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Domino's Pizza had an annual employee turnover rate of over 150% resulting in a completely new store crew every 9 months. This high turnover was costly, so improving retention became a priority. Under CEO David Brandon, Domino's launched initiatives focusing on managers, job performance tracking, and incentive-based bonuses. These efforts cut turnover in half, benefiting the bottom line in a low-margin business.

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730 views

Dominos +case

Domino's Pizza had an annual employee turnover rate of over 150% resulting in a completely new store crew every 9 months. This high turnover was costly, so improving retention became a priority. Under CEO David Brandon, Domino's launched initiatives focusing on managers, job performance tracking, and incentive-based bonuses. These efforts cut turnover in half, benefiting the bottom line in a low-margin business.

Uploaded by

harshmaroo
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CASE Dominos pizza takes a bite out of turnover

Nine million miles-thats how far you travel if you went to the moon 37 times. Coincidentally, thats also how far dominos pizza delivery drivers travel each week in more than 60 countries. The 1,70,000 employees who work in the 8,800 stores in these nations get 1.3 million pizzas out the door each day. And they have been doing these each day since 1960, when the brothers, Tom and James Monaghan bought their first small pizzeria in Ypsilanti, Michigan. The recipe for keeping these employees working happily at their jobs is something the company takes as seriously as its pizza recipe. And just as dominos totally redesigned its pizza from the crust up in 2010 to keep customers coming back for more, it also has been rethinking its approach to employees to keep them coming back to work. This is no minor concern for dominos pizza, considering that annual turnover within the stores has been more than 150 percent, resulting in an entirely new crew about every 9 months. Although these figures are lower than the industry average for fast food, the fact that it costs upward of $2500 to replace an entry level worker ( and 10 times more for a manager) was enough to make boosting employee retention a priority for Do minos corporate management team in Ann Arbor. In 2005 under the leadership of David Brandon, Dominos launched several initiatives to tackle the turn over problem, which continued when Patrick Doyle assumed the CEO post in 2010. Brandons approach was straight forward. Because employees tended to leave when manager resigned, he focused primiraly on mangers. Unlike some other CEOs facing the same problem in their companies, he opted not to buy his managers loyalty by raising their pay. He believed that would have only a small and temporary effect on retention. Instead, he initiated a threeprong approach, beginning by hiring better managers. With this in mind, Dominos official worked with researchers to develop an online test to select managers who had adequate levels of financial known-how and whose management styles were appropriate for the company. Once managers were selected they were trained thoroughly in ways of effectively recruiting employees and interviewing them so as to ensure their success. The second focus of the retention effort involved giving store managers tool to assess how well their employees are performing. This consisted of computerized tracking systems that enable them to learn precisely how long the pizza production process is taking and to identify star performance as well as those who need additional help.

Third, all the Brandon is not a fan of across-the-board pay increases, he believes firmly in creating incentives for managers that reward them for outstanding performance. This lead to a system of bonuses based on store profits in addition to stock option for managers whose store sales grew while also creating highly satisfied customers. The effect was to align the financial interest of the managers with those of the company. Since these effort was put in place, turnover at Dominos pizza has been cut in half a vast improvement whose impact has been felt on bottom line. And in an era of crust-thin margins, such developments are welcome for sure.

Questions for discussion: 1. Of the three initiatives put into place to boost retention, which ne do you believe will prove to be the most effective? Why. 2. Based on the material in this chapter, what else could Dominos pizza do to reduce its turnover problem? 3. How might making an effort to promote job satisfaction contribute to reducing turnover? As a manager of Dominos store, what exactly could you do to help in this way?

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