Paying Your Employees
One of the most critical decisions you'll make is how much to pay your employees. Not only is it essential to meet state minimum wage standards, but also to ensure that your compensation package is competitive and fair to attract and retain top talent. In this article, we'll cover the basics of employee compensation and then explore some creative strategies to differentiate your business from the competition.
Meeting the Basics: Minimum Wage, Tips, and Hierarchy
First and foremost, it's essential to meet state minimum wage standards, which vary by state and even city. While the federal minimum wage is, surprisingly, still $7.25 per hour, many states and cities have raised their minimum wage to $15 per hour or higher. Ensure that you're paying all employees at least the minimum wage required by law.
When it comes to tips, only hourly employees can receive tips, so salaried employees are exempt. This means that servers, bartenders, and hosts/hostesses can receive tips, while managers and other salaried employees cannot. It's also important to note that tips can only be used to supplement hourly wages, not to replace them.
In terms of hierarchy, most fast casual restaurants follow a standard structure:
- Entry-level positions (hosts/hostesses, servers, bussers): $8-$12 per hour
- Line cooks and prep cooks: $10-$15 per hour
- Shift leaders and assistant managers: $12-$18 per hour
- Managers: $40,000-$60,000 per year
Creative Compensation Strategies: Equal Pay for Undesirable Positions
Now, let's think outside the box. First proposal: consider paying the least desirable positions equal pay to line cooks. For example, paying the dishwasher or janitor $15 per hour, the same as a line cook, may seem counterintuitive, but it can have numerous benefits. These positions are often harder to fill and have higher turnover rates, which can lead to increased recruitment and training costs.
While these positions may require less skill, they are undoubtedly more demanding. Dishwashers and janitors work in hot, physically demanding environments, often for long periods without breaks. By paying them equal to line cooks, you're recognizing the value they bring to your restaurant and incentivizing them to stay.
This approach can also help reduce turnover rates, which can save you thousands of dollars in recruitment and training costs. According to the Bureau of Labor Statistics, the average cost of replacing an employee is around $4,000. By paying your dishwasher or janitor a competitive wage, you can reduce the likelihood of them leaving and minimize the costs associated with replacing them.
Incentive Plans: Sales Percentages, Bonuses, and Tuition Reimbursement
In addition to fair compensation, incentive plans can motivate employees to perform at their best. Here are a few ideas:
- Sales Percentages: Offer a percentage of sales to servers, bartenders, and hosts/hostesses. This incentivizes them to upsell and provide excellent customer service.
- Monthly Bonuses: Offer bonuses to managers who meet or exceed sales targets. This can be a percentage of sales or a flat bonus.
- Employee of the Month: Offer a bonus or reward to hourly employees who demonstrate exceptional performance, such as excellent customer service or teamwork.
- Tuition Reimbursement: Offer tuition reimbursement to employees who pursue higher education or vocational training. This can help you compete with larger chains like McDonald's and Starbucks, which offer similar programs.
Conclusion
Paying employees a fair wage is not only a moral imperative, but also a sound business strategy. By meeting state minimum wage standards, providing tips to hourly employees, and following a standard hierarchy, you're laying the foundation for a fair compensation package. However, by thinking creatively and offering equal pay for undesirable positions, incentive plans, and tuition reimbursement, you can differentiate your business from the competition and attract top talent. Remember, fair compensation is not just about paying employees a certain amount; it's about recognizing their value and incentivizing them to perform at their best.
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