Pizza Today - September 2016 - 48

to spur management's dedicated investment in store performance.
"When you have organization-wide
goals that are addressed with incentives like profit sharing, it promotes a
spirit that we're all on the same team
and share in the fruits of our labor,"
says Kerry Chou, senior practice leader
at WorldatWork, a nonprofit association for human resources management
professionals.
But creating a successful management
incentive program demands strategy and
sincerity. Here are six steps to getting it
right:
Step 1: Prepare to launch

Before Phoenix-based Spinato's Pizzeria rolled out its management incentive program three years ago, leadership
collected feedback from managers
throughout its five-unit system on how
the program could be fair and beneficial
for both sides. The company also got its
accounting in line so each store maintained its own P&L.
Such preparation is key, Chou says,
adding that ownership should perform
some financial modeling to examine the
prospective investment and returns of
any incentive program.
Step 2: Define the goals

According to Chou, incentive programs should align with the company's
goals and be focused on results. Are you
working to control labor costs or reduce
waste and spoilage? Are you looking to
increase the check average or improve
secret shopper scores?
"You don't want to be giving cash just
because," Chou says. "Know why you're
offering the plan and where you need to
move the needle."
Culinary Institute of America associate professor of business management
Lynne Eddy recommends ownership
start with their hoped-for outcomes and
work backwards from those targets.
"But think baby steps," she advises.
"You can't try to tackle 10 things all at
once."

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Step 3: Set clear expectations

To drive management buy-in and
results, supply simply stated goals that
are achievable and readily available for
managers to review.
"This is what keeps the managers
invested," Flippers' Richardson says.
"They see our expectations in black
and white, understand the targets and
know what they need to do to earn that
bonus."
Chou calls this "providing a line of
sight" and says plans should be quantifiable, consistent and objective.
"Managers should see that they have
control over their incentive opportunity,"
Chou says.
Step 4: Seek balance and fairness

Set unachievable targets and employee
morale can plummet. Set objectives too
low, however, and the pizzeria's overall
financial performance can suffer.
"You want a plan that's a win-win:
employees benefit from their extra effort
and the business captures the ROI it
needs," Chou says.
Fairness, meanwhile, includes
amortizing costs such as capital expenses
or repairs. A manager, for instance,
shouldn't be penalized if store profitability wanes because exterior signage
needed to be replaced after a fierce
thunderstorm.
Step 5: Evolve and adapt

New competitors arrive, trends
develop and regulations occur. The world
around the pizzeria evolves, and so, too,
should a management incentive program.
Since first rolling out its incentive
program three years ago, Spinato's has
undergone three updates. Currently, the
biggest bonus piece is linked to reducing
employee turnover, which has compelled
managers to focus on creating a positive workplace culture. The initiative has
dropped employee turnover from 112
percent to nearly 60 percent, Spinato
reports, and improved store operations.
"You can't think you have it all figured
out," Spinato says.

Step 6: Monitor for holes

Even the most well-designed incentive programs hit hurdles.
To wit: in an early iteration of Spinato's incentive plan, the company did not
set a floor for labor costs. Some managers responded by running lean teams
or ignoring staff raises. Those efforts
increased the manager's bonus pool, but
also threatened employee morale and
guest satisfaction. Spinato quickly
addressed the flaw.
"Sometimes you just don't see problems until a policy is in place," Spinato
says. n

Chicago-based writer DANIEL P. SMITH has
covered business issues and best practices for
a variety of trade publications, newspapers,
and magazines.

The Management
Incentive Dilemma
Why would I ever pay managers extra
for doing their job?
Anthony Spinato remembers his "oldschool" father, Spinato's Pizzeria founder
Ken Spinato, posing that exact question
as Spinato's contemplated launching its
own management-incentive program.
In an industry notorious for employee
turnover, Spinato told his father that an
incentive program could help the five-unit
pizzeria attract and keep top talent,
particularly given the growing ubiquity of
managerial bonus plans.
"Larger restaurant chains had such programs in place and we were competing
with them for the same talent," Spinato
says. "We had to try and level the playing
field."
Beyond competitive balance, empowered -- and incentivized -- managers
can help propel growth. Ben Richardson
of Flippers Pizza says his concept has
been able to open additional units, including three in 2016, precisely because the
company has compelled store management to take greater ownership of their
individual stores.
"Micromanaging simply isn't scalable,"
Richardson says.

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Pizza Today - September 2016

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