Design your business model to match your employees

At Nick’s Pizza and Pub, in the Northwest Suburbs of Chicago, the young people who work in either of its two locations find the culture energizing. Nick, the owner, finds it intentional.

As 48-year-old Nick Sarillo contemplated further expansion a few years ago, he became determined to create a culture that would ensure success. This is precisely what he has done. Let me remind you of a key focus as we think about corporate cultures: attracting and retaining the workforce of today and of the future. Employees join companies, and they leave bosses and cultures.

Let’s begin with some context: Sarillo’s restaurants are each approximately 9,000 square feet and are equipped to seat up to 350 guests. He describes the atmosphere as very intense, very busy and conflict-prone. Further, when I asked Nick how his young employees would describe him as the president and founder, he said they would likely say, “I’m a nice guy, I do not accept average performance, and I expect every employee will be connected to a bigger why, to be invested in creating a ‘Nick’s Experience.’ We have clearly-defined values and processes that integrate our values into every action and interaction. Before any prospective employee is even given an interview, they are asked to read about our purpose and values. If they feel they are not a fit, they are asked to not interview.”

Sarillo’s view of young workers’ work ethic? He believes emphatically, “They DO have a work ethic. What may be different is that they have high expectations of leaders. While command and control leadership was effective for a long time, we are now in a conceptual age where intellect and creativity need to be unleashed. In our culture, we’re all equals.”

What kind of culture is Sarillo building? I’ll touch on some of the highlights below then conclude with the measureable results.

Highly-trained team members

This starts with a comprehensive orientation. In addition to job-related skills, employees are given opportunities to simulate what they would do in situations where cultural values are not being demonstrated. In the future, when a situation occurs, they have already been equipped with how to handle it.

Beyond orientation, team members can move through “rookie” levels to “pro” and then to “expert.” Each level earns them a raise and a different colored hat! Nick shared that the biggest resistance from other organizations is that Nick’s spends too much time on front-end training. Really? The result is that 96 percent of employees are still on board a year later…a clear investment in retention.

Perpetual feedback

In lieu of annual performance reviews, Nick’s has a clearly-defined method of giving feedback, of keeping employees engaged in their own performance. At the end of every shift, an employee answers the following two questions: What did you do well? What would you do to enhance your contribution? Throughout organizations, feedback is the most underutilized tool of a leader. Perpetual is good!

Dealing with low performers

At Nick’s, everything ties to the value of the Nick’s Experience. When expectations are not met, an employee has three questions to answer: 1. What is your understanding of the expectation? 2. What do you need to do differently? 3. Can you do this? When an issue needs to be addressed a second time, the employee is asked to commit these things to writing, and the third time, the employee is let go. As Nick says, “There are never any surprises.”

Contemporary management

One of the biggest challenges at Nick’s has been earning the buy-in of managers who had been there longer than a couple of years, those who were stuck in a command and control model. The culture requires managers who can let go of egos and trust the team to do what they need to do. As you might imagine, some of the managers had to go.

The energy expended at Nick’s to create and sustain this culture is palpable. What are the results? While pizza industry turnover is approximately 200 percent per year, the turnover in Sarillo’s restaurants is just 20 percent. With an estimated cost of $1,500 to interview, hire and train a new employee, the annual cost savings at Nick’s could be estimated at $250,000. While the numbers are impressive, it is even more impressive when you take a moment to think about what’s going on here. Employees are happy, and they’re not going elsewhere. Almost 70 percent of Sarillo’s 180+ employees are under the age of 25.

In an earlier column, I suggested organizations build their business model to fit their workforce. This is precisely what Sarillo has done.

In contrast, I spoke with an HR manager recently from a company in South Carolina. She said, “During the past 12 months, we have hired primarily Gen Y employees….and we have lost almost all of them.”

Do not underestimate the need your Gen Y employees have to be a part of something intentional.

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