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February 10, 2007

Treat Employees Like Family

“In a business where front-line employees represent the face of the company—where every transaction counts—it only makes sense to treat the store-level employees with the same respect (and benefits) as those in upper management.” -- John Moore | TRIBAL KNOWLEDGE


Steven Bigari, a successful McDonald’s franchisee from Colorado Springs, understands the importance of treating front-line employees with compassion and respect. In what began as a plan to reduce employee turnover has blossomed into a business ethos where the Golden Rule of treating others like you would like to be treated became standard operating procedure at his Golden Arches McDonald’s locations.

In 1990, Steven Bigari was a struggling McDonald’s franchisee dealing with dire cash flow problems. His first plan of action was to reduce costs across the board, including the elimination of paid vacations for front-line employees. Bigari presented his cost reduction plan to a mentor of his who promptly shot down the plan by saying, “You can afford to give up your rizzing-razzing vacation, but they [front-line employees] can’t, so I hope you have a better plan than that.”

Bigari understood exactly what his mentor was saying:


So instead of reducing employee benefits to curb costs, Bigari increased the benefits he offered to employees. He added services such as day care, transportation to/from work, and small loans to the mix of employee benefits. Bigari made the business case for adding such expensive benefits believing it would not only reduce employee turnover, but also keep employees more focused on daily customers at work than on their daily problems at home.

Bigari was right.

Employee turnover at his McDonald’s locations fell to 100% which is remarkable considering employee turnover at most fast food places is 300%. (To bring those percentages to life, Bigari’s McDonald’s locations would turnover its staff once every twelve months compared to other fast food places that change over staff three times in the same period.) Employees at Bigari’s McDonald’s said they felt motivated to work harder because of the benefits they were receiving. And in turn, profit margins increased by more than three percentage points at Bigari’s McDonald’s locations.

To add day care to his list of employee benefits, Bigari partnered with a local church to provide such services. In order to provide employees with transportation to/from work, Bigari used to buy abandoned cars from police auctions and resell them to employees at cost. Now, a local car dealership refurbishes donated cars and resells them to the employees. The short-term/no-interest micro loan program Bigari setup lent nearly $30,000 to front-line employees, which all but $960 was repaid.

Treating front-line employees as family not only changed the lives of his employees, it also changed his life. In June of 2006, Bigari sold his McDonald’s franchises and based off his experience treating employees like family, he created and now runs a non-profit group called America’s Family to offer similar services to low-wage employees at other companies.

The lesson for us all is to Practice the Golden Rule. Treat employees as you would like to be treated and the company will be ultimately rewarded. Endearing and enduring companies are those that develop meaningful relationships with its employees that go beyond being professional to being personal.

Thinks Big About the Little Guy | New York Times (Feb. 4, 2007)
Further Learning:
McDogooder | Westword (Aug. 24, 2006)
America’s Family website | "Success Stories"


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Is it more "Respect People" over the more paternalistic "Take Care of Your People"? I wonder about this since Ricardo Semler is quite explicit about the distinction.

Hmm ... either way is better than the current way most businesses operate. The "respect" approach and the "paternalistic" approach seem better than the "people as pawns" approach.

Great story! And what a great opportunity for others to take a lesson! Also, what a stark contrast to the point in Seth's awesome post today on "Sheepwalking".

These are the same qualities and behaviors that we try to Coach all of our clients on, because not only do they work, they are the right thing to do!

But the question that comes to my mind is why we can't celebrate the actions of people like Bigari - and Semler - without getting bogged down by talking about definitions of their behavior. I don't give a damn what you call it as long as we hold up these examples and shout the ideas from the rooftops.

We need more people "doing it" than trying to find the rights and responsibilities necessary to not label it as paternalism.

It’s a distraction we really don’t need considering the poor state of personal relations we face in every facet of our lives, every single day.

Another issue that comes up though is the transient nature of the restaurant biz and lower-paying jobs in general. It's easier to treat employees in better jobs like family because your expectation is that they'll be there longer.

And that's why I find what Steve Bigaria managed to accomplish so remarkable. He dealt with low-wage employees but built processes and perks to treat them like family. Bigari proved that treating employees like family can be done with low-wage employees.

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