| Case
Study: Hourly
Employee Incentive Programs
For most
genres of employee, it is apparent how to go about motivating and
rewarding their efforts. However, for others, there is not a clear-cut
path for success, especially for industries that traditionally have
a one hundred percent turnover rate like the restaurant business.
How do you motivate an hourly employee when you don't necessarily
control the amount of tips they receive? How do you keep a restaurant
employee when the restaurant next door pays one dollar more?
One year ago,
K-BOB's, a steakhouse franchise based out of Albuquerque, New Mexico,
surveyed its employees and discovered that only 33% were likely
to refer the company to their friends as a great place to work.
The question, "Does the company care about me personally and
professionally?" yielded a similar response. K-BOB's actively
went to work to create a marketing program for its internal customers.
"You have to market to your internal customers because they are
your front line," says Joe Redmond, Vice President of Marketing
and Co-founder of K-CARE.
K-CARE is an
employee recognition program created initially for K-BOB's Steakhouse.
K-Bob's wanted to increase job satisfaction, recognition, employee
satisfaction, and retention.
K-Care has now
rolled-out nationally as a retention and reward program for restaurant employees and is expanding into other businesses that employee an hourly staff such as hair and nail salons.
The
Program
The K in K-CARE doesn't come from K-BOB's, but rather
from the K in 401K. It is a 401K-type program. Employees earn money
through the program but have to remain with the company for at least
a year before withdrawing any money; then withdrawals are limited
to 50% each year. K-CARE is a "Show me the money!" incentive program.
It targets tip reporting, education, employee compensation and benefits,
and overall, rewards for doing a great job.
K-CARE also promotes teamwork because it takes everyone's effort
to serve the guests and keep them happy. The entire staff (servers,
cooks, hosts/hostesses) benefits from the program based on the servers'
reported tips and the hours worked by each person during the pay
period.
There are four
ways where employees can earn money:
1. Tip
Contributions:
"Important thing about tips is, tips register customer satisfaction."
- Servers report
tips and the company deposits cash into all employee accounts
equivalent to 5% of the total reported amount, based on the hours
they worked. Employees want to report their tips because they
earn more for being truthful.
- K-CARE is
the First Industry Created EMTRAC (Employer Tip Reporting Alternative
Agreement).
2. Vacation
earnings:
"They want to report tips because they get vacation at a higher
rate of pay."
- Based on
reported tips, employees receive vacation earnings at a higher
rate of pay. Again,
the more they truthfully report their tips, the more they earn.
3. Continuing
Education: "If you give 110%, you will receive 110%."
- Employees
may select courses, such as health and food sanitation, offered
by the National Restaurant Association Education Foundation, The
employee pays for the course up front, 100% of it, but upon successful
completion receives a rebate for 110% of the cost.
4. K-CASH:
"It's the caring that counts."
- On birthdays,
employees receive $20; on their yearly anniversary, $50. The K-CARE
software, which works directly with the company's payroll software,
integrates these benefits with the payroll and the 401K program.
It incorporates incentive programs such as, "whoever serves the
most desserts, wins this award." All the cash and awards are paid
in K-CARE dollars.
Program
Costs
Initially, a restaurant invests $3,000 up-front for
the cost of the software, the K-CARE communication board, and the
other materials needed to create a successful program. The ongoing
K-CARE subscription is $50 per month or $500 per year for the 24
x 7 software support and materials.
K-CARE estimates
that the annual cost of the program, including the investment contributions
to the employees, should equal .7% to 1% of the sales revenue each
year.
The
Incentive Rewards
In other words, employees earn money, vacation days, education,
and recognition!
The
Motivating Factors
Through the K-CARE program, employees receive certificates
at home in the mail with their account balance. Progress is also
reported on the K-CARE communication board, which is strategically
placed in the kitchen or most convenient work area. The board posts
the birthdays, anniversaries, account balances, and K-CARE news.
It provides the account balance for the whole team to see so that
newer employees will be motivated by the big bucks earned by the
older employees. "They see that Susie has $1,000 in her account.
They know that if they stick around and work hard, participate in
continuing education, win contests, this is how they get that sort
of money," says Redmond.
Employees want
to report their tips because the more they report, the more they
earn. At the end of the year, employees have money to spend on vacations,
holiday expenses, and personal gifts.
Because K-CARE
is an IRS approved program substitute for TRAC (Tip Reporting Alternative
Commitment) agreements and the program has on-going communication
to reinforce the fact that by law servers must report their tips,
restaurants are able to avoid audits because the IRS knows that
employees are more likely to report tips.
Return
on Investment
By implementing K-CARE for its staff, K-BOB's was
able to lower turnover by half. Within a year, 61% of employees
said they would refer the company to their friends as a great place
to work: a great improvement over the previous year's 33%. Reported
tips went up 20%. For K-CARE, the return on investment is undeniable.
Start a retention
program for your hourly employees with K-Care. To learn more about
the K-CARE® program, visit http://www.k-care.com.
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