Case Study:
Outsourcing Training Serves Up Happy Diners at Golden Corral (Adapted from BPO Outsourcing Journal, September 2001) Providing good service to your customers is vital no matter what type of business you're running. But for managers in the food services industry, where increased competition has led to the challenge of staff retention and higher customer expectations, supplying a good service becomes increasingly tough.
This is where employee training has become instrumental. The outsourcing of training services among food services companies has grown as a result. Doug Higdon, vice president (operations west) for the national restaurant chain Golden Corral Corp., believes the move to outsourcing has been in part due to technological advances, such as computer and Web-based methods that provide both faster and more efficient staff training.
The need to improve and redevelop training methods has always been a hot button for Golden Corral, which is headquartered in Fayetteville, North Carolina. "Before, we used videos and pencil and paper. But we needed a better means of training to help reduce the retention problem and improve customer service," he says.
Another important reason for outsourcing was the ability to monitor the process. Although the traditional methods did train workers, the company had no tracking method to determine whether the training had actually been accomplished. Higdon knew outsourcing using technologically improved methods would be able to track the training of 10,000 employees in more than 450 Golden Corral locations nationwide. "We wanted to find a partner to provide a software platform that was user-friendly, affordable and easy to make changes to," he explains.
Supplier Assigned to Develop Training Kiosks:
Golden Corral began its research in 1998. After a year of research, which involved meeting with different providers to see their training programs, Higdon identified a handful of firms. He finally outsourced training to Star Services, a Cincinnati, Ohio technology company introduced by one of the Golden Corral's franchisees. Star Services’ assignment: to develop a computer-based kiosk providing training with content and video material that allows staff to interact using a touch-sensitive screen.
The new training system took almost a year to develop. "We tested the technology in a number of company restaurants for several months to work out glitches. Then we introduced it voluntarily. Today it's a required part of the system," Higdon says.
According to John Blank, vice president of Star Services, the roll-out of the product was problem free. "Because of excellent communications between Golden Corral and Star Services, the design and programming went smoothly and were completed in the time parameters set," he says.
Looking back, Higdon says the experience working with an outside company was a success. "I think it involves more than outsourcing training. You have to find a partner outside your company that can help you do what you do not have the expertise to do internally. In our case, our goals were in sync. I personally believe we have gone in the right direction," he explains. Blank says that most restaurants that build computer-based training applications inhouse concentrate only on the daily operations. Star Services, on the other hand, specializes in software for the human side of the business. "We concentrate on applications such as pre-employment testing and multimedia training. We also have the infrastructure to handle Web-based software that would not be cost effective for most restaurants," he explains.
Outsourcing Aids Employee Retention
Upgrading employee training is extremely important to both service and retention in the restaurant business. "The basic need from the companies we work with is simple: better customer service. And we've found that the best restaurants hold onto the best employees because they monitor what's happening and provide training on a regular basis," says Isadore Kharasch, president of Hospitality Works Inc., a 14-year-old food service consulting firm based in Deerfield, Illinois.
Hospitality Works offers training and development services for kitchen and service staff and managers at all levels. One CD-ROM product called Silver Service saves time by providing good introductory training for both service and kitchen staff, which he says can then be followed up with management interaction.
"It has very short video training clips and is simple to use. A manager can introduce new skills or topics to an employee via the CD-ROM and then focus on those skills with them later that day. For kitchen staff, products such as this can enhance the one-on-one training later on," he explains.
But beyond choosing the right partner and adapting to new training methods, Kharasch believes it's the continuation of training in the services industry that can be a challenge. "What is difficult is the long-term follow-up," he says. "We find that restaurateurs typically start off strong but get so caught up in the day-to-day operations that new programs tend to get lost."
Outsourcing Improves the Dining Experience:
For Higdon, upgrading employee training, particularly in industries where turnover is high, is vital: "It should never end," he says. "The goal should be continuous improvement." In achieving this, he advises even smaller businesses in this sector that outsourcing is the best solution. "It's very cost prohibitive to get the expertise you would need inhouse which is why companies are moving more and more towards outsourcing." Kharasch agrees. "While we are nowhere near the point where technology can do all of the training, the hospitality industry is still a customer based industry. I believe that the trend we have experienced in outsourcing our services will continue to grow," he says.
According to Judy Irwin, Golden Coral’s vice president of human resources and training, the relationship with Star Services is not likely to wane: "We will continue to innovate and find ways to make the training fun, effective and easier for our team members because it helps with retention. We see it as directly impacting the guest experience in our restaurants," she explains.
Question 1: What are the reasons given in the case for outsourcing of training services by restaurants?
Question 2: Explain the Transaction Cost Economics framework and use it to analyse the case for or against outsourcing of training services by restaurants.
Question 3: What are the weaknesses of the Transaction Cost Economics framework in the analysis of outsourcing of training services?
Question 4: What could be the possible pitfalls of outsourcing training services in restaurants?
Question 5: In which case(s), do you think that it would not make sense to outsource training services?