level towards the training comes from the company’s culture. More open cultures led to more questions while more closed ones resulted in more on-way communication of material. There was, however, a general thirst for more knowledge and skills, even by those who were attending after a long work day.

Of course, the nagging doubt about all training is how much difference it will make and over what time horizon. For some participants, they have very little formal authority in their current position, so one can only hope that the skills they learned can be applied in the near future. For others, perhaps they’ll have the opportunity to use something they learned in a “real life” situation and experience positive results. My challenge is to improve the courses so they have a better chance of “sticking.”

For more information on these training courses, please contact me at warren@allaboutperformance.biz.

 

Implementing a Wide-Scale Culture of Service

We read plenty about cultures of service. Whenever we purchase a product or visit an establishment, we have an expectation of service, which is usually correlated with how much we are paying for it. However, good customer service is more than call center representatives saying the right things. This culture must permeate the entire organization in order to drive business results. If you are in the consumer products business, your level of customer service flows through the entire chain of your business—easy to use products, friendly sales people, user friendly websites, quality technical support, etc. Any weak link will negatively affect customers, referrals, and return business. But, what if your organization is a whole city?

Those in charge of promoting tourism in Steamboat Springs decided that their customer service ratings were not high enough. The city competes with other towns for tourism dollars, so there is more at stake than just saying they are the friendliest place around.

As described in the article, this effort showed some classic examples of change management: There was a true champion of the project, skepticism had to be overcome, training initially took place with a small group who then became evangelists, and results were measured (and they were not as clear-cut as I am sure they had hoped).

One of the things that I liked was that they did not “pick” on one industry (restaurants, for example). Training took place in several areas that would touch customers.   They also addressed hiring practices, which can be tough to do in a small labor pool. They focused on interviewing, but there are many good pre-employment testing practices that could also be used to hire people who are likely to delivery quality customer service. Lastly, they are sticking with their program—this indicates that they are serious about making customer service a priority.

This case should provide hope for those of you trying to implement any type of organizational-wide initiative. It shows that if the project resonates with others, and can be shown to clearly impact them, diverse groups can come together and change, even they are not part of the same company. The city is also showing that a culture of service can be implemented on a wide-scale if everyone is involved.

For more information about improving customer service in your organization, please contact Warren Bobrow.

Presenting Today on Evaluating Talent Across Cultures

OK, it’s not much of a blog post, but I am excited to be presenting today with Google, Amgen, Paramount, etc at Pepperdine’s Talent Management Symposium http://tinyurl.com/mye2rck.

If you’d like a copy of the slides, please send me an e-mail (warren@allaboutperformance.biz).

Thanks to Chris Christie for the Reminder That Culture Matters

The term “corporate culture” has given way to “employee engagement” in describing the atmosphere in an organization.  It is one jargon change that I do not mind.  If you can link engagement to behavior, then it is a valuable construct.  However, organizations do have cultures and norms which affect how people act on the job.  Think about where you work.  Are people encouraged to innovate or execute processes?  Can management be questioned or are instructions supposed to be carried out?

A clear example of culture affecting behavior has gotten New Jersey Governor Chris Christie in trouble.  Part of Christie’s appeal is that he speaks his mind and projects himself as a tough guy.  People who disagree with him are publicly called “stupid” or “idiots.”  This candor is refreshing to some, but to others he is a bully.  Culturally, it shows that those who disagree with the office are lesser people.

Essentially, when Christie was running for re-election, he (or his staff) asked mayors of different political parties to endorse him.  There was no doubt that he was going to win big, but his strategy for higher office includes showing that he has support across the board.  In one town, the mayor said he would not endorse the governor, so Christie’s staff decided to inflict some retribution by messing up traffic in the city for a few days.

After all of this became public, Christie threw up his hands in astonishment, fired one of the staffers responsible (oh, and calls her “stupid”), allowed others to resign, and pleaded ignorance because he did not specifically direct them to punish the mayor.  He just cannot understand why they would do such a thing.

They did such a thing because they thought the boss would approve.

The object of management is to get things done through people.  Managers cannot give their direct reports instructions for every task, so, to be effective, leaders need to convey expectations of behavior and performance.  This occurs with a combination of clear communication and a strong culture established by the leaders.  With those in place, employees will meet leaders’ expectations without being told what to do.  This was clearly the case in Governor Christie’s organization.

Leaders need to know that their behavior serves as cues for their employees, especially if those behaviors are rewarded.  If the top person treats others with respect, employees are more likely to do so.  If the leader punishes dissent, middle managers will as well.  It is not that hard to figure out.  You would think that a guy who is smart enough to identify the idiots would know this.

For more information on employee engagement and leadership, please contact Warren at 310 670-4175 or  warren@allaboutperformance.biz.

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