Question: Turnover-the rate at which employees leave their jobs-is notoriously high in the fast-food industry. According to the National Restaurant Association, more than half of all managers in limitedservice restaurants change jobs each year, and turnover among lower-level employees is even higher. So it's rare to find a pizza franchise in which employees are so loyal they name their children after the boss. But that's exactly the kind of thing that happens at Dave Melton's Domino's Pizza franchises in New York City. A newspaper reporter recently found Melton preparing his five Domino's stores for Super Bowl Sunday with his entire staff of about one hundred employees plus twelve former employees who were happy to come back and help on the chain's busiest day of the year. Melton knew business would be "crazy" for the two-and-ahalf hours of the game, but he was confident, too. Incredibly, most of his team had been with him long enough to have worked through the Super Bowl together several times already.
All Melton's managers started as minimum-wage delivery workers who worked their way up and have now been with him for at least six years, some for twice as long. They earn as much as $70,000, partly by sharing in the profits of their stores, which each earn about $1 million in annual sales. Regular employees are just as committed to their jobs. Asked why, they respond that Melton treats his workers with dignity and respect. For instance, Melton and his wife encouraged one kitchen worker to take a city food safety course. "I was a little skeptical," she said. "I don't like tests. But I took it and I passed. I did well. I got a raise and I got a bonus for passing the test." And, following one of his basic employment policies, Melton promoted her to assistant manager. Another employee, an immigrant from Pakistan, started as a delivery worker and now manages one of Melton's stores. Someday he hopes to open his own. "My No. 1 career goal is to be in my own business and bring my family here," he said. And then there's the employee from Burkina Faso, who has been with Melton for many years and named his son after him. How does Melton account for his success at retaining people in such a fluid industry?
Domino's provides its franchise operators with at least a week of management training and continued support, but Melton's results are special. He admits his first year as a franchise operator was filled with hiring mistakes, often the result of hasty decisions. Some employees were disruptive, argued with customers, had high absentee rates, and even stole from the firm. Melton quickly learned how to do better. "You are on your feet," he says of the jobs in his business. "It is long hours. It takes a certain kind of person to love it"-someone who can work fast and cheerfully. Most of his hires now are referrals from current employees, who come from many countries, and he devotes time to training them, setting goals with them, sharing information about how the stores are faring, and paying bonuses for outstanding work. "My role is being a resource, providing motivation, inspiration, and compensation," he says. "This is one of the places where so many people get their first experience in America. It is fun exposing them to the way capitalism and business in America works."16 For more information about this company, go to www .dominosbiz.com.
1. What are some of the strategies Dave Melton uses to retain good employees?
2. What do you think are the advantages of Dave Melton's hiring strategies? Can you think of any disadvantages?
3. What effect do you think Dave Melton's compensation strategies have on his firm's success?