Two Ways to Successfully Manage Minimum Wage Increases

By Brian Murphy, Foodable Contributor

2014 saw a minimum wage increase in 14 states and several cities throughout the nation. California and Massachusetts lead the way with an increase from $9 to $10, and more increases are imminent. The conversation is all over the news, in politics, and definitely on the mind of business owners and restaurateurs throughout the nation. Fear and worry is the knee-jerk reaction, as the already small profit margins in the hospitality industry appear to be squeezed out. The industry is an industry of people, on nearly every level. And those people are going to cost more in the next few years. California already has a plan to get to a $15 minimum wage. The sky is not falling. At least, it doesn’t have to.

There are two ways that wise business owners will recognize as more important than ever and are late to the pity party if they haven’t already begun to plan for the future. Management and hiring are the two ways to make a tremendous impact on the business and perhaps stop the potential sting of higher employee wages.

Hiring Like It’s the Last Time

A manager that spends less time hiring and more time managing is a more effective manager. Considering the staggering numbers that ERE Media reports that it costs 30-50 percent of the annual salary to replace entry-level employees. This may seem high, but all of the factors and aspect of recruiting, lost productivity, and training are examples of how this could possibly be the case. Even if numbers for some establishments are half of this, the cost of an employee making $10 hourly and working 30 hours weekly would cost $2,340-$3,900 to replace. These costs will snowball if hiring isn’t done well the first time and multiple people move on or are terminated.

There is a wealth of hiring and interview advice out there, but often the advice is appropriate for the immediate hire, like when the cook calls out for the fifth (and final) time and they are scheduled for the next six days. Reacting to situations and hiring accordingly is inevitable at times, but building a network of candidates is doable. Hiring managers need to understand a few key things about the business in order to be especially effective.

What is the culture like at that establishment? Understanding this completely is essential if new hires are going to be the right ones, and finding out if candidates understand the culture and truly want to be a part of it comes with practice and a lot of reflection. Movement beyond the basic interview questions and a trusted employee’s reference has to happen in order to be successful and get a real read on a candidate. Time needs to be put into the process, and methods proven successful at the large corporate business level should be considered.

Perhaps a panel interview or a peer interview in addition to the one with the hiring manager is in order. Should formalities like this not be in the cards, then a long conversation definitely needs to happen. Setting a candidate at ease by interviewing in a conversational fashion and also noting non job related comments during the process is an extremely powerful tool that can be quite telling. Candidate complains too much? Perhaps the negativity or perceived sense of entitlement isn’t something you would like to bring to the rest of the team. The right questions and maneuvering of conversations can get potential new hires to offer up anecdotal evidence of their work ethic and habits, but it takes practice and tremendous listening skills.

Managers Need to Really Manage

When the hiring is out of the way, keeping staff on hand should be at the top of a manager’s list, understanding that it is the people working for the organization that make it all happen. Only true leaders should be thrust into this position, and not because it is the next logical step and they have been on the staff for several years. Not everyone can manage, even if they know everything inside and out. Managers need to internalize the fact that they are on stage, all the time. They are always leading, and it can be exhausting, but they cannot lose sight of what their job is—to lead the people of the establishment to do the best job they can possibly do. This means setting all employees up for success and offering a safe place for them to not only thrive, but make mistakes once and learn from them. The first time a mistake or policy infraction goes unnoticed or unmentioned is when the employee starts to question the integrity of the organization and the leader.

Extra attention to job descriptions and adherence to policies is the only way to be successful and perhaps still keep the profit margin doable given the higher wage environment. Cutting some hours here and there will likely be inevitable, but it can’t hurt the rest of the staff. The restructuring should affect the rest of the staff, and planned well, that can happen in a positive way. Getting team input into the restructuring is important, as it can be quite empowering for an employee to have their voice heard in tough times. Redistribution of tasks so every position’s down time is spent helping the team in some way, decreasing the chance of the stressful situations that blindly cutting hours leads to.

Plan ahead. Listen. Empower. Lead. Stop making reactionary moves, or the hiring process may never end.