How much should you pay your key staff? Because we are constantly recruiting senior people for our hospitality clients I regularly get asked for advice on this topic. They’re hard questions to answer but there are some general guidelines I follow when I have to make decisions on salary packages.
When working out what to pay people I find it useful to remind myself that you have to sell about $3000 worth of food and beverage each year to pay each extra $1000 in a person’s salary package. An ill considered decision to pay $10,000 more in salary can have quite serious consequences for a business, especially a smaller one.
I don’t mean to give you the idea that I’m automatically against high salary packages, because I’m not — but I’m very careful to try to construct realistic salary packages based on three main considerations: a) the type of hospitality business and it’s ability to support the salary in consideration, and b) the demonstrated skills (not qualifications) and prior track record of the person in consideration for the job, and c) the market salary being paid for this type of position.
You’ll note I do not consider qualifications as a high priority in the salary package. This is because I have come to prefer to base my recruitment decisions more on what a person has demonstrated they can do, rather than what they know. In my experience there are a lot of people out there who have bits of paper that say they are qualified to do various things that don’t necessarily translate into a concrete benefit for my clients.
To illustrate my logic lets take a hypothetical busy 120 seat one-hat restaurant in a popular location, which is one of a company group of restaurants (i.e. the owner does not wish to be hands-on in the business) and examine the salaries I would pay a variety of front of house staff:
A professional waiter would attract a salary of between $550 and $700, depending on their technical, customer service and selling skills. For a senior waiter I would add a 10–15% premium on to the base waiter’s salary, but I would require basic supervisory and training skills in return, together with an above average level of technical and service skills.
Moving up to a Head Waiter’s position, I would be prepared to pay a premium over an ordinary waiter’s salary of around 30–40%, in return for all the skills of the senior waiter, plus well developed recruitment, training, rostering, sales and merchandising skills.
Beyond the Head Waiter we move up to a Restaurant Manager’s position. At this level, we have moved from a supervisory position to a management position. We are looking for somebody who can run the operations of an entire business unit. For us to put someone on at this level they would have to demonstrate strong skills in human resource management, environment and stock management, supervisor development, financial control, quality control and marketing — and they would have to understand the workings of and be able to direct the front of house, kitchen and administration of the business unit. We would pay a premium of 75–100% over a base waiter’s salary for a good Restaurant Manager.
So, we only pay more if we get something very solid in return. The general idea is that we are happy to pay quite large salary packages, provided our client makes a profit on the whole deal. Behind all my thinking is the question, ‘If we pay more, what does my client get in return for the extra money?’
We are always very careful of people who base their job applications on the fact that they have worked in a number of high profile places. I always establish how long they worked in the businesses they list and seek to do a very thorough reference check. Over the years I have come to realise that some of our high profile businesses have a very high staff turnover and a series of well known business names on a resume is no guarantee of performance ability. I certainly would not base their salary package on their ‘pedigree’, as I see business owners doing quite regularly.
It all comes down to the old notion of value for money. In principle there is no limit to the salary I am prepared to recommend to a client, provided the client will clearly benefit from the expenditure. Indeed, we often have to talk clients into paying higher salaries than they intended, in order to attract the right candidate for a particular position.
The hospitality job market is very scary at the moment. There are a lot of fairly basic staff running around applying for Head Chef, Restaurant Manager and other senior positions — in fact we joke that if you want a good waiter, put an ad in the paper for a Restaurant Manager and they will come out of the woodwork. They commonly front up to interviews in designer suits, with professionally prepared resum?s and plausible stories and hold their hands out for $70,000 salaries. A skilled interviewer will reveal their shortcomings in a few minutes; an unskilled interviewer is quite likely to be fooled.
You can’t blame the applicants. A change of job is the only real opportunity al lot of them have for a large jump in salary, and some of them go to great lengths to con you into believing they are something they are not. Just like in real estate the principle is Caveat Emptor (let the buyer beware). Salaries must be based on solid skills, not on smoke and mirrors.