Study

Low Employee Turnover
With typical industry margins between 4 -7%, many restaurant companies must closely monitor costs in order to remain profitable (Nessel). Since salaries consist of the second largest cost within this industry, employee management becomes quite important. One aspect of employee management is turnover. Turnover costs for one employee are estimated to be 30 – 150% of their employee’s annual compensation (PeopleLink). Table 1.1 (See Appendix) are examples of both direct and indirect costs associated with high employee turnover. Because of these costs, organizations such as the Hard Rock Café, place a large emphasize on maintaining a low turnover. By incorporating efficient Human Resource strategies, the Hard Rock Café is able maintain a turnover rate that is half the industry average of 140% for hourly positions and 40% for management (Deitch). These Human Resource strategies are outlined below.
Thorough Screening in Hiring Process
One of the main issues, as discover by Harvard University, was that 80% of turnover is attributed to hiring mistakes (Campbell). The study further suggests that companies tend to address qualifications and experience, while disregarding personality profiling to determine the right fit. In the case of Hard Rock Café, the Human Resource department bases their hiring decisions not only on experience and qualifications, but also on the candidate’s interest in music and their ability to tell a story. These decision criteria ensure that their employees’ interests and values align with the company’s, thus ensuring the right fit.
In addition, the company holds the philosophy to hire only those who are best qualified instead of just those who are available. This philosophy demonstrates that the Hard Rock Café’s hiring process attempts to attain the employees who are the right fit and, as a result, avoid high turnover associated with hiring mistakes.