Doing some light reading on the airplane, I came across a story about Chick-fil-A, the second largest quick service chicken restaurant and the 25th largest restaurant chain in the country. The story profiled its founder, S. Truett Cathy and his keys to creating a successful business.
The first key was to cultivate the desire to succeed. As Cathy put it, "A 19 year old can outperform a Harvard graduate" simply because he or she is willing to do the work.
The second focused on employees and the investments a company must make in its employees. As an initial matter, in case you have never been to a Chick-fil-A, it is not open on Sunday. Cathy explains that this policy has roots in his religious beliefs. As a result one may think it has no connection to employees. However, Cathy explains that Sunday closures also have importance for creating a better work enviornment. He claims that closing on Sundays--and ensuring that all franchises close on Sunday--attracts the caliber of people who appreciate such a gesture. Second, Cathy focuses on investing in people early. Hence, the company provides college scholarships to employees--something many other companies do. However, the company also seeks to give all of its employees the ability to have some ownership-type interest in the company. Not through stock options, but through operating franchises. To that end, the company invites any employee interested in operating a franchise to its corporate headquarters to learn about the company. Chick-fil-A also seeks to make franchises affordable in a variety of ways. And according to the article, franchises are typically only $5,000. Apparently as a result of these efforts, 65% of Chick-fil-A franchisees worked for Chick-fil-A in high school or college. Also, employee turnover at Chick-fil-A is only 3.5%. In Cathy's view these extra efforts with employees translates into more satisfied employees, customers and ultimately a higher profit.
I found the strategies Cathy employed interesting and refreshing because they moved beyond rhetoric to real policies.
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8345157d569e200d834635a4769e2
Links to weblogs that reference The Profit in investing in employees:
1. Posted by Raffi on November 8, 2006 @ 14:31 | Permalink
Do you remember where you saw the article?
2. Posted by Kate Litvak on November 8, 2006 @ 20:51 | Permalink
I just love it when rich people say that employees are supposed to “appreciate” the “gesture” of not being able to work on Sundays. Only someone who never held a low-wage job can come up with this nonsense. Real low-wage employees, like I once was, know that working on Sundays is an opportunity, not a punishment. If you spend the rest of your week doing something else (going to college, holding another job, taking care of small child, etc), your only chance to make some extra money is to work on weekends. If I couldn’t work on weekends (and late evenings), I would not have been able to go through college. Thank god this silliness hasn’t yet spilled over from a small group of quirky businessmen to policy-makers.
3. Posted by Jake on November 8, 2006 @ 21:12 | Permalink
Kate's point loses me somewhere. Some people appreciate the gesture of having Sunday off. Those people may be attracted to Chick-Fil-A. Other people, like Kate, appreciate the opportunity to work on Sundays. If an employer wants to shape his business policies so as to attract the former category of workers, at the risk of losing the latter category, what is wrong with that?
I assume Kate does not challenge the right of some people to value having Sunday off.
So where is the "silliness"?
4. Posted by Larry on November 8, 2006 @ 21:17 | Permalink
I would have thought someone teaching in the Bible Belt would have a grasp of the concept - and the rationality - behind this business decision.
5. Posted by Kate Litvak on November 8, 2006 @ 21:35 | Permalink
Not being able to work on Sundays is not a "gesture" and not a gift -- it's a restriction. If Chick-Fil-A wants to reduce its worker turnover by employing only non-college-bound church-goers who have no other weekday obligations and no competing careers, that's fine. What's not fine is to present it as a benevolent "gesture". Stupid employees, too much choice is bad for them.
6. Posted by Jake on November 8, 2006 @ 21:40 | Permalink
Now I see where the silliness is.
7. Posted by Kate Litvak on November 9, 2006 @ 5:00 | Permalink
An economist would say that the restriction against working on Sundays is not an "investment in employees" -- it's a sorting mechanism.
8. Posted by Jeff Lipshaw on November 9, 2006 @ 6:24 | Permalink
Oy vey. And if I'm shomer shabbat? And can't or won't work on Saturday? Well, I guess the chicken is all tref anyway.
9. Posted by Larry on November 9, 2006 @ 7:32 | Permalink
Gosh, I didn't realize Chik-Fil-As existed solely in places where they are the lone employer and thus are preventing people from working on Sundays. If people want to work weekends, they can do so at Dairy Queen.
Again, for someone living in the Bible Belt, you sure underestimate the effect of religiosity. What's wrong with something being mutually beneficial to the employer and the employee? But I guess those non-college-bound, church-going, fake low wage employees are just too stupid to realize that a company valuing their religious convictions is really just taking advantage of them. Stupid employees, too much choice in where they decide to work is bad for them.
10. Posted by Employment Finder on January 21, 2008 @ 8:11 | Permalink
A compay can find some great beneift if they invest in long term employee benewfits as they will stick for longer persiopn of time than people with short term
| Sun | Mon | Tue | Wed | Thu | Fri | Sat |
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |||
| 5 | 6 | 7 | 8 | 9 | 10 | 11 |
| 12 | 13 | 14 | 15 | 16 | 17 | 18 |
| 19 | 20 | 21 | 22 | 23 | 24 | 25 |
| 26 | 27 | 28 | 29 |
