I imagine most of us have visited a new restaurant with high hopes of finding that new place that surpasses the same old combination of mediocre food, service, and atmosphere. If the concept is good and the execution well managed, then the restaurant lasts and might even flourish. If not, a slow fizzling out occurs until the doors close. A recent study by Cornell University and Michigan State University assessed how often restaurants failure by examining three local markets over a 10-year period. Their findings indicated that: After the first year 27 percent failed; after three years, 50 percent were out of business; and after five years, approximately 60% ceased to exist. Most of us have had those momentary inspirations to open a restaurant to “be brought back to reality” by the friend or spouse that reminds us, that food service is not for the faint of heart.
So, what is the real difference between success and failure? Put simply, it is the difference between people deciding to come back or not. Businesses require regular cash flow and growth usually necessitates new customers. If I like a place, I will return more often and will tell my friends. The more I return and tell others, the more loyal I become and more valuable to the business. These customers play a huge role in a restaurant’s success. However, if I find the place less than appealing, then I will likely share my negative impressions with friends, family, or anyone interested in listening. No business owner wants a “negative” champion since that customer not only takes his or her business elsewhere, but also influences the buying decisions of others. Moreover, in this electronic age, being a champion is much easier since our thoughts travel at the speed of flying thumbs on our mobile device’s keyboard.
What can we learn from this simple illustration?
- Just like in the consumer market, organizations have a reputation in the labor market. The network may not be as well developed, but we all have a brand that potential employees analyze before making a decision to apply or pursue employment with our organizations. If that brand is negative, the potential loss in applicants as well as overall talent can be immense.
- The weak economy has not diminished the importance of employer reputation. It is easy to assume that if I am looking for a job, I will take what I can find. Recent research by Corporate Responsibility (CR) Magazine and Allegis Talent2 found that reputation really does still matter. Their survey of 1,032 Americans nationwide asked if you were unemployed would you be willing to work for a company with a bad reputation. Seventy-five (75) percent said “no.”
- Just as we want customers who recommend us, we want employees that do that same. We have much better chance of attracting the type of employee we desire if we have advocates among our own employees and not just our recruiters. Some of my best hires came as recommendations from current employees. Quality tends to attract quality.
- Once we have a poor reputation, it is very hard to change it. Like many things, building is hard and losing is easy. If we are known as a negative place to work, it can take years for that perception to change. Guard your reputation.
- Even if folks feel good overall, we need to assess the opinions of those employees that make the most difference. Just as most businesses target their most loyal customers, we should gauge the satisfaction and opinions of our highest performers. Some work environments actually turn off high performers, which bring fewer high performers joining our organization.
Make sure your employees are not really telling you, “I would not come here again, if I knew what I know now.”