Fierce competition for talent has had severe consequences for several pubs in the past year. And a key question for gastro pub and bar owners alike is: how do you attract and retain the best chefs? In this feature, Gareth Ogden, Partner at Chartered Accountants haysmacintyre, suggests some New Year’s resolutions for those pub owners who are struggling to find or hold on to their head chefs.
One of the most regular complaints of pub owners is that they invest heavily in the training and development of their key staff, only to see them move on to new opportunities as they leverage off their new-found skills. But if you heed the words of Richard Branson, “Train people well enough so they can leave. Treat them well enough so they don’t want to” then this should not be an issue you suffer.
Train people well enough so they can leave. Treat them well enough so they don’t want to.
After all, the success of a pub comes down to its people. For those offering food, having a quality chef who understands the local market and can source the best food is key. Equally important, they should have a head for figures and understand the importance of cooking up a good margin as well as a great menu. Once the right person is identified, holding on to them should be a top business priority.
Naturally, financial rewards are fundamental to both attracting and retaining chefs. The basic salary offered must be competitive and should therefore be benchmarked against rival employers. A “negotiable” salary level (within reasonable limits) can often heighten applicant interest at the interview stage and more importantly encourage buy-in from the candidate if they are made to feel they have had an input into the agreed terms. Bonuses, regular pay reviews, a good pension and other sundry benefits should also be explored in order to maintain morale and encourage loyalty.
Carrot and stick
One way of motivating staff, whilst at the same time aligning their effort with the goals of the business, is to offer a well-targeted incentive scheme. There are a number of important attributes to consider here.
An effective incentive scheme must be clear and understandable, challenging yet achievable. There must be buy-in from the individual concerned who should feel that they genuinely have the capacity to influence the outputs by which their performance is measured, within the agreed timescale. Delegated responsibility can be important for head chefs in achieving these targets including allowing creative freedom in the design of menus, recruiting their own team and being personally involved in the branding of the restaurant, even being the focus of that branding themselves.
The key metrics upon which any reward is based should then be synchronised with the interests of the business owners – be it maximising site EBITDA (operational profitability) or improving gross margins. The metrics may also extend beyond the financial – for example the number of covers or the quality of customer feedback.
The scheme’s structure and targets should be reviewed regularly and amended if appropriate. Continual non-achievement under an incentive scheme, due to unrealistic demands or circumstances beyond the control of the individual, can be demotivating and counterproductive.
A basic salary bonus scheme is a simple and effective means of rewarding excellence. The benefit is little or no upfront cost and the ability to set relatively short term objectives for more immediate improvements. Regardless of performance outcome however, a salary bonus scheme is only effective for the period to which it relates. As the measurable timeframe expires, so might the commitment of the head chef.
Equity based remuneration
An alternative way of giving chefs a vested interest in the pub’s performance, whilst promoting longer term commitment, is to offer them a stake in the business. A share option scheme can provide individuals with the opportunity to purchase a certain number of shares in the business at a fixed price, sometime in the future. The rights to buy shares can be based on certain performance criteria – as with a salary bonus scheme. However, by providing the opportunity to acquire equity, the individual is tied into the maximisation of the long term “market value” of the business – until such time as this value can be realised by a sale of shares. Whilst there is an upfront cost for setting up these schemes, those such as the Enterprise Management Incentive (“EMI”) can be pre-approved by HMRC and attract generous tax advantages for both individual and the company.
It’s not all about the money
Once you have incentivised your chef to think like business owners by aligning their goals with those of the business, it is equally important to create a first class working culture and environment. This is both an internal and external consideration. Keeping the pub and the brand at the forefront of its market, by means of an effective social media platform and a focussed marketing resource, is a motivating force to the staff by association. Regular and high quality training and the maintenance of exemplary standards is also a pre-requisite for a happy and effective team.
So, with the New Year just around the corner and many employees resolving to start afresh, these incentivisation methods should be the bread and butter for any gastro pub or bar looking to retain their key personnel.