HBR Blog: Case of Performance-based Compensation at a Restaurant

Our Summary: A post on HBR covers a case where performance-based compensation was deployed at a restaurant.  The system tracks waitstaff performance in terms of customer sales and tips.  It then adjusts scheduling to reward top performers.

This deployment is considered a success with a 2-3% increase in revenues.

Get Employees to Compete Against Each Other
by Serguei Netessine and Valery Yakubovich

By using technology to create a form of the leaderboard typical in sales organizations, innovative firms are infusing their workplaces with competitive spirit. Both companies and high-performing employees stand to gain. We call these firms “winners take all” organizations.

Instead of distributing work evenly among employees, winners-take-all organizations allocate according to merit: Better workers take more assignments, and the others get what remains. The model exploits the fact that workers differ dramatically in productivity because of such factors as skills and attitude, which can be hard to assess when hiring. Over time, it may induce low performers to quit, leading to a higher-performing workforce and a constantly rising bar.

Servers at the Massachusetts-based restaurant chain Not Your Average Joe’s always know how they’re doing relative to their colleagues, owing to a cutting-edge workforce management system Muse provided by Objective Logistics, Inc. Rather than forecasting demand and staffing a restaurant accordingly, as most systems do, the software tracks waitstaff performance in terms of per-customer sales and satisfaction (gauged by tips). Highly rated servers are given more tables and preferred schedules. By shifting work to its best servers, the restaurant hopes to increase profits and motivate all employees.

We talked with the company’s CEO, Stephen Silverstein, who founded the firm in 1994 and Colleen Cushman, one of the restaurant’s servers in Beverly, Massachusetts. Here’s what they had to say about the system.

Read the entire article on HBR Blog Network

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