I'm travelling between Phoenix and Baltimore for a visit to Mala Tang. I just "broke the fast" with a couple bags of trail mix flying somewhere over the midwest. Now that I can think about something other than food, I thought I'd jot down a few notes about employers (myself included). I'm inspired to touch on this subject as I read the book "A Slice of the Pie. How to build a little big business," by Nick Sarillo the owner of a small group of pizzeria's in Chicago. Sarillo touches on some emotions that hit close to home as I ponder my dual role as restaurant owner in Virginia, and restaurant executive in Phoenix. What is the "right" formula for attracting and retaining a passionate team to operate your business?
I tend to relate to my own experiences, as most of us do. However my philosophies are typically a blend of my own experiences with those of great people who I've read about. I'm a biography addict, and I especially enjoy reading biographies that focus on the development of the person prior to attaining greatness. Walter Isaacson's bio of Benjamin Franklin was particularly inspiring for me, and led to me convincing my wife to give our 2nd son, Brady, the middle name of Benjamin. Anyhow, one of my early experiences in business was working for Peter Wood, whom at the time was the managing partner of Hofberg's Delicatessens. I had worked at Hofberg's for over a year before I had the opportunity to work directly under Peter at his Potomac, Maryland location back in the early 90's. I had established myself as a trusted prep cook and then kitchen supervisor. I had always found Peter's passion for the business infectious, and I decided to begin my lobbying effort to become a supervisor. The only reason I wanted to become a supervisor at the time was because my impact on the business was limited to 40 hours a week. I was an hourly employee and Peter was pretty adamant about no overtime. I just wanted to be on salary, so I could work as many hours as I wanted (usually 70+)! Yes I was young, and I certainly wasn't thinking about a "work-life balance", but it was Peter's passion that really motivated me to do more for the business. I wholeheartedly believed that so long as I committed myself to the success of the business, the business would eventually reward me in kind. A year or so later, having been on salary at Hofberg's, Peter offered for me to be his partner in a new venture called Luchansky's Real Brooklyn Bagels in Annandale, VA. After a year and a half that business was sold as a result of a falling out with Peter and his partners at Hofberg's; but nevertheless I was able to create a completely new concept, and open a business from the ground up, at age 22. Peter didn't care how young I was, all he cared about was that I shared his passion for Hofberg's and Luchansky's, and he gave me a shot. Eventually I returned to Hofberg's and helped facilitate it's sale to a new owner, whom I worked with for a couple of years as their General Manager. This was yet another valuable set of learnings in opening, operating, and facilitating the sale of a business.
Now as I contemplate my ownership of Mala Tang, which is the first restaurant I've opened with my own resources (along with my partners Liu Chaosheng and Liming Zhang), I want to make sure that the people working for me are just as motivated to help propel our business into the future. Especially since I am not the operating partner, as I live 3,000 miles away, I want to develop a sense of ownership in our entire staff that makes them feel more connected to Mala Tang than a mere paycheck. Right now we're "re-grouping" our ownership structure, which will give me more control over the organizational infrastructure of our business. This is the result of my partner, Mr. Liu (who is an extraordinary chef and entrepreneur , not understanding the nuances of successfully managing an "American style" restaurant model. Mr. Liu has been very successful opening authentic Chinese restaurants in Northern Virginia with a business model that focuses on him and family members having unapologetic tight control, very low payroll (at the expense of service), and no frills. This model does not translate well at Mala Tang, where we are trying to encourage Americans to experience the magic of authentic Sichuan cuisine. Mr. Liu has acknowledged this (fortunately), and he has agreed to step back to focus solely on the culinary operations of the business. I had agreed to some of his decisions in order to maintain harmony in our partnership, but it never felt right. Mr. Liu had burned through 3 general managers, and after terminating the last one abruptly, I knew that I needed to step in. I couldn't stand by as we set another manager up to fail.
I believe that it is the business owner (or corporate executives) greatest responsibility, to their business and to society, to open doors for ambitious people...and to keep them open. With this type of mindset, we inevitably allow great talent to rise to the top. Some might argue that by keeping the door open I might be giving opportunities to people who haven't earned it. I have seen the opposite of this theory on many occasions. That's not to say I haven't had poor outcomes by giving certain individuals an opportunity; but as long as I can recognize that it's not a good fit early enough, it shouldn't have too bad of an impact on operations. I think that everyone deserves a chance to challenge themselves in an environment that cultivates success. If parameters are too tight, or pay is too low, or hours are too long...we are just establishing a cycle of mediocrity and attrition. After all, if I ask someone to commit themselves to my business (ultimately to my success), shouldn't they feel as if they have a stake in that success. It's like renting vs. buying...I want my staff to feel like they're "renting to own". Sometimes even renters will take great care of their rented property if they like living there! It's our responsibility as owners and executives to guide these future leaders, and to help them to recognize and minimize failures that lead to the business suffering. As I've always said, I'd rather have to pull someone back than kick them in the butt. I feel as if I've kept the door open whenever I've been in a position to do so, and I think that people who have worked for me over the years would agree with that. I admit that I could always do better with guidance and development. I like to teach by letting others make mistakes, and being there to help them recover from it and never let it happen again. On the first day I've ever started in a new leadership role, my first initiatives are not procedural in nature, rather they are to start building a capable leadership team around me. Then the process of improving operations can begin.
So I would urge business owners and executives to keep the door open for people like me. People who are driven, passionate, and want to do what's best for the business. People who want a stake in it for more than a paycheck.
I was employed not so long ago by an owner who purposely compensated new managers, no matter how qualified, at about 50% of their market value (including myself). His philosophy was "show me" what you can accomplish with my business and in 1 year we'll discuss your accomplishments and what they are worth to this company. He was able to get away with this due to one reason or another, but primarily due to economic conditions causing managers to seek stability in an established company, rather than taking a higher paying position with a newer company. The inherent flaws in this philosophy (I hesitate to call it a strategy), are that from the outset even the most ambitious managers/employees feel unsure about their future with the company. Then getting to know the rest of the leadership team, I realized that nobody (even those that had been with the company for decades), was being compensated even close to market rates. As a result, mediocrity and excuses were the norm; as anyone with ambition and motivation left for greener pastures. Overworked and underpaid was not a cliche, it was the overriding company philosophy. It's not surprising that the company's operations, processes, administration and ownership were fragmented and extremely unproductive, at the expense of profits. I felt that I could really affect change and bring the company to a new level of revenue, profitability, and more importantly customer and employee satisfaction. After a year I submitted my annual report of accomplishments, which was basically ignored. Upon further contemplation of the outcome of this philosophy it seems to me that the owners understood that after a year of being grossly underpaid and working with, at best, mediocre managers...even highly accomplished leaders would not accomplish much. Thus giving them the comfort and justification that they were right not to spend too much on talent, that no matter how good the resume the individual would always fail to deliver exceptional results. Duhhh!
Here's an alternative STRATEGY; which is still financially prudent but would have a much more positive impact on the company's performance:
1) Determine the market value for the leadership position, and then for the first year or so, make it a combination of base salary and incentives. But make the incentives rich enough to get the individual to their compensation goal. If they don't it's not because your cheap, it's because they didn't focus enough on accomplishing their objectives.
2) In year 1, the incentives should be based on measurable process improvements; understanding that it's very difficult to drastically impact any financial results in the first year. This encourages the leader to focus on improving the core processes and procedures that will lead to sustained financial improvements.
3) In year 2, offer a standard base salary increase based on basic performance standards, with the incentives being blended evenly between processes and specific financial results.
4) In year 3 and beyond, the shift can be made to 80% financially focused incentives, with only 20% focused on process based incentives; which are important in ensuring the manager or executive is not blindly pursuing financial results at the expense of sound processes.
5) IMPORTANT: Do not cap the incentives! If the business is profiting as a result of the improved procedural and financial results, let the leader and his team feel that there is no limit to how far they can take the company. After all, isn't that what you want?
I'm not suggesting that my method is that innovative, but it does allow for individuals to prosper as they grow the company. And back to my earlier suggestion that anyone who shows the initiative should be given an opportunity, I stand by that. It doesn't mean that they should be promoted to a leadership role immediately, it means that they should be given some small responsibilities in their area of work to see how they handle them. Then over time, if they are productive and achieve the desired results, they can be given more impactful responsibilities. and eventually be promoted. This allows you to let them grow at a measured pace while you assess their abilities and character.
When someone comes to me once and says they want more responsibility, or they want to become a manager, I usually don't act on it. I usually will have an honest discussion with them about what leadership really is, and then will not address it with them again unless they approach me again. In many cases I've found that employees may have a revelation (or frustration) on a particular day that leads them to want to take the next step in their career. These may be short-lived, especially after I give them a realistic glimpse into the world of restaurant leadership. If they persist, then I don't hesitate to give them an opportunity, unless they are known to be a poorly performing employee. Using this method, I've promoted hundreds of employees over the years, to the benefit of the company I was working for.
So I implore everyone who has the capability to take a hard look at your own practices. Look around and determine who you've overlooked, ignored, or set up to fail. Give them a real opportunity to grow, take a risk and don't be scared of the outcome. People will see that there is a willingness in your organization to open the door to success at all levels; the goodwill generated by this strategy far outweighs the possibility of demoralization because someone did not succeed in their elevated role. In fact it encourages employees to rally behind newly promoted managers who may lack confidence early on. This is, in fact, what I like to call a win-win-win scenario.
I tend to relate to my own experiences, as most of us do. However my philosophies are typically a blend of my own experiences with those of great people who I've read about. I'm a biography addict, and I especially enjoy reading biographies that focus on the development of the person prior to attaining greatness. Walter Isaacson's bio of Benjamin Franklin was particularly inspiring for me, and led to me convincing my wife to give our 2nd son, Brady, the middle name of Benjamin. Anyhow, one of my early experiences in business was working for Peter Wood, whom at the time was the managing partner of Hofberg's Delicatessens. I had worked at Hofberg's for over a year before I had the opportunity to work directly under Peter at his Potomac, Maryland location back in the early 90's. I had established myself as a trusted prep cook and then kitchen supervisor. I had always found Peter's passion for the business infectious, and I decided to begin my lobbying effort to become a supervisor. The only reason I wanted to become a supervisor at the time was because my impact on the business was limited to 40 hours a week. I was an hourly employee and Peter was pretty adamant about no overtime. I just wanted to be on salary, so I could work as many hours as I wanted (usually 70+)! Yes I was young, and I certainly wasn't thinking about a "work-life balance", but it was Peter's passion that really motivated me to do more for the business. I wholeheartedly believed that so long as I committed myself to the success of the business, the business would eventually reward me in kind. A year or so later, having been on salary at Hofberg's, Peter offered for me to be his partner in a new venture called Luchansky's Real Brooklyn Bagels in Annandale, VA. After a year and a half that business was sold as a result of a falling out with Peter and his partners at Hofberg's; but nevertheless I was able to create a completely new concept, and open a business from the ground up, at age 22. Peter didn't care how young I was, all he cared about was that I shared his passion for Hofberg's and Luchansky's, and he gave me a shot. Eventually I returned to Hofberg's and helped facilitate it's sale to a new owner, whom I worked with for a couple of years as their General Manager. This was yet another valuable set of learnings in opening, operating, and facilitating the sale of a business.
Now as I contemplate my ownership of Mala Tang, which is the first restaurant I've opened with my own resources (along with my partners Liu Chaosheng and Liming Zhang), I want to make sure that the people working for me are just as motivated to help propel our business into the future. Especially since I am not the operating partner, as I live 3,000 miles away, I want to develop a sense of ownership in our entire staff that makes them feel more connected to Mala Tang than a mere paycheck. Right now we're "re-grouping" our ownership structure, which will give me more control over the organizational infrastructure of our business. This is the result of my partner, Mr. Liu (who is an extraordinary chef and entrepreneur , not understanding the nuances of successfully managing an "American style" restaurant model. Mr. Liu has been very successful opening authentic Chinese restaurants in Northern Virginia with a business model that focuses on him and family members having unapologetic tight control, very low payroll (at the expense of service), and no frills. This model does not translate well at Mala Tang, where we are trying to encourage Americans to experience the magic of authentic Sichuan cuisine. Mr. Liu has acknowledged this (fortunately), and he has agreed to step back to focus solely on the culinary operations of the business. I had agreed to some of his decisions in order to maintain harmony in our partnership, but it never felt right. Mr. Liu had burned through 3 general managers, and after terminating the last one abruptly, I knew that I needed to step in. I couldn't stand by as we set another manager up to fail.
I believe that it is the business owner (or corporate executives) greatest responsibility, to their business and to society, to open doors for ambitious people...and to keep them open. With this type of mindset, we inevitably allow great talent to rise to the top. Some might argue that by keeping the door open I might be giving opportunities to people who haven't earned it. I have seen the opposite of this theory on many occasions. That's not to say I haven't had poor outcomes by giving certain individuals an opportunity; but as long as I can recognize that it's not a good fit early enough, it shouldn't have too bad of an impact on operations. I think that everyone deserves a chance to challenge themselves in an environment that cultivates success. If parameters are too tight, or pay is too low, or hours are too long...we are just establishing a cycle of mediocrity and attrition. After all, if I ask someone to commit themselves to my business (ultimately to my success), shouldn't they feel as if they have a stake in that success. It's like renting vs. buying...I want my staff to feel like they're "renting to own". Sometimes even renters will take great care of their rented property if they like living there! It's our responsibility as owners and executives to guide these future leaders, and to help them to recognize and minimize failures that lead to the business suffering. As I've always said, I'd rather have to pull someone back than kick them in the butt. I feel as if I've kept the door open whenever I've been in a position to do so, and I think that people who have worked for me over the years would agree with that. I admit that I could always do better with guidance and development. I like to teach by letting others make mistakes, and being there to help them recover from it and never let it happen again. On the first day I've ever started in a new leadership role, my first initiatives are not procedural in nature, rather they are to start building a capable leadership team around me. Then the process of improving operations can begin.
So I would urge business owners and executives to keep the door open for people like me. People who are driven, passionate, and want to do what's best for the business. People who want a stake in it for more than a paycheck.
I was employed not so long ago by an owner who purposely compensated new managers, no matter how qualified, at about 50% of their market value (including myself). His philosophy was "show me" what you can accomplish with my business and in 1 year we'll discuss your accomplishments and what they are worth to this company. He was able to get away with this due to one reason or another, but primarily due to economic conditions causing managers to seek stability in an established company, rather than taking a higher paying position with a newer company. The inherent flaws in this philosophy (I hesitate to call it a strategy), are that from the outset even the most ambitious managers/employees feel unsure about their future with the company. Then getting to know the rest of the leadership team, I realized that nobody (even those that had been with the company for decades), was being compensated even close to market rates. As a result, mediocrity and excuses were the norm; as anyone with ambition and motivation left for greener pastures. Overworked and underpaid was not a cliche, it was the overriding company philosophy. It's not surprising that the company's operations, processes, administration and ownership were fragmented and extremely unproductive, at the expense of profits. I felt that I could really affect change and bring the company to a new level of revenue, profitability, and more importantly customer and employee satisfaction. After a year I submitted my annual report of accomplishments, which was basically ignored. Upon further contemplation of the outcome of this philosophy it seems to me that the owners understood that after a year of being grossly underpaid and working with, at best, mediocre managers...even highly accomplished leaders would not accomplish much. Thus giving them the comfort and justification that they were right not to spend too much on talent, that no matter how good the resume the individual would always fail to deliver exceptional results. Duhhh!
Here's an alternative STRATEGY; which is still financially prudent but would have a much more positive impact on the company's performance:
1) Determine the market value for the leadership position, and then for the first year or so, make it a combination of base salary and incentives. But make the incentives rich enough to get the individual to their compensation goal. If they don't it's not because your cheap, it's because they didn't focus enough on accomplishing their objectives.
2) In year 1, the incentives should be based on measurable process improvements; understanding that it's very difficult to drastically impact any financial results in the first year. This encourages the leader to focus on improving the core processes and procedures that will lead to sustained financial improvements.
3) In year 2, offer a standard base salary increase based on basic performance standards, with the incentives being blended evenly between processes and specific financial results.
4) In year 3 and beyond, the shift can be made to 80% financially focused incentives, with only 20% focused on process based incentives; which are important in ensuring the manager or executive is not blindly pursuing financial results at the expense of sound processes.
5) IMPORTANT: Do not cap the incentives! If the business is profiting as a result of the improved procedural and financial results, let the leader and his team feel that there is no limit to how far they can take the company. After all, isn't that what you want?
I'm not suggesting that my method is that innovative, but it does allow for individuals to prosper as they grow the company. And back to my earlier suggestion that anyone who shows the initiative should be given an opportunity, I stand by that. It doesn't mean that they should be promoted to a leadership role immediately, it means that they should be given some small responsibilities in their area of work to see how they handle them. Then over time, if they are productive and achieve the desired results, they can be given more impactful responsibilities. and eventually be promoted. This allows you to let them grow at a measured pace while you assess their abilities and character.
When someone comes to me once and says they want more responsibility, or they want to become a manager, I usually don't act on it. I usually will have an honest discussion with them about what leadership really is, and then will not address it with them again unless they approach me again. In many cases I've found that employees may have a revelation (or frustration) on a particular day that leads them to want to take the next step in their career. These may be short-lived, especially after I give them a realistic glimpse into the world of restaurant leadership. If they persist, then I don't hesitate to give them an opportunity, unless they are known to be a poorly performing employee. Using this method, I've promoted hundreds of employees over the years, to the benefit of the company I was working for.
So I implore everyone who has the capability to take a hard look at your own practices. Look around and determine who you've overlooked, ignored, or set up to fail. Give them a real opportunity to grow, take a risk and don't be scared of the outcome. People will see that there is a willingness in your organization to open the door to success at all levels; the goodwill generated by this strategy far outweighs the possibility of demoralization because someone did not succeed in their elevated role. In fact it encourages employees to rally behind newly promoted managers who may lack confidence early on. This is, in fact, what I like to call a win-win-win scenario.
