Post on 15-Feb-2017
AMERICAN DEVELOPMENT CORPORATION
Proposal to Reorganize XXXXXXX Sports Bar and Grill
Developing a Zero-defect Organization
Dany Kaiser
3/19/2016
Through reorganization, the introduction of new management methods, technology, and understanding the importance of people to processes, this plan lays out the means to achieve the full sales potential of the enterprise, and to sustain it once it is reached.
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Objective ................................................................................................................................................... 3
Preface ...................................................................................................................................................... 3
Background ............................................................................................................................................... 4
Proposed remediation plan ...................................................................................................................... 5
HR Reorganization Plan ............................................................................................................................. 5
Phase One – Setting the Expectation .................................................................................................... 7
Phase Two – Employee Training ........................................................................................................... 7
Phase Three – Assessing Performance ................................................................................................. 7
Phase Four – Developing Corporate Best Practices .............................................................................. 8
Phase Five – Employee Retention ......................................................................................................... 9
Technology Plan ...................................................................................................................................... 10
Profit Engineering ............................................................................................................................... 11
Loss Control ......................................................................................................................................... 11
Inventory Management ...................................................................................................................... 11
Accounting .......................................................................................................................................... 11
Guest Experience ................................................................................................................................ 12
BOH Technology .................................................................................................................................. 12
HRMS ................................................................................................................................................... 13
Lean Six Sigma ......................................................................................................................................... 13
Introduction ...................................................................................................................... 13
Transportation ...................................................................................................... 13
Inventory ............................................................................................................... 14
Motion................................................................................................................... 14
Waiting .................................................................................................................. 14
Over-processing .................................................................................................... 14
Over-production ................................................................................................... 14
Defects .................................................................................................................. 15
Six Sigma ........................................................................................................................... 15
Application of Lean Six Sigma Methods to Reorganization .............................................. 15
Key People ......................................................................................................................... 16
Owners .................................................................................................................. 16
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General Manager .................................................................................................. 16
Assistant Manager ................................................................................................ 17
Kitchen Manager ................................................................................................... 18
Salary and Future Plans ........................................................................................................................... 19
Summary ................................................................................................................................................. 20
End Notes ................................................................................................................................................ 21
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Objective
The aim of this reorganization proposal is to suggest an effective means of restructuring
operations in order to:
1) Maximize profit potential;
2) Improve on-the-job performance;
3) Resolve customer service issues;
4) Improve quality control;
5) Offer an excellent guest experience; and,
6) Restructure cash flow to assure the integrity of year-round operations.
To accomplish this, our proposal will suggest ways to introduce new efficiencies,
automate complex tasks, and reduce waste as discussed below under the sections,
Technology Plan, Lean Six Sigma, and Key People.
Preface
The overarching goal of management is to be the best in everything it does. Food,
customer service, and customer experience are at the top of this list. However, to do so
there must be a realization that, without rehabilitation, the team that led the
organization into its current predicament cannot lead the way out of it. Thus, to
accomplish this, a transitional HR plan to reset employee work habits, and rethink
organizational roles for others, must become an integral part of any reorganization. The
reasons for this will become clear in the following section, HR Reorganization Plan.
Assuming we’ve achieved the first goal, being the best in all we do, the second is very
simple to say, but much harder to do. What is it? To repeat all the steps used to
accomplish the first goal each time, every time without errors or exceptions.
Repeatability in service and products is realistically the only way to achieve a zero-
defect organization, and to maximize profit potential. However, to do this requires
skilled leadership not in floor management, which as we’ll see in “Key People” and
illustrated in Figure 2, the Organizational Chart, is better-suited to assistant managers,
but in General Management.
It is the job of the General Manager to manage the many complex tasks, which go into
producing a zero-defect organization. General Managers are like the captain of the ship.
If the captain is not in the control room steering the ship, and is instead wandering the
deck minding employees and handling customers, the ship will go astray and eventually
run ashore. Likewise, with 10 departments to head up (as shown in Figure 2), if the GM
is not in control, the organization will run astray. Thus, assigning the right people with
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the right talents to the right position is essential to the success of any high-performance
organization, and is an integral part of our reorganization plan.
Lastly, new management methods are introduced to achieve the business objectives of
owners. Based upon “Lean Six Sigma (or LS6),” reorganization of human resources,
technology, and processes are discussed as a way to create an organization with the
required skills and expertise necessary to achieve $5-6M in annual sales, the estimated
limit of what is possible given the capacities of the venue.
Background
As gathered from feedback on several forums, management is suffering from
identifiable problems in customer service and product defects. In addition, seasonal
fluctuations in business lead to recurring cash flow problems at the beginning and end
of the calendar year, which result in the inability to meet financial obligations during
these lean periods.
Other identifiable problem areas include:
High BOH employee turnover;
a lack of quality control, quality assurance, and consistency in the kitchen;
no inventory controls;
no loss control;
no reconciliation reports;
no audits;
no per item P&L analysis and monitoring program;
no weekly/daily P&L reports;
no departmental accounting;
no actionable sales information;
failed employee rehabilitation;
employee resistance to the authority of management;
no comprehensive employee training programs;
no written work rules clearly setting out the expectations of employees;
poor (but improving) waste control;
poor sanitation practices;
lack of well-defined employee policies;
no accountability;
poor employee morale; and, perhaps more importantly,
open disregard of ad hoc work rules by employees.
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Proposed remediation plan
To remedy the situation it is recommended that the finance and operations of the
organization be restructured, and new management methods be introduced. The
primary focus of these efforts will be in the areas of:
operations management;
accounting;
reporting and account reconciliation;
re-engineering of cash flow to address vendor payments and seasonal fluctuations in
revenue;
loss prevention;
inventory management;
customer service improvement;
quality control and assurance;
HACCP food handling and sanitation procedures;
HR training and management, including recruitment and employee retention;
purchasing and vendor management.
HR Reorganization Plan
When forming a HR reorganization plan, one consideration must be the realization that
doing the same thing over will not result in a different outcome. Current employees who
have been through several changes of ownership and management have become callus
and resistant to change. While questionable if hardened employees with poor work
habits and resistant to change can become model employees, a program to do this will
take on the effort. This program will incorporate a 5 –pronged approach to HR
management, which includes:
1. Setting employee expectations
2. Employee training
3. Assessing performance
4. Developing corporate Best Practices; and,
5. Employee retention
In this HR reorganization plan, we will rely upon Lean Six Sigma management methods
to create a culture of ‘experts’. Experts are employees who have gained expertise within
their departments and assigned roles, and have mastered the processes that go into
delivering a zero defect product or service. Key to the reorganization of the enterprise, it
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is necessary to elaborate upon a few concepts first to understand how employee
training is the critical means by which organizational change is developed.
To explain, in Lean Six Sigma, the organization is comprised of internal customers and
internal vendors. Just as an external customer would order an item produced by the
restaurant, internal customers also order products and services from internal vendors.
For example, a server may order a meal from the chef, and the chef provides that
product by performing a service. In turn, the server presents the product to their
customer, and in doing so, provides a service.
In Lean Six Sigma employee (or experts, as I prefer to call them) training programs, we
rely upon a concept called Voice of the Customer, or VoC. The objective of this is to
understand the expectations and preferences of the customer with the goal of
delivering a good or service with zero defects and as expected. In doing so, waste of the
company’s time and resources is avoided (the ‘zero defect’ objective), customer
satisfaction was achieved (the goal), and the anticipated profit margin of the company is
preserved (the desired result).
As seen in the example above, delivering a product involved not one, but several
processes along the way. Therefore, becoming an expert in hearing the VoC, learning to
effectively advocate on their behalf with your own internal vendor, and performing to
your own customer’s expectations, is as critical to delivering a zero defect process as is
becoming an expert in the process itself.
A process then consists of the objective (zero defects), the goal (customer satisfaction),
and the result (the preservation of anticipated profit margins). Lean Six Sigma then is a
management method that works to identify all the processes that go into producing a
product or service, improves upon them by eliminating waste, and developing a team of
internal experts in each one with the goal of producing a zero defect product or service.
Therefore, it is the management method of choice in reorganizing a company chronically
failing to deliver upon the processes necessary to produce a zero-defect product or
service.
Lean, developed by Toyota, and Six Sigma, developed at Motorola and first adopted as
the de facto management system at GE by legendary former chairman and CEO, Jack
Welch, is used today all over the world by top-performing organizations. Named
“Manager of the Century” by Forbes in 1999, when he retired from GE he took
a severance payment of $417 million, the largest such payment in history. I provide this
information only to lend perspective on the value of the concepts offered in this
proposal, and to set the stage for the HR portion of the reorganization plan.
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Phase One – Setting the Expectation
Phase One of the HR plan will include rewriting employee manuals to set out the work
rules for each position. By communicating the expectations of management, it sets the
stage in the employee’s mind for what changes to expect, and informs them of any on-
the-job requirements going forward.
Phase Two – Employee Training
As discussed, developing internal teams of process experts, and understanding who the
internal customers and vendors are, is essential to the success of the HR reorganization
plan. After first indentifying all the internal processes of each department and the
product or service they provide, team leaders for each department will be recruited
from within, which may not necessarily be the manager of the department. The reason
for this is simple. We recruit rather than appoint team leaders because we want them to
own the process and be personally invested in its success. If we appoint a person as
team leader, they may be detached from the process we are looking to improve, and a
lack of commitment to success sets the organization as a whole up for failure.
Therefore, to avoid this, we recruit rather than appoint.
Having identified the team leader for each process, the next step is to define the
process, and then identify in detail the ideal way it should work. To this, we write the
procedure to produce that process, and develop a training program to perfect it.
Phase Three – Assessing Performance
Having set the stage, Phase Three of the HR plan will include two behavioral
modification tools; an employee scorecard and a professional mentorship program. The
employee scorecard serves to let employees know where their own personal
weaknesses lie. The intent is not to criticize employees, but to help them recognize and
improve upon their own performance.
The employee scorecard is used in tandem with a mentorship program comprising
counseling and supportive advice. The format requires no less than two managers are
present when meeting with employees to discuss shortcomings in work performance.
With the goal of resetting employee expectations in mind, management will draft an
action plan together with the employee laying out the suggested remedy. The employee
will then sign it to affirm their commitment. Again, the focus is not to criticize, but to
inform the employee of where their performance is falling short of expectations, and to
work with them to correct it.
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The other critical component of assessment is a statistical process tool that we use
referred to as DMAIC, which goes hand in hand with the employee scorecard. DMAIC is
an acronym for its five phases – Define, Measure, Analyze, Improve and Control. DMAIC
is a Six Sigma methodology which helps in achieving process improvements by reducing
variation. Each phase has its own significance and we will understand how DMAIC
process reduces many root causes to only a few vital root causes, which can then be
controlled for variance. Below is a chart representing the DMAIC process.
Figure 1
As we see above, the Define phase looks at all the X’s (process inputs). In the Measure
phase, we get the first “Hit List” where the root causes (X’s) are reduced to just 10 – 15.
In Analyze phase, we screen the available list and reduce the root causes to 8 – 10. In
the Improve phase, we identify just 4 – 8 critical X’s, and in Control phase we are
controlling only 3 – 6 root causes (X’s). Thus, by controlling just 3 – 6 root causes we are
able to positively impact the project Y.
Phase Four – Developing Corporate Best Practices
Phase Four of the HR plan is to boost morale by recognizing performance. For this, we
use the well-known principle that employees invested in the outcome of the company
do well on the job. This does not mean they have a financial interest in the company
other than their regular salary or pay. But, by encouraging emotional investment of
employees in the outcome of their work, it provides an effective means of gaining their
buy-in to change outcomes.
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One behavioral tool at our disposal to gain emotional investment is pride. To explain, in
mechanical physics, we know that for every action there’s an equal but opposite
reaction to kinetic force. Likewise, in psychology there’s an equal but opposite
perception for each emotion. For pride, the resulting perception is status. Recognized as
being the best, or being the top performer, and being acknowledged by an authority in
this (e.g., the employer in this case), is a powerful tool used in applied behavioral and
cognitive psychology. By exploiting pride, we can gain the emotional buy-in of
employees to improve on-the-job performance.
In Phase Four of our HR plan, principles of applied behavioral and cognitive psychology
are used to develop a corporate culture of ‘best practices’. Used with our other
cognitive tool addressing poor performance, i.e. the employee scorecard, we now have
a method of demerits and rewards that confer status upon individuals in return for
performance. Just as poor behavior is contagious in an organization, we now have a HR
management method that provides a powerful contagion capable of spreading good
behavior. It is these principles that will form the basis of our HR management plan, the
expected result of which will be a corporate culture of ‘best practices’.
Phase Five – Employee Retention
Phase Five of the HR program concerns employee retention. The cost of employee
turnover in terms of lost productivity and the time necessary to train new employees is
high. One study, from the Center for American Progress, places the cost of replacing an
employee making $50,000 a year or less at 19.7 percent of wages or salary. Doing the
math, this means replacing a server earning $35,000 a year costs $6,895. For employees
earning less than $30,000 a year, costs decline to 16.1 percent of wages. So, doing the
math, a busser earning $10 per hour and working 40 hours a week costs $3,489 to
replace. Considering that the employee turnover rate in 2014 for the hospitality industry
was 66.3 percent according to the U.S. Bureau of Labor Statistics’ Job Openings and
Labor Turnover (JOLTS) program, and using sales figures for 2015, eliminating employee
churn will increase net profit of the company by at least 150 percent!!
So, while the costs of employee turnover is plain, the broader repercussions of
diminished employee morale, damages to the customer experience we are trying to
create, and lost productivity incurred in training replacements, are compelling reasons
that an employee retention program MUST be part of any effective HR plan.
The organizational chart below shows the proposed hierarchy of an overhauled HR plan.
The hierarchy of the chart is laid out such that the person responsible for the
department (shown in blue) is listed below it followed by their subordinates. Hourly
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employees are grouped into brigades, shown in red, while salaried employees are
shown in white.
Organizational Chart
Figure 2
Technology Plan
Technology will play a key role in achieving the objectives of improved financial
performance, enhanced quality control, and provide excellent customer service and
experience.
The 7 pillars of our IT plan include:
1. Installing a new POS system;
2. Implementing an accounting system that provides current, actionable information;
3. Implementing inventory management systems to control costs and shrinkage;
4. Implementing a loss prevention system;
5. Implementing customer-facing technology to improve the XXXXXXX guest experience;
6. Implementing BOH technology to improve server efficiency, quality control and
assurance;
7. Implementing an HR management system including hiring and on boarding.
Following are some of the critical functions an effective IT management plan will solve.
Owner
FOH
Owner
2-4 Asst. Mgrs
Server Brigade
GM
BOH
Owner
Kitchen Mgr
2 - Asst. Kitch Mgrs
(Sous)
Kitchen Brigade
IT
GM
Operations Management
GM
Accounting
GM
Book Keeper
Accountant
Loss Prevention & Inventory
GM
Asst Mgrs
LP&I Brigade
Events Coordinator
Owner
GM
AsstMgrs
Security
HR
GM
Owner
Asst. Mgrs.
Marketing & Advertising
Owner
GM
Purchasing
GM
Kitchen Mgr
Key: Employees Departments Brigades Vendors
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Profit Engineering
In F&B operations, profit engineering is the ongoing process of creating a top
performing menu. Aside from analyzing per item profit for each menu item, the goal of
profit engineering is to monitor the impact of inflation and costs over time, and to test
the potential of new items to improve bottom-line performance. Another benefit of
profit engineering is that, through advertising, the firm’s marketing executives can also
exploit the well-known power of the word ‘New.’ (See Dooley, Roger, et al., The Power
of “New”, Neuroscience Marketing, 2008.).
Loss Control
Various loss control systems offer mixed results. Depending upon the skill level of the
programmer and business analyst handling the data, useful information of varying
degrees may be derived through reports.
Use and portion-reporting systems such as Bar Vision, the system currently in use, can
form the basis of a good inventory control system. But, without the skilled help of good
programmers or analysts, they offer little more information other than beverage costs
and use. Reconciliation reports still have to be written by an analyst to supply useful
shrinkage information, and to identify the source of any discrepancies.
Having tested and experimented with Bar Vision, I can confirm that beside use and cost
data, reconciliation reports can be developed to detect shrinkage due to theft or fraud.
Responsibility for reporting this information would fall to the GM under this proposal.
Used with Bar Vision, exception reports from Remote Eyes, the other proposed loss
control system I recommend, my opinion is that it would be about 85 percent effective
in detecting losses through theft and fraud. The remaining 15 percent exposure to risk
can be controlled through good management practices, enforced work rules, and
effective analysis.
Inventory Management
Inventory control is the central nervous system of effective loss control, and is the
principal means of optimizing OpEx. Through good inventory control, cash flow is
enhanced, ROI tends to increase, and working capital is freed up enhancing the firm’s
credit profile as a result, an important issue going forward to take on any new projects.
Accounting
Accounting is the function of reporting the financial results of an organization’s sales. By
nature, it is an account of transactions that occurred in the past.
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Under this proposal, the accounting system I recommend will provide up-to-the-minute
results of what is currently going on in the business, and allow management an
immediate opportunity to act on the information. Errors, shrinkage, portion and quality
control, waste, labor, and expense exceptions are addressed nearly as they occur rather
than long after damages have been done. The difference between historical and near
real-time records will result in improved financial performance.
Guest Experience
While guest experience is a combination of food, service, and ambiance, technology can
play a key role in enhancing the experience itself. To provide an analogy, imagine for a
moment that each table had a single server assigned to it. Like a butler who serves at
your beck and call, your personal server anticipates your every need and answers your
every desire. Due to high labor costs, while this scenario is not possible in practice, cost-
effective technology does exist to do just this.
If there were a way to answer every customer’s wish the moment it occurs, one result
might be an increase in the per person average (PPA) check. In fact, using technology
that does this, a rise in PPA has been documented in case studies that have emerged in
recent years. Adopters of the technology include Applebee’s, which serves over one
million customers daily, and Chili’s, a casual dining concept of Brinker International.
After several years of testing, Applebee’s will install 100,000 table-top devices in more
than 1,800 locations nationwide. Likewise, Chili’s has announced that it will install
similar devices in approximately 800 locations.
While my proposal uses different and lower cost technology than Applebee’s and Chili’s,
it addresses the same basic issues: People don’t want to wait, and responsiveness to
customer desires is a proven means of increasing the PPA. Used along with other
technology that exploits the notion that people eat with their eyes, case studies show
it’s possible to place more and higher value transactions through the system while
improving upon guest experience.
BOH Technology
In BOH operations, aside from the food, time is the most critical element when it comes
to guest experience and the impact it makes on bottom-line profits. To address this
there are two low-cost technology solutions I recommend. The first is a server paging
system, and the other is a KDS, a kitchen display system, to automate the cook line and
reduce the time it takes to prepare an order.
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HRMS
HRMS, or the Human Resource Management System, is a key part of our restructuring
plan. In F&B operations, food, service, and guest experience are the products we
provide. Therefore, people who control these processes are the most valuable asset
any company has, and it only makes sense to invest in their success.
As discussed in the HR Reorganization Plan, while many elements of HRM come into
play, it’s the HRMS that ties them all together into a single and cohesive management
system. Inconsistency in the application of work rules, benefits, scheduling, and record
keeping can lead to chaos in HR administration, and a breakdown of processes key to
success. To avoid this, an effective HRMS should be an integral part of any technology
plan.
Lean Six Sigma
Introduction
People are the key to the success of any organization. This is a universally accepted
truth regardless of which school of management you subscribe. However, for our
purposes, we will employ the Lean Six Sigma management methodology, which is a
combination of Lean and Six Sigma management methods, to reorganize operations and
finance. The reason why is that it is not only the most effective in terms of resolving
customer service and quality control issues, but it is the most effective means of
achieving the goals of management.
To explain, the core idea of Lean is to maximize customer value while minimizing waste.
It is a byproduct of the Toyota Manufacturing Process (TMP), a philosophy developed to
streamline operations, add customer value, and maximize profits. Lean deals with seven
types of “muda,”which is a Japanese word meaning useless, futile, or waste:
Transportation, Inventory, Motion, Waiting, Over-production, Over Processing, and
Defects. An illustration of this follows:
Transportation
Each time a product is moved it stands the risk of being damaged, lost, delayed, etc. as well as
becoming a cost for no added value. Transportation does not make any transformation to the
product that the consumer is willing to pay for. Thus, moving products about should be kept to
a minimum. How this applies to XXXXXXX is evident by something I myself have said concerning
reorganizing the kitchen, “A place for everything, and everything in its place.” By practicing this,
waste and spoilage is kept to a minimum, and labor costs are reduced. This will become more
evident as we begin taking inventories.
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Inventory
Inventory, be it in the form of raw materials, work-in-progress (WIP), or finished goods,
represents a capital outlay that has not yet produced an income. Any of these three items not
being actively processed to add value is waste. The application of this principle is also
something I have discussed, which is mismanagement of inventory and delays in service.
Motion
In contrast to transportation, which refers to damage to products and transaction costs
associated with moving them, motion refers to the damage that the a process inflicts on the
entity that creates the product, either over time (wear and tear for equipment and repetitive
strain injuries for workers) or during discrete events (accidents that damage equipment and/or
injure workers). Reducing motion is therefore an area of great interest for many restaurants,
and Chili’s provides us a good case study in that they have undertaken a kitchen program to
reduce motion (and service times) by using advanced equipment. It is something that applies to
all F&B operations across the board.
Waiting
Whenever goods are not in transport or being processed, they are waiting. In traditional
processes, a large part of an individual product's life is spent waiting to be worked on. This
principle likely needs no further explanation, as we all understand that a guest who is waiting is
not buying anything that s/he hasn’t yet received. If time is money and money is time, waiting
produces no additional revenue for the organization, but adds to its costs. Additionally,
perishable inventory in waiting increases the risk of waste through spoilage, and therefore must
be kept to the minimum necessary to assure operations.
Over-processing
Over-processing occurs any time more work is done on an order than what is required. If a cook
or server forgets something and has to return for it (a rather common occurrence), then the
process is more than was necessary, and costs of the company rise while producing no
additional revenue.
Over-production
Overproduction occurs when more product is produced than is required at the time. This waste
is considered the worst of all because it generates all the rest. Overproduction leads to excess
inventory, which then requires the expenditure of resources on storage space and preservation,
additional motion, and activities that do not benefit the customer or produce additional
revenue.
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Defects
Whenever defects occur, extra costs are incurred reworking the order. This results in additional
labor costs, and delays "Work-in-progress". Defects cause a chain reaction involving the entire
process chain, which now has to be repeated. Defects can sometimes double the labor costs of
one single product, not to mention the replacement costs of goods that cannot be reworked.
They cannot be passed on to the customer, and must be taken as a loss.
Six Sigma
Six Sigma, on the other hand, is a similar management philosophy that deals more with
processes and the people involved in them. Specifically, it deals with process improvement.
However, to the seven types of wastes in Lean, it adds Skills. The waste of skills, or the
mismanagement of them by assigning people to jobs for which they are not qualified, is the 8th
type of waste addressed in process improvement. To accomplish this, it creates a special
infrastructure of people within the organization who are experts in the methods necessary to
complete a process.
Having said this, it is the reason I recommend using the Lean Six Sigma methods of
management in order to achieve the objectives we’ve discussed. Referring back to Figure 2, our
Organizational Chart illustrates this special infrastructure of people, and the functions assigned
to them.
Application of Lean Six Sigma Methods to Reorganization
Borrowing a concept from Lean Six Sigma, in each organization there are internal and
external customers. Internal customers order from inside vendors, who in turn deliver
the service or product requested. The objective of such a command and control
structure is to eliminate eight types of waste: Time; Inventory; Motion; Waiting; Over
Production; Over Processing; Defects; and Skills.
These principles apply to any organization producing a service or a product, and our
reorganization plan relies upon them to achieve its ultimate goals – the realization of
our full sales potential; the improvement of guest service and experience; zero product
defects; lean inventory; reduction of waste; and improved financial performance.
The organizational chart in Figure 2 above is laid out showing who the internal customer
is, and who the inside vendor is that provides that particular service. From the chart in
Figure 2, it is seen that the owner’s primary internal vendor is the GM, and that the
GM’s primary internal vendors are the assistant managers, and onward down to the
brigades who they command.
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Again, borrowing a page from Lean Six Sigma, internal structure is essential to the
command and control of the organization. Without it, people tend to push duties to
others when they can, or become confused about what their job is, and important
processes fail creating a product or service defect as a result. This describes the current
situation under the present system of management, and our reorganization plan has
been designed to resolve it. As such, following is a list of key people, their job
descriptions, and the duties with which they are charged.
Key People
Owners
Owners are the primary internal customer of the organization. As illustrated by the
organizational chart in Figure 2, they sit at the head of the company. Owners make
decisions about the general direction of the company based upon advice from their
inside team. A team of trusted advisors is normally led by the GM, or in the case of
larger enterprises, a regional manager or V.P. In our case, we have you, Jeff, Joe, Johni,
and me making up the core of the management team. Together, the management team
works to develop strategies to accomplish the business objectives of the owners, and
the GM is responsible for implementing them.
General Manager
Under the owner is the GM. As seen in Figure 2, the GM is responsible for the entire
operation, and answers directly to the owner. In turn, the GM relies on assistant
managers who work under him to manage the various departments for which they are
responsible. The GM’s responsibilities are many, and he relies upon their assistance in
executing them. A description of the general responsibilities of the GM, which I
borrowed from Monster.com, follows below.
Restaurant General Manager Job Duties:
Establishes restaurant business plan by surveying restaurant demand; conferring with people in the
community; identifying and evaluating competitors; preparing financial, marketing, and sales
projections, analyses, and estimates.
Meets restaurant financial objectives by developing financing; establishing banking relationships;
preparing strategic and annual forecasts and budgets; analyzing variances; initiating corrective
actions; establishing and monitoring financial controls; developing and implementing strategies to
increase average meal checks.
Attracts patrons by developing and implementing marketing, advertising, public and community
relations programs; evaluating program results; identifying and tracking changing demands.
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Controls purchases and inventory by meeting with account manager; negotiating prices and
contracts; developing preferred supplier lists; reviewing and evaluating usage reports; analyzing
variances; taking corrective actions.
Maintains operations by preparing policies and standard operating procedures; implementing
production, productivity, quality, and patron-service standards; determining and implementing
system improvements.
Maintains patron satisfaction by monitoring, evaluating, and auditing food, beverage, and service
offerings; initiating improvements; and building relationships with preferred patrons.
Accomplishes human resource objectives by recruiting, selecting, orienting, training, assigning,
scheduling, coaching, counseling, and disciplining management staff; communicating job
expectations; planning, monitoring, appraising, and reviewing job contributions; planning and
reviewing compensation actions; enforcing policies and procedures.
Maintains safe, secure, and healthy facility environment by establishing, following, and enforcing
sanitation standards and procedures; complying with health and legal regulations; maintaining
security systems.
Maintains professional and technical knowledge by tracking emerging trends in the restaurant
industry; attending educational workshops; reviewing professional publications; establishing
personal networks; benchmarking state-of-the-art practices; participating in professional societies.
Accomplishes company goals by accepting ownership of them; and explores opportunities to add
value to job accomplishments.
Restaurant General Manager Skills and Qualifications:
Cost Accounting, Developing Budgets, Financial Planning and Strategy, Decision Making, Process
Improvement, Strategic Planning, Verbal Communication, Customer Focus, Management Proficiency,
Managing Profitability, Quality Focus.
In addition to the above skills, I also bring with me an extensive background in IT
systems engineering and information management. Managing and analyzing large
volumes of data to generate actionable information is within my skill set.
Looking at the job description above, the GM serves as the ‘glue’ that binds all
departments together. However, under our former working arrangement, 85-90 percent
of my time was spent managing the floor, and only about 10-15 percent was actually
spent on duties like those described above (i.e the 8th type of waste defined in Six
Sigma, Skills). Under the proposed reorganization plan, I would be fully dedicated to
fulfilling the duties of a GM instead – something critical to the success of any
reorganization plan, and likely a better application of my skills and expertise.
Assistant Manager
Assistant managers are the left and right hand of GMs. In addition to executing
directives of the GM, duties may include:
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Identify and delegate responsibilities to shift leaders and staff to ensure objectives are met
and excellent service is consistently achieved
Effectively manage the restaurant in the absence of the Restaurant Manager
Manage operations with passion, integrity, and knowledge while promoting the culture and
values of the restaurant.
Implement new company policies and procedures by developing plans and instructing staff.
Provide direction to shift leaders and staff to achieve restaurant goals.
Manage the restaurant to meet or exceed standards in food quality, safety, and cleanliness.
Consistently monitor product and labor costs to remain within goals.
Solicit guest feedback to understand the needs and wants of customers.
Train and coach staff on guest services principles and practices.
Follow restaurant policies and procedures, including those for cash handing and
safety/security.
Monitor POS and notify GM of any issues.
Assist in new menu implementation.
Develop and implement creative solutions to areas of improvement.
Assist in conducting staff and daily pre-shift meetings.
Assist in any areas of the restaurant when staffing constraints require.
Identify employee weaknesses and retrain as necessary.
Kitchen Manager
The Kitchen Manager is responsible for all kitchen functions, including but not limited to food
purchasing, receiving, preparation, and presentation, maintenance of quality standards, safety,
sanitation and cleanliness. In addition, the kitchen manager is expected to perform the
following duties:
Ensure that all food and products are consistently prepared and served according to the
restaurant’s recipes, portioning, cooking and serving standards.
Responsible for ordering food products according to predetermined product specifications
and received in correct unit count and condition and assure deliveries are received in
accordance with the restaurant’s receiving policies and procedures.
Control food cost and usage by following proper requisition of products from storage areas,
product storage procedures, maintaining standards recipes and waste control procedures
including checking and maintaining proper food holding and refrigeration temperature
control points.
Fill in where needed to ensure guest service standards and efficient operations.
Work with restaurant managers to plan and price menu items.
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Establish portion sizes and prepare standard recipe cards for all new menu items.
Ensure that all equipment is kept clean and kept in excellent working condition through
personal inspection and by following the restaurant’s preventative maintenance programs.
Make employment and termination decisions including interviewing, hiring, evaluating and
disciplining kitchen personnel as appropriate.
Provide orientation of company and department rules, policies and procedures and oversee
training of new kitchen employees.
Prepare all required paperwork, including forms, reports and schedules in an organized and
timely manner.
Oversee and ensure that restaurant policies on employee performance appraisals are
followed and completed on a timely basis.
Schedule labor as required by anticipated business activity while ensuring that all positions
are staffed when and as needed and labor cost objectives are met.
Be knowledgeable of restaurant policies regarding personnel and administer prompt, fair
and consistent corrective action for any and all violations of company policies, rules and
procedures.
Oversee the training of kitchen personnel in safe operation of all kitchen equipment and
utensils.
Responsible for training kitchen personnel in cleanliness and sanitation practices.
Responsible for maintaining appropriate cleaning schedules for kitchen floors, mats, walls,
hoods, other equipment and food storage areas.
Provide safety training in first aid, CPR, lifting and carrying objects and handling hazardous
materials.
Attends all scheduled employee meetings and brings suggestions for improvement.
Together with servers, bussers, and the expos who comprise our frontline Brigades, this then
comprises a complete infrastructure of experts whose skills have been properly allocated to the
best use of resources in order to succeed.
Future Plans
Under this proposal, we discussed jointly opening the carryout as partners. Also, we
discussed sharing expenses for new equipment for this, and that I would provide all
labor and management of the carryout as part of my obligations under any agreement.
To finance this, and create a situation where we can go forward with reorganization
planning in time for the upcoming season, I suggested that I would accept all the
responsibilities of GM (as outlined above), including implementing and managing the IT
initiatives discussed. In return, we discussed a management fee of$xxxx or 10% of net
sales weekly plus a commission on performance (bonus) for achieving net annual sales
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over $2.5M. However, in order to manage the intermediate term in between the busy
season and getting the carryout up and running, I suggested escrowing $350 per week
of salary to be put toward finance of new equipment for carryout. This escrowed
amount would be paid if for any reason we do not go ahead with the carryout, and we
set a date of about June 1, 2016 to open this.
To summarize, under this arrangement a management fee of $xxxx weekly or 10% of
net sales would then be paid excluding bonuses, and $350 per week of this amount
would be paid into escrow, which is to go toward the purchase of equipment for
carryout . In return, I would hire and place a management staff consisting of myself as
starting GM for 6 to 8 months, two assistant managers, one of whom will take over the
GM’s duties after the initial phase of implememtation, and a kitchen manager on site for
the term of the management contract. For comparative purposes, this is on par with the
pay of similar establishments, such as Chili’s and TGI Fridays, for the same positions.
However, it does not take into account any additional pay for IT engineering and
information management, and we agreed that bonus commissions will offset that to
some degree provided we achieve the required sales target.
As we discussed, a performance bonus of 12 percent of net sales over and above annual
sales of $2.5M would be paid in addition to management fees, and a cap of $150,000 in
annual compensation for the GM would apply. For the purpose of this agreement, net
sales, not to be confused with net income, are defined as gross sales minus the cost of
goods sold. To reach this goal, it effectively means that annual sales would have to
reach about $4.3M. No employee benefits were discussed as part of our negotiations,
and remain the responsibility of American Development Corporation under this
agreement.
Summary
It is the conclusion of this author that, through improvements in HR management, the
application of new technology and management techniques, and retraining of the
workforce or the hiring of new talent, this organization is capable of achieving sales of
$5-6M annually. Provided the right tools, which ownership has in principle agreed to
provide, there is no reason to believe that it cannot be achieved given the seating and
production capacity of the facility.
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End Notes:
References used in the preparation of this document:
Merhar, Christina. "Employee Retention - The Real Cost Of Losing An Employee". Zane Benefits,
2016.
Boushey, Heather, and Sarah Jane Glynn. "There Are Significant Business Costs To Replacing
Employees". Center for American Progress, 2012.
"Hospitality Employee Turnover Rose In 2014". National Restaurant Association, 2015.
Stelzer, Ryan. "Why I Left Management Consulting To Start A Philosophy Company". Strategy of
Mind, 2016.
Dooley, Roger. "The Power Of "New"". Neuroscience Marketing, 2008.
Konrad, Alex. "Applebee's Will Install 100,000 Intel-Backed Tablets Next Year In Record
Rollout". Forbes.com, 2013.
Kimes, Sheryl E., Ph.D., and Collier, Joel E., Ph.D. , “Ready and Willing: Restaurant Customers’
View of Payment Technology”, Cornell Hospitality Report Vol. 14, No. 5, Cornell University
School of Hotel Administration, 2014.