Business 11th Edition by William Pride,Robert Hughes ,Jack Kapoor

Exercise 3

Domino's Pizza Franchisee Finds Sharing Success Promotes Success
Turnover-the rate at which employees leave their jobs-is notoriously high in the fast-food industry. According to the National Restaurant Association, more than half of all managers in limited-service restaurants change jobs each year, and turnover among lower-level employees is even higher. So it is rare to find a pizza franchise in which employees are so loyal that they name their children after the boss. But that is exactly the kind of thing that happens at Dave Melton's Domino's Pizza franchises.
Melton has been a Domino's franchisee since 1989 and now operates six Domino's units in New York City and Connecticut. A newspaper reporter recently found Melton preparing his Domino's stores for Super Bowl Sunday. He had his entire staff of about 100 employees working in the stores, plus 12 former employees who were happy to come back and help on the chain's busiest day of the year. Melton knew business would be "crazy" for the two-and-a-half hours of the game, but he was confident, too. Most of his team had been with him long enough to have worked through the Super Bowl together several times already.
All of Melton's managers started as minimum-wage delivery workers who worked their way up and have now been with him for at least six years, some for twice as long. They earn as much as $80,000, partly by sharing in the profits of their stores, which each ring up about $1 million in annual sales. Regular employees are just as committed to their jobs as the store managers. On average, Melton's hourly employees remain on his payroll for eight years. Several of his employees have gone on to follow in Melton's footsteps by becoming Domino's franchisees and hiring employees of their own.
Why is turnover so low at Dave Melton's Domino's units? Workers say they are treated with dignity and respect. For instance, Melton and his wife encouraged one kitchen worker to take a city food safety course. "I was a little skeptical," she said. "I don't like tests. But I took it and I passed. I did well. I got a raise and I got a bonus for passing the test." And, following one of his basic employment policies, Melton promoted her to assistant manager. Another employee, an immigrant from Pakistan, started as a delivery worker and now manages one of Melton's stores. Someday he hopes to open his own. "My No. 1 career goal is to be in my own business and bring my family here," he said. And then there's the employee from Burkina Faso, who has been with Melton for many years and named his son after him.
How does Melton account for his success at retaining people in such a fluid industry? Domino's provides its franchise operators with at least a week of management training and continued support, but Melton's results are special. He admits his first year as a franchise operator was filled with hiring mistakes, often the result of hasty decisions. Some employees were disruptive, argued with customers, had high absentee rates, and even stole from the firm. Melton quickly learned how to do better. "You are on your feet," he says of the jobs in his business. "It is long hours. It takes a certain kind of person to love it"-someone who can work fast and cheerfully.
Most of Melton's hires now are referrals from current employees, who come from many countries, and he devotes time to training them, setting goals with them, sharing information about how the stores are faring, and paying bonuses for outstanding work. "My role is being a resource, providing motivation, inspiration, and compensation," he says. "This is one of the places where so many people get their first experience in America. It is fun exposing them to the way capitalism and business in America works." 13 For more information about this company, go to http://www.dominosbiz.com.
What effect do you think Dave Melton's compensation methods have on his firm's success?