Human Assets: Search Party

The restaurant labor pool is shrinking, so Chili's recruits managers from outside the industry.

By Donna Hood Crecca, Contributing Editor -- Chain Leader, 5/1/2003

Todd Diener, president, and Jan Barr, vice president of human resources for Chili’s

Jared Vogt, general manager of the Chili’s restaurant in St. Charles, Ill., is a former attorney and sales manager. Ira Vaughn worked as an operations manager for Federal Express before joining Chili’s as general manager of the Olive Branch, Miss., location last November. Hiring non-industry people for unit management positions is part of the expansion strategy at Brinker-owned Chili’s Grill & Bar. The chain began actively recruiting from other industries last year to satisfy its growing need for unit management.

Chili’s, which typically opens 35 to 40 restaurants annually, opened 52 company-owned restaurants in 2002 and will open 65 this year, 65 to 68 next year and 70 to 75 in 2005. Plus, 20 to 25 franchised units will open annually. To staff company restaurants, allow for turnover and have a buffer against unforeseen occurrences, the chain estimates it needs 1,200 new unit managers each year through 2005.

Twenty percent of Chili’s unit managers are promoted from within the hourly ranks; the remainder has traditionally been recruited from other casual-dining concepts. Chili’s hopes to recruit as much as 20 percent of new managers from other industries with its new initiative.

“We realize we can’t rely solely on other industry companies to provide the talent needed to build 250 restaurants in four years,” says Jan Barr, vice president of human resources at Dallas-based Chili’s. “We have to look outside this industry.”

Chili’s appears ahead of the game on a trend that will undoubtedly affect all restaurant operators. The foodservice industry will need to replace workers in 5.2 million positions and fill 1.6 million new positions between 2000 and 2010, according to the Bureau of Labor Statistics Monthly Labor Review (November 2001). At the same time, the growth of the U.S. labor force is slowing from a high of 2.6 percent annually in the 1970s to a current low of 0.2 percent.

One Step Ahead
The incidence of out-of-industry management hires by the 60 concepts tracked by People Report, a Dallas-based human resource benchmarking firm, increased from 8 percent in 1996 to 16 percent, but has remained stable at 16 percent from 2000 through 2002. “Operators are considering outside talent more often, but none are making the strategic commitment to sourcing from other industries that Chili’s is,” says People Report founder and CEO Joni Doolin.

Broadening the search effort has other benefits, says Chili’s President Todd Diener. “We have to get beyond the recycling of managers. This industry is so incestuous, and that’s not always good,” he argues. “We’re committed to diversity at Chili’s, and looking into other industries gives us access to more women and minorities and affords us the diversity of thought and skill sets that will keep Chili’s growing.”

Barr began the out-of-industry recruiting strategy by first looking within Chili’s itself. She spoke with heads of departments such as marketing and finance that often find talent elsewhere. She then huddled with multiunit and unit-level managers about how Chili’s and casual dining are perceived by those outside the industry.

“There were no big surprises,” Barr reports. “The perception is that managing a Chili’s means flipping burgers, taking out the trash, working tons of hours for low pay while managing a very young work force. While some of that is true, there is no perception of the competitive compensation, flexibility of scheduling and quality of life we offer at Chili’s.”

A Stronger Message
Barr and her team also investigated the pros and cons of working in the industries that Chili’s planned to target. Those include grocery, mass merchant, home improvement, home good, drug and convenience retail, as well as hotels, sales organizations, health-care management and franchised retail concepts. That information helped Chili’s develop a new “sales pitch” for recruiting.

“We’ve gotten away from ‘run a restaurant’ messages and more toward ‘run a business,’” Barr says. “We are communicating the flexibility of scheduling, the opportunities for career development and advancement, and the competitive compensation piece, which surprises a lot of people. We also communicate the fun, energetic atmosphere at Chili’s that is the core of our culture.”

Chili’s uses the same vehicles for recruiting outside and inside the industry—Internet sites, trade journals, outplacement services, job fairs and college-recruiting programs. But the sales pitch now varies according to the target audience. For example, ads placed in retail or health-care journals highlight flexible scheduling and the opportunity to run a business.

“Retail managers are accustomed to grueling schedules. Maybe they’re working at a Wal-Mart where they run a department but don’t have a lot of say in the overall operation of that store,” says Barr. “Health-care management workers are in a 365/24/7 environment, typically in very large organizations. We’re offering a different quality of life and a chance to steer the ship, and we advertise that.”

Heeding the Call
So far, the message is being heard, at least by some. Barr estimates that since late 2001, Chili’s has hired more than 150 unit managers from industries including airlines, home-improvement retail, meat processing, supermarkets and mass merchants. Barr anticipates that the new approach to marketing Chili’s as a potential employer, coupled with the relative stability of the casual-dining segment and Chili’s own positive performance, should enable the chain to hire over 200 managers from other industries in fiscal year 2004, which ends in June 2004.

“Once we get into conversations with these folks from other industries, it’s often the economics of this industry and the absence of layoffs that really get their attention,” Barr says. “What keeps them in the process is their discovery that Chili’s really is different than they thought, and that managing a Chili’s is a real job.”

While Barr estimates the cost of hiring non-industry personnel is on par with recruiting from within the industry, she acknowledges that more time and energy goes into the process. She says more fact-finding conversations take place, which is necessary for both sides to ensure a complete understanding of what the other has to offer.

Once hired, out-of-industry managers undergo the same management training program as industry hires, but those involved in the process are alerted to the trainee’s background in case extra help is needed.

“The training program is mapped well for anyone who comes in,” says Vogt, the GM in Illinois. “It’s pretty comprehensive and adaptable to anyone from any industry. I had no problem mastering the material.”

Fitting In Fine
Anecdotal reports indicate that non-industry hires acclimate quickly to Chili’s system. In fact, the company benefits from the sharing of best practices in areas such as inventory management, cost control and labor scheduling.

“We can teach them to cook a hamburger and understand the financials of unit management,” says Diener. “The functional training is here and so is the ongoing leadership development. What we are doing is finding good leaders, in any industry, that can motivate a team of people to run an operation successfully, and we’re teaching them the restaurant business. A bonus is that we also learn from them in the process.”

Retention of those managers appears to be consistent with industry hires: Overall unit management retention averages 21 percent at the chain; general manager turnover is 12 percent. One reason non-industry managers are tracking with veterans may be that Chili’s takes time during recruiting to clarify employment expectations.

“There were no big surprises,” says Vogt, who left a sales-management position with Pasarelli Foods in Chicago to join Chili’s. “OK, maybe a few good ones, like the fact that Chili’s actually made good on the quality-of-life promises. I had prepared myself for hours that are much worse than they actually are. I was also pleasantly surprised with the compensation package.”

Vogt personally approached Chili’s three years ago, seeking a job that would utilize his management experience and culinary degree. He was surprised by the company’s openness to his application despite his lack of restaurant management experience. Today, he says Chili’s also made good on its offer of letting him run a business. “I’m amazed at the number of large and small decisions I make that impact the bottom line,” Vogt says.

Vaughn was supplementing his Federal Express income as a shift server at Chili’s when an area director approached him about joining management full-time. “I loved Federal Express, but the quality of life just wasn’t there,” says Vaughn, who worked for the Memphis-based shipping giant for seven years before joining Chili’s as a manager.

Other deciding factors for Vaughn included Chili’s positive financial performance and quality-of-life issues. “The restaurant business is stable. With the threat of war, the shipping industry is not. Chili’s is strong—people will eat out even if we are at war—and there are opportunities to advance. Plus, I’m not working insane hours,” he adds. “I work 50 to 55 hours a week, and the pay is great.”

Trickle-Down Effect
Chili’s may not be alone in casting its recruiting net a bit wider, but it may be among the first to clarify it as a strategy. Joan Ray, executive vice president of Elliot Associates Inc., an industry recruiting firm based in Tarrytown, N.Y., reports increasing requests for executive searches of other industries and has noticed a trickle-down effect.

“Once senior management opens the door to considering other segments and industries as executive talent resources, that thinking spreads throughout the organization,” she says.

“Looking both inside and outside this industry for management talent is now part of our growth strategy,” asserts Diener. “We’re just looking for great leaders to help grow this concept.”