Ten million miles-that’s how far you travel if you went to the moon 41 times. Coincidentally, that’s also how far domino’s pizza delivery drivers travel each week in more than 60 countries. The 200,000 employees who work in the 9,000 stores in these nations get 1.5 million pizzas out the door each day. And they have been doing these each day since 1960, when the brothers, Tom and James Monaghan bought their first small pizzeria in Ypsilanti, Michigan. The recipe for keeping these employees working happily at their jobs is something the company takes as seriously as its pizza recipe. And just as domino’s totally redesigned its pizza "from the crust up" in 2010 to keep customers coming back for more, it also has been rethinking its approach to employees to keep them coming back to work.
This is no minor concern for domino’s pizza, considering that annual turnover within the stores has been more than 150 percent, resulting in an entirely new crew about every 9 months. Although these figures are lower than the industry average for fast food, the fact that it costs upward of $2500 to replace an entry level worker ( and 10 times more for a manager) was enough to make boosting employee retention a priority for Domino’s corporate management team in Ann Arbor. In 2005 under the leadership of David Brandon, Domino’s launched several initiatives to tackle the turn over problem, which continued when Patrick Doyle assumed the CEO post in 2010.
Brandon’s approach was straight forward. Because employees tended to leave when manager resigned, he focused primarily on mangers. Unlike some other CEO’s facing the same problem in their companies, he opted not to buy his managers loyalty by raising their pay. He believed that would have only a small and temporary effect on retention. Instead, he initiated a three- prong approach, beginning by hiring better managers. With this in mind, Domino’s official worked with researchers to develop an online test to select managers who had adequate levels of financial known-how and whose management styles were appropriate for the company. Once managers were selected they were trained thoroughly in ways of effectively recruiting employees and interviewing them so as to ensure their success.
The second focus of the retention effort involved giving store managers tool to assess how well their employees are performing. This consisted of computerized tracking systems that enable them to learn precisely how long the pizza production process is taking and to identify star performance as well as those who need additional help.
Third, all the Brandon is not a fan of across-the-board pay increases, he believes firmly in creating incentives for managers that reward them for outstanding performance. This lead to a system of bonuses based on store profits in addition to stock option for managers whose store sales grew while also creating highly satisfied customers. The effect was to align the financial interest of the managers with those of the company.
Since these efforts were put in place, turnover at Domino’s pizza has been cut in half – a vast improvement whose impact has been felt on bottom line. And in an era of crust-thin margins, such developments are welcome for sure.
Questions for discussion: "Your answers have to be related to work-related attitudes such as: job satisfaction, prejudice, and organizational commitment"
1- What did Domino’s Pizza do to enhance its employees’ job satisfaction and/or organizational commitment?
2- What benefits may be expected to result from these actions?
3- What additional steps might Domino’s Pizza consider taking help tackle its turnover problem?
