Tuesday, February 11, 2014

Psy/435 - Real World Problems in the Restaurant Industry



Real World Problems in the Restaurant Industry
The bar and restaurant industry is the one with the highest level of failure. Around 60% of restaurants that open in the United States will have their doors closed within the first year, and the statistics for bars are not much better. When it comes to a popular vacation destination, bar and restaurant owners must be aware of the business fluctuation that will occur throughout the year. In the small town of Stateline, Nevada, on the south shore of the beautiful Lake Tahoe, the XX Bar and Grill can witness firsthand the difficulties that small business bust face when trying to succeed. South Lake Tahoe has recently been voted the best ski destination in the country, but the area is dealing with a serious issue: it won’t snow. Local businesses are suffering, because tourists are cancelling their ski vacations, or relocating to snow resorts in other areas of the county that are getting more snow.
The XX has been in the area for over 21 years, and although most of its business in the winter and summer come from tourists, it also has a strong legion of local loyal customers, who are attracted by the restaurant’s diverse menu containing burgers, pizzas, sandwiches, Mexican food, and barbeque. The owner, xx., explains that although the restaurant seems to be really successful in the busy months (summer and winter), it suffers from the lack of costumers during the fall and spring.
The Interview
During an interview, xx. was asked to describe what he believed were his biggest problems with the administration of the restaurant, to which he explained that job retention could use some improvement, as well as hiring appropriate candidates. Over the past year, the restaurant has hired over ten waitresses, bartenders and cooks, to be added to the existing staff of around 20 employees. Most individuals who work in the restaurant today have been there for over 5 years. All the ones who have recently been hired end up leaving (either quitting or getting fired). The hiring costs at the restaurant are not necessarily expensive, but are time consuming. The bar manager has developed an interview process that she believed to be effective, but it has proven to be quite ineffective. During the interview process, she would ask the bartender/waitress candidates questions about their experience and knowledge about making drinks, serving food and working the computer. What she figured out was that most candidates would lie, and answer the question with what they believed was what the manager wanted to hear. Their dishonest is usually only exposed during the 2-week training period, when the newly hired individuals can’t keep up with the work. At this point, the owner and manager must decide if they will keep those employees and give them a chance to prove themselves, or count their losses and fire them, having to start the hiring process again.
The other issue, although related to the previously explained one, is job retention. Even when employees pass their probation face and secure a job at the company, many employees end up leaving the company. In a touristic town, there are many restaurants, so competition is always present. During the slow season, the XX isn’t able to guarantee to the new employees a full time position, since the ones who have been there longer have priority over shifts. Because of this, employees are tempted to search for new job with better security. Many times employees end up getting a second job, which is accepted by the XX, but fail to successfully maintain both jobs. Also, Tahoe is a very transitional area, in the sense that it is rare to find someone who was actually born there. Most people move to the area, live there for a few years, and move again to somewhere new. Because of that, the restaurant is always losing good employees who are moving away.
After the interview with the restaurant owner xx., it was possible to see that although he is doing a great job running the restaurant, there are many aspects of his business that would use the advice from an I/O psychologist. The restaurant industry is the one with the most unstable workforce when compared to other retail industries (Zuber, 2001). The interview process at the XX, for example, could use some improvement. An I/O psychologist would suggest developing a process where the applicant’s skills are actually tested, instead of a question and answers format. This way, the manager can evaluate if that individual will be able to do the work or not, before hiring. In the restaurant industry, most part of the employee turnover occurs in the first 30 days, most likely because of poor selection procedures (Rothwell, 1992).
When it comes to job retention, there are several ways the restaurant could make itself a more desirable and satisfactory work place. “Employees leaving after 60 days generally do so because of inadequate training and a failure on the part of management to motivate and provide growth opportunities” (Dermody, Young, & Taylor, 2004, p. 4). Monetary awards, paid vacation days, promotions, and encouraging words are all ways to make sure that employees are satisfied and won’t be looking for other jobs. TheXX provides a great environment for work, as the bosses are nice and easy to work with. However, management could try harder to make sure that all employees have a share amount of shifts on the slow season.
Conclusion
            The XX has been a successful local business, but as most small businesses, it would benefit from the advice of an I/O psychologist. The cost of this professional would be balanced by how much the company would save with their hiring and training costs. “Hourly workers are motivated by cash, and can most effectively be motivated by incentive pay programs that have the potential to increase cash wages” (Frank, p. 549). In other words, the challenge of motivating workers in the restaurant industry can be conquered by making sure employees feel appreciated.




References
Dermody, M. B., Young, M., & Taylor, S. (2004). Identifying Job Motivation Factors of Restaurant Servers: Insight for the Development of effective Recruitment and Retention Strategies. International Journal Of Hospitality & Tourism Administration, 5(3), 1-14. doi:10.1300/J149c05n0301
Frank, R. (1984). Are workers paid their marginal products? American Economic Review,74 (4), 549-572
Rothwell, S. (1992). Productivity improvement through reduced labour turnover. Long  Range Planning, 15, 69-73
Spector, P. E. (2012). Industrial and organizational psychology: Research and practice (6th ed.). Hoboken, NJ: Wiley.
Zuber, A. (2001). A career in food service: High turnover, staff in flux leaves morale low, training costs high. Nation’s Restaurant News, 35(21) 147



Appendix
Questions to the X owner:
1.      For how long has the restaurant been open?
2.      Do you have anyone who helps you run the restaurant or do you do it all by yourself?
3.      Please name the main problem you have to face while running the restaurant?
4.      Do you have any other areas that could use improvement?
5.      Overall, would you say you are satisfied with the way your employees do their job?
6.      What is the hardest aspect of trying to coordinate a staff of 20 people?
7.      Do you think you would ever hire an industrial organizational psychologist?

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