Another interesting service ops story. One of the challenges in service is assuring staff are productive and friendly. Yes, manufacturers need to worry about productivity but capital and technology often play a much bigger role in determining what gets done today. Even if worker effort is the deciding factor in how much gets made in a factory, services are still different since at least some of the staff has to be customer facing. The customer who buys a car or a shirt never comes face to face with the workers who made it. That is not the case at a fast food restaurant. Here the service aspect of service matters.
And that gets us to a New York Times piece of Pret a Manger, a British sandwich chain that is now expanding in the US who provides fast service with a smile (Would You Like a Smile With That?, Aug 7). Pret a Manger aims to serve customers within 60 seconds and while being pleasant and friendly and so far has been able to do this even in New York. Further, they have a workforce turnover of only 60%. (Remember that this is fast food where turnover rate is often well over 100%.)
So what is their secret sauce?
How does any company encourage teamwork? At Pret A Manger, executives say, the answer is to hire, pay and promote based on — believe it or not — qualities like cheerfulness.
There is a certain “Survivor” element to all of this. New hires are sent to a Pret A Manger shop for a six-hour day, and then the employees there vote whether to keep them or not. Ninety percent of prospects get a thumbs-up. Those who are voted out are sent home with £35 ($57), no hard feelings.
The crucial factor is gaining support from existing employees. Those workers have skin in the game: bonuses are awarded based on the performance of an entire team, not individuals. Pret workers know that a bad hire could cost them money.
Pret also sends “mystery shoppers” — people who anonymously visit and grade the stores — to every shop each week. Those shoppers give employee-specific critiques. (”Bill didn’t smile at the till,” for instance.) If a mystery shopper scores a shop as “outstanding” — 86 percent of stores usually qualify — all of the employees get a £1-per-hour bonus, based on a week’s pay, so full-timers get around $73. “There’s a lot of peer pressure,” said Andrea Wareham, the human resources director at Pret.
Pret reinforces the teamwork concept in other ways. When employees are promoted or pass training milestones, they receive at least £50 in vouchers, a payment that Pret calls a “shooting star.” But, instead of keeping the bonus, the employees must give the money to colleagues, people who have helped them along the way.
There are other rewards. Every quarter, the top 10 percent of stores, as ranked by mystery-shopper scores, receive about £30 per employee for a party. The top executives at Pret get 60 “Wow” cards, with scratch-off rewards like £10 or an iPod, to hand out each year to employees who strike them as particularly good. Pret has all-staff parties twice a year, and managers get a monthly budget of £100 or so to spend on drinks or outings for their workers.
“Rewards, through bonuses or ‘outstanding’ cards, affect behavior,” Ms. Wareham says.
What backs this all up is detailed procedures and extensive training. Pret a Manger workers are periodically tested with new opportunities for those who pass. Extensive standardization allows for a very fast pace of work (e.g., making six bowls of granola in 1 minute and 17 seconds).
All of this has a Service Profit Chain feel to it. The argument goes that customer loyalty comes from creating value for them and a firm that has productive workers has an advantage in creating value. Then if you believe that long-tenured employees are more productive, you start thinking for ways to select good workers and get them to stay. That’s what Pret a Manger is doing.
There are some interesting questions that come from this. One is how this affects their growth. If you are going to put this amount of effort into building the team at each store, it is going to take a while to fill out a market. That is, it’s going to be a while before Pret a Manger is as ubiquitous as, say, Panera.
A second part of this is how robust this approach is. What I have in mind here is Starbucks. They have also had a reputation for treating workers well, providing good benefits, and so on. In 2008, they were #7 on Fortune’s 100 best companies to work for list. In 2010, they were #93 and this year they were #98. What’s caused the slide? Store closings, belt tightening etc. That is, it is easier to be generous and good with employees when times are good and you’re growing. But that sets expectations and can lead to disappointment when things get tougher.