Last month Part I of “Our Most Important Assets” provided a short description of how Starbucks Coffee recruits and develops it’s most important asset. In case you missed it, it was not about coffee. It centered on why and how Starbucks is able to recruit and train good people and what they consider to be so important about their company. It permitted some comparative views on how we have continued to do the same thing in the recruiting and training arena for real estate with less than desired results.

The recent report by REAL Trends on Top Performing Companies showed that the average company in the study spent .9% of their gross commission on recruiting and just over half of one percent on training. These same companies spend about 1.25% on “technology” (however we define it). Salaries and wages for are not included in this number.

With the global commercial acceptance the internet in the late 1990’s and the active consumerism that began to surround its application to the real estate business about 6 years ago, it troubles this practitioner that per person productivity within the top 500 companies on REAL Trends Big Broker report remains relatively unchanged. Couple this with one of the best real estate markets we have seen in years and this statistic becomes most glaring. The per person productivity for the Big Broker Report of 2002 was 11.9 revenue units per year. In 1992, ten years prior, the average for the REAL Trends report was 10.4, a 14% increase over 10 years.

What would happen if the average could be increased to 15 or 20? What would happen to our respective companies if this number increased 10-12% per year for 5 years? Could we become more efficient and therefore more profitable? Could we also put into effect some strategies to reverse the decline of the retained company dollar percentage? Coupled with increased productivity and growth of the one stop shopping experience for the consumer would have a dramatic effect on our overall bottom line. In this light we explored the Starbucks experience in Part I.

This month we will again take a clinical look at another company not in the brokerage business to see what can be learned and applied to our own business. Next month Part III will explore training and what we are doing at both the agent level and for our own managers.
From coffee to hamburgers… No we are not talking about Wendy’s or the Golden Arches. For those not familiar with the west coast operation of In-N-Out Burger it is a private family run company serving California, Arizona and Nevada. The company is based in Irvine, Ca. There are no franchises. Like Starbucks, all stores are company owned.

WHO DO YOU WANT TO EMPLOY AND WHY?

In-N-Out Burger, management has set its sights on hiring only the best young adults to serve its fanatical customers. It's their talented team that has made their burgers a California icon.

In-N-Out focuses their recruiting on high school and college students. First, they offer a flexile schedule in order to help these students work and go to school. Second, $8.25 an hour is more than most jobs open to high school and college kids. Third, In-N-Out is breeding their future managers and even possible executives.

EXAMPLE: Imagine working for In-N-Out Burger for 2 years in high school. You transfer to one near your college in order to pay for books and living expenses. After 4 years of school, you graduate with a degree in business and have no clue what you want to do or where to work. Then, someone at In-N-Out tells you a manager position opened up and you will start at $60,000 a year and move up to $80,000 in five years. Sound alright! But from the side of In-N-Out, they have just bred a 6 year employee for $8.25 an hour and probably didn’t need to give away benefits in that time. Moreover, that manager could be there their whole career because of the competitive pay and great benefits.

This is why on April 23rd and 24th, In-N-Out Burger interviewed for 48 positions at a new restaurant opening in Alhambra, CA. One thousand young adults and high school students lined up over the two days of hiring.

WHY DO EMPLOYEES STAY AT IN-AND-OUT?

In-N-Out remains privately owned and the Snyder family has no plans to take the company public or franchise any units. All Associates are treated like family. Many Associates have been with In-N-Out for over 20 years, and some even worked with the Snyders in the early years. These relationships and the commitment to the company's philosophies continue to make In-N-Out a very special place to work.

• Another very refreshing aspect of In-N-Out is that customers are not subjected to
  "selling up" - being asked if you want any additional items when they order. I wonder if the expensive and non-productive marketing and management idiots in many of the other fast food chains realize how many customers their policies of having inadequate staffing numbers, poor quality low paid staff and "selling up" lose them?

In-N-Out provides a service with employees in a facility that is extremely dependent upon customer satisfaction and repeat business. The success of In-N-Out Burger is directly related to its management practices and priorities. The front line of the business is very much in focus. Concentrating on the customer experience, items such as image, cleanliness and courtesy are high on the priority list. Cutting costs and labor are not. In fact, In-N-Out Burger has a starting wage of $8.25 an hour. This includes paid vacations, free meals and a 401K plan, plus full-time employees receive medical benefits.

Every year, In-N-Out Burger holds its annual company picnic. It is held over two days, with separate picnics for Southern California, Northern California, Nevada, and Arizona so all associates have a chance to attend. Those from areas which are not close to their region's picnic can ride there on chartered busses. There is tons of food, which is all free, and the company raffles off many prizes to the associates, some of which include TV's, camcorders, DVD players, and Sony PlayStation 2's, to name a few.

IT STARTS WITH THE PEOPLE YOU HIRE

When you walk through the swinging glass doors, the counter people often are beaming as if you'd just returned from a long trip. It's obvious they are there to serve you. If they all seem to have graduated from the same charm school, it's because there is an In-N-Out University where associates are trained. Management says it pays higher wages than the industry average and promotes a family-oriented environment. So which candidates make the final cut?
"Ideally, the candidate that has previously enjoyed success in positions that involve customer service or working in a team environment," points out Ken Mart, In-N-Out's vice president of human resources.

The HR professionals at In-N-Out zero in on those candidates whom they feel will go the extra mile. Admit to viewing customer service as a drag and you're out. "When asked how he or she might respond to an unhappy patron, we try to ascertain if there is a genuine desire to satisfy the customer," Iriart explains. "We're looking for answers that communicate a desire not to meet, but to exceed, customer expectations."

Employers like In-N-Out know that the customer relations practiced by the folks on the front lines will make or break the company. That's why, with more applicants than jobs, Iriart takes his time probing areas involving the candidate's ability to positively interact with others.

"As an example, we often ask candidates to recount a previous experience they may have had with a difficult co-worker. The candidate's remarks should verify their flexibility to work with people who hold different views. They should also demonstrate a reluctance to arbitrarily judge others." Judging others is a topic that Gardner thinks about, too.

In-N-Out Burger places their employees, excuse me, associates at an extremely high level. Their four year management training course (yes, they have a school) teaches this philosophy, dealing more with culture and how to treat people than the basics of making hamburgers. They call this the In-N-Out University (established in 1984) and it is used so that every single In-N-Out will be consistent in how the management and the employees treat consumers. The company even established a central commissary, which allowed the company to have quality control over all menu ingredients at its stores. For In-N-Out, it’s all about consistency.

WHY DO ALL THIS?

The theory is a simple one: Satisfied employees make satisfied customers. Jack Deal, president of Deal Consulting Group agrees, "Employees tend to treat customers the same way they've been treated by ownership, management or coworkers of the company". Creating a work atmosphere of respect as well as building pride within the organization, not only increases customer service and productivity but can also attract a higher level of personnel. Deal goes on to say, "One of the eye-openers in my research on recruiting skilled employees is that they will go from a tension-filled workplace to one that has a sense of 'family' often without increased compensation. It appears that the feel of the workplace is as important as compensation."

EXAMPLE: I was recently speaking with Alex, an in-store training manager at an In-N-Out Burger restaurant in Oxnard, CA. I was amazed at not just his knowledge of the company policies and procedures, but he knew everything you could possibly ask about the food itself. He exhibited such a professional as well as courteous attitude.

Their training facility for their managers is a fully operating hamburger stand located within blocks of their original drive through in Baldwin Park, CA., insuring a unified experience regardless wherever the restaurant is located. Add to that the biblical references on the bottom edges on the drink cups and it is a heavenly experience."

"In-N-Out's success shows that you don't have to be fancy, you don't have to be all things to all people, but be consistent," said Bob Sandleman, a restaurant consultant at Sandleman and Associates. Sandleman said his company's surveys of fast-food dining habits indicate that In-N-Out's customers are more than willing to wait a minute or two longer for the goods than they would at, say, McDonald's. "Believe it or not, they rate high on speed of service," said Sandleman, noting that people in the drive-through lane understand that the company makes its burgers and fries fresh-to-order. "That's all built into (customers') thinking, so they don't mark them down for service."

Moreover, customers give In-N-Out the industry's highest marks for friendliness and courtesy – probably, Sandleman speculated, a reflection of the longtime commitment by the company's founders, the Snyder family, to pay employees above-average wages compared with the rest of the industry.

All this starts with the people you hire and how you train them. If you don’t tell your employees what you want, you never know what you are going to get! It is this philosophy and approach to a crowded business that gives this company a distinguishing differential to it’s competition.

Summary Conclusion:
In a business where the difference between one brand of real estate company is seldom different from the next, how do we set our companies apart? Have we lost sight of the consumer believing that technology is the panacea to our growth and service? Are we giving thought and vision to what we might become in the future as opposed to crisis management for the next few months? And, perhaps as coffee houses and hamburger restaurants may be showing us, should we begin to make drastic changes in how we recruit and train the right people to take our companies from good to great?