College--Courtesy of Carl’s Jr. : Management: The fast-food company hopes to reduce employee turnover by offering to pay up to $405 a term for higher education.
At 23, Andrew J. Maldonado manages a nearly $1-million operation and a crew of more than 30 employees at the Carl’s Jr. restaurant in the Mall of Orange.
The demands of management require long hours and many skills--fix-it man, recruiter, bookkeeper and chef. It has left Maldonado little time to earn a college degree in business--an achievement that he feels is necessary for future advancement.
But this semester, aided by an innovative program offered to all Carl’s Jr. employees, Maldonado has resumed earning credits toward his degree. He is taking a class at a nearby community college, and the bill is being paid by his employer.
Maldonado is participating in an educational program offered by the chain’s parent company to reduced employee turnover. Anaheim-based Carl Karcher Enterprises Inc. is paying up to $405 a term for some employees’ tuition, transportation and books.
“It’s the right thing to do,” said John A. Kubas, Carl’s vice president for human resources. “It’s reflective of Carl’s philosophy that we have an obligation to return something to the community.”
Strictly from a business standpoint, it also is reflective of Carl’s desire to return something to its kitchens--namely workers.
That has not always been easy for Carl’s Jr. The chain’s work force has an average annual turnover rate of 160%, Kubas said. That means Carl’s Jr. must fill each position three times within a two-year period. Such churning takes a large toll on the company in expenditures for recruitment, training and other factors.
Carl’s Jr. is not alone. Kubas said other fast-food chains have even higher turnover rates. The industry as a whole averages yearly turnover of 225% to 250%, Kubas said, meaning that each position must be filled more than twice a year.
The reason is that many young people no longer look at flipping hamburgers as a good part-time job while in high school or college or as a good entry-level job. They are turned off by minimum wages, low prestige and poor working conditions.
The fast-food industry, aware that declining birth rates in the 1970s have shrunk its historic labor pool of young people, has sought out senior citizens and other groups to try to fill the uniforms.
Carl’s Jr.’s education program, which has attracted industrywide attention, represents a new tack--albeit an expensive one--to try to retain more of its young work force and attract new recruits.
Though still an experiment, the program has paid the costs of a semester’s worth of schooling for 96 Carl’s Jr. workers, or their immediate family members, since it began in August, 1989. Only about 10% of the chain’s 557 restaurants are participating so far.
Both full- and part-time workers can use the benefits to attend college, go to trade school, or take English, Spanish or other language classes. The program is available to employees who have worked at least one month at a participating Carl’s Jr. outlet.
Benefits are based on the number of hours an employee works a week. The maximum benefit of $350 toward tuition, $30 for books and $25 to cover transportation costs goes to employees working 26 hours a week or more.
Terry Newman, 20, said he is using the Carl’s Jr. program for his first semester at Cal State Dominguez Hills in Carson. “It makes ends meet, believe me,” Newman added.
He said that word of the program has spread at the Carl’s Jr. where he works near the university. Some workers transferred to the restaurant from other Carl’s Jr. sites in order to take advantage of the benefits.
Maldonado, who hopes to earn a degree in business administration, has attended Fullerton College and Cal State Fullerton in the past to study computers. This semester, he enrolled in an elective photography class at Cypress College, with Carl’s picking up the tuition tab.
He said that he has tried to promote the educational benefit program among members of his restaurant crew but that, so far, few have enrolled. He said many of the employees are Latino, supporting themselves or families on the money they earn at Carl’s, and have only sixth- or eighth-grade educations and no immediate desire for more schooling.
“It’s really hard to get them motivated to use it,” Maldonado said, adding that many Latinos are unaccustomed to receiving job benefits. “Some are afraid of it. They don’t really trust it.”
Kubas said that 43% of Carl’s work force is Latino, and many of them are recent immigrants. He said that he hopes, over time, to attract more Latinos to the education program.
Dr. Sal D. Rinella, vice president for administration at Cal State Fullerton, said that the challenge will be to show Latinos that the program is available and that education will help them work their way into the mainstream.
“I think what it will do is develop the worker so that the company gets better performance and so that the worker can (eventually) move on to other things,” Rinella said. “Turnover goes down. Morale is sustained very high.”
Rinella has worked extensively with Robert J. Kopecky, a consultant based in Troy, Mich., who helped formulate both the Carl’s Jr. plan and a similar program in two Detroit-area Burger King franchises. Kubas said it was an article in a trade magazine on the Burger King experiment that first drew him to the idea.
In Detroit, Kopecky said he experimented with various programs to try to cut Burger King’s turnover rate of 179%. The restaurants initially tried cash-incentive programs, improving the look and comfort of uniforms, making schedules more flexible and enticing managers to extend better treatment to workers. Though the changes were appreciated by employees, none stemmed the high dropout rate.
Then the two Burger Kings set up the program to pay for tuition and books. It appeared to strike an immediate chord with workers. “They all wanted to get an education somewhere, because they didn’t necessarily want to flip hamburgers the rest of their lives,” Kopecky said.
President of the Excellence Group Inc., Kopecky said that absenteeism dropped, productivity increased by 3% and employees stayed on the job longer. “For some reason, the workers began to feel the company was really behind them,” he said.
Even though the tuition costs are high compared to the workers’ relatively low hourly wages, they are less than the estimated turnover cost of $600 for each new worker. Turnover costs include the value of management time to advertise an opening, scout for and interview applicants, and provide a uniform and training.
Rinella, who studied the Detroit experiment, said that the educational program appears to have a staying power that other kinds of incentives lack. With the program, he said, a fast-food job “is not a dead-end anymore. It also changes the image of fast foods as companies that take in great numbers of people (as employees) and don’t care very much about them.”
