This post was last updated on Jun 07, 2021.
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Ah, the human resources department, simultaneously the butt of countless Michael Scott jokes and a fundamental resource for any high-functioning organization. For the majority of industries, having an HR department is a requirement for success — a necessary component of any company with more than a handful of employees. The breadth of responsibilities assigned to HR team members varies company to company, but is often vast and encompasses everything from recruiting to onboarding, hiring to firing and much more in between. So, if they are such a necessary element, why do so few restaurants have an HR department?
For independent restaurants, creating an entire HR department from scratch can seem out of reach, but the fact is, even having just one person dedicated to human resources in a restaurant can lead to happier employees who continuously learn and grow on the job, and stay with their company for the long term. Think of how much time and money you spend each year hiring and replacing your restaurant employees, rearranging schedules to cover interviews, bending employee responsibilities to cover the onboarding and training process in your restaurant, and negotiating pay without a standard protocol in place. Creating an HR team is simply a proactive approach to employee retention.
How much does employee turnover really cost restaurants?
The National Restaurant Association found that turnover costs restaurants $150,000 per year.
Just because restaurants don’t typically have HR departments doesn’t mean that it’s a sustainable business strategy. Think about the benefits of HR for restaurants that are growing or looking to expand — when you have multiple locations to manage, your number of employees grows quickly. With an HR person or team designed to oversee and juggle their needs, a lot of responsibility is taken off of the plate of the owner, GM, and assistant GM, allowing for even more growth and time to focus on managing the business.
Yes, creating an HR department at your restaurant is an investment. And yes, it is an investment worth making, and one that will pay for itself in a short amount of time.
Why don’t more restaurants have HR departments?
We know what you’re thinking: if the majority of restaurants don’t have HR departments then it can’t be that necessary. The truth is, HR departments are not seen as frequently in the restaurant world as in other industries because up until quite recently, it wasn’t seen as a traditional “industry”. For a long time, most restaurants didn’t provide their employees with any means of stability — no restaurant benefits, no wage increases, limited protections for workers.
Of course, this lack of structure and employee protection had the potential to put restaurant employees at risk. Without benefits or tangible job security, many restaurant employees felt unimportant, when in reality all of them are essential to the success of restaurants of all sizes.
Simply put, HR departments keep restaurant employees feeling secure, in addition to easing the employee management burden on owners and GMs. To invoke industry-wide change takes an organized effort — and one of the first steps you can take toward progress is hiring an HR manager for your restaurant.
Why You Should Consider Hiring an HR Manager for Your Restaurant
If you're not yet sold on the importance of hiring an HR manager at your restaurant, let’s explore a little further into the many perks and benefits of having an HR department.
1. To help source, hire, and onboard new employees
In 2019 the annual restaurant staff turnover rate reached 75% — the highest of any industry. Additionally, COVID-19 introduced an entirely new fleet of unforeseen obstacles to the restaurant industry, resulting in 7.7 million jobs lost in the hospitality industry. While there has been an incremental increase in job creation over the last 5 months, with over 4.5 million jobs added back, the turnover rate in the restaurant industry will likely see high rates in the coming years as we hoist ourselves back up to our full potential post-pandemic.
With an HR team, you have a resource dedicated to the recruiting, hiring, and onboarding process, as well as employee engagement and morale. If you’ve ever led recruitment and onboarding efforts, you know how tasking the job can be. It frequently entails:
Creating job descriptions
Advertising job openings
Processing onboarding paperwork
Creating and teaching orientation
Training hires on workplace policies
Communicating restaurant service standards and guidelines
Fostering employee engagement
Mediating workplace issues or conflicts
Handling terminations of restaurant employees and delicate conversations
While these responsibilities are standard for HR reps in any industry, for the restaurant industry HR team members also serve as industry professionals in order to network well to recruit the best candidates for the job. Without a dedicated recruiting, hiring, and onboarding resource, restaurants are left either loading all of these responsibilities onto the GM, or dispersing them to a combination of assistant GMs and shift managers — a practice that has a high potential to result in miscommunications.
2. To mediate when interpersonal problems arise on the team
When people think of the responsibilities of an HR rep, many of them jump right to picturing them as problem solvers and mediators. While we know that their responsibilities are much more involved than breaking up arguments here and there, it is true that when interpersonal problems arise in the workplace, an HR team member is able to step in and help all parties navigate the conflict.
Having a team with the ultimate goal of acting as mediator means that when problems arise, there is a go-to source for problem solving. Otherwise, the problem has the potential to quickly get out of hand and become unmanageable, or result in an employee’s resignation, leading you to need more staff and having someone with an unhappy experience who will be a negative referral.
When employees don’t have a trusted source they can turn to and confide in when things get tough, they might inappropriately jump rank to bring a small issue straight to a higher-up, begin spreading misinformation to their fellow employees, or worse — feel as though their voice isn’t being heard at all.
3. To advocate for employee needs
HR representatives are first and foremost a resource for employees. In regards to many different workplace topics, HR reps are who employees go to first. When companies don’t have an HR team, senior management is left responsible for both day to day grievances of employees, as well as long term grievances and more serious issues like immigration concerns or sexual harassment.
Helping employees thrive in and out of the workplace is an essential function of HR and managing employee relations can oftentimes feel like a full-time job in and of itself, especially for organizations that are growing. Having a dedicated HR team on hand is essential to improving overall company culture. HR team members may find themselves advocating for employees needs that include:
Supporting employees as their career grows within the company
Providing education assistance or a student loan forgiveness program
Training managers, department heads, and even other HR reps
Supporting employees by providing them with information and resources concerning both physical and mental health
Communicating the intricacies of healthcare and childcare plans
Providing professional development and training programs
4. To help with scheduling
Restaurant schedules are more involved than those of most industries. There is no standard 9 to 5 and some restaurants are open 24/7. Usually, restaurant schedules are determined by employees working in shifts, ensuring that the restaurant is fully staffed at all times. To put it bluntly, scheduling restaurant shifts can be a headache. It is a detailed, highly involved and tedious process that takes time to master.
To help ease the scheduling burden off of the shoulders of the restaurant GM, many companies turn to their HR manager to help with scheduling. By having your HR rep run point on scheduling changes and employee scheduling needs, your GM can save valuable time.
5. To help with payroll
If scheduling is a headache, then payroll management is a tamed migraine, kept at bay thanks to a balance of expertise and delegation. Of course, not all HR reps are tasked with managing payroll and not all companies require their HR reps to oversee this field, but this is where the delegation comes in.
Balancing the payday of a large staff, covering expenses that need to be reimbursed, navigating raises and bonuses — all of this and more being managed by a single person can very quickly be an overload. It is important to not overwhelm your employees, especially those dealing in delicate matters such as payroll. Instead, delegate a payroll managerial responsibility or two to your HR team. This way, you can avoid the migraine altogether by spreading the burden out into more easily managed, lighter loads to carry.
Recruiting, hiring, retaining, and managing restaurant staff is a top concern for restaurateurs. In this guide, we cover everything you could ever need to know about how to attract high-quality restaurant staff and keep them around for years to come.
Outsourcing HR to a Restaurant HR Service
If you read this whole guide on why you should create an HR team at your restaurant and feel like it would be too massive of an undertaking, we have some good news for you: You can outsource HR to a restaurant HR service.
Once you choose to integrate HR services at your restaurant, you get to decide whether or not to build an in-house team (or individual!) or outsource your HR needs to a third-party service. Whichever you choose will depend on the specific needs of your restaurant and employees, but to make the decision a little easier for you to make, let's run through the pros and cons of outsourcing HR.
Benefits of Outsourcing your Restaurant HR
Hiring outsourced HR services is often less expensive than building an internal HR team from scratch, especially for smaller restaurants
If you have a single in-house HR rep, you can outsource the more tedious or repetitive tasks and reserve your internal HR rep for more strategic, personal responsibilities
Restaurant HR requires experience — it may be easier to hire a team of outsourced industry experts than it is to hire someone who requires industry-specific training
Limitations of Outsourcing your Restaurant HR
An outsourced service does not know the intricacies of your restaurant as well as someone who spends every day there
An outsourced HR rep has the potential to be less trustworthy to your employees initially, as opposed to an internal rep who your employees have more of an opportunity to get to know on a personal level
There is an inherently emotional component of the HR rep-employee relationship, which takes time to build with an external HR team
The bottom line is that when you incorporate a human resources team into your restaurant you are actively choosing to make your restaurant a happier, more inclusive professional environment where employees will be more likely to work for the long run. This, in turn, saves your restaurant money and contributes to a better work environment overall. Speaking of keeping restaurant employees on long term, to up your hiring game check out our guide on How to Recruit Your Next Star Employee.