The Business Lessons in Taco Bell’s Turnover Equation

The Business Lessons in Taco Bell’s Turnover Equation

In a session at last week’s WorldatWork Total Rewards Conference and Exposition, Taco Bell Vice President of People and Experience Bjord Erland discussed how the fast food chain has handled turnover—a major challenge in its sector—in recent years. At HRE Daily, David Shadovitz passes along some insights from Erland’s talk:

Leadership was hearing that pay was a major reason people were leaving. But in order to come up with the right game plan, HR knew it needed more data. So it brought in global consultancy Mercer to better understand the key drivers behind the high turnover and identify ways to address it. When it looked at why workers stuck around, Taco Bell, a unit of Yum! Brands, found that a flexible work environment and strong culture were major drivers. As to why people were leaving, factors such as a high level of stress, lack of training and better opportunities elsewhere emerged as a big contributors. …

Well, the big “Aha!” for Taco Bell was learning that earnings were far more important to workers than their rate of pay. Were they working enough hours, including overtime, to bring home a bigger paycheck? (Erland noted that Taco Bell’s pay was competitive with others in the industry.) In light of these findings, Erland said, the company began to increase its use of “slack hours” to increase the amount of employee take home pay. “Turnover improved when employees were able to bring home more earnings,” he said.

Taco Bell’s findings are consistent with what we’ve learned in our research at CEB (now Gartner): Pay matters, but only so much. In the food and beverage services industry overall, compensation is a leading attraction driver: selecting from a list of 38 total employment value proposition (EVP) attributes that attracted them to their work, 44 percent of employees in that sector said compensation was among the top-five most important attractors. However, compensation is very closely followed by respect (42 percent), then stability (33 percent) and work-life balance (32 percent). When it comes to attrition, a lack of future career opportunities is the top driver across the board, meaning employees are more likely to quit because of this than for any other reason.

When organizations like Taco Bell look at their turnover rates, EVP attributes (including attraction and attrition drivers) can reveal great opportunities for improving their employment brand. They have the opportunity to make adjustments that address other EVP attributes—like respect, work-life balance, and creating future career opportunities—without breaking the bank.

When our members track their turnover, they take a similar approach to Taco Bell. Through the in-membership Annual Turnover Survey, CEB members can see how their organization’s turnover compares to that of their peers. This year, over 500 organizations participated and helped develop a benchmark that is available to all members here through our Unified Benchmarking Platform. Members can also access data on drivers of attraction and attrition. This data is also presented in regularly-updated Global Talent Monitor reports, the latest of which CEB HR Leadership Council members can read here.