Rebooting Your Workforce — Managing Employee Obsolescence at Wendy’s

Everyone knows what it means to reboot your computer, but what does it mean when you reboot your entire workforce?

It’s no secret that the speed of change in business is incredibly fast. And as a result products, operational processes, customer expectations, and even business models are constantly changing. Every time one of these business factors is upgraded, it simultaneously requires the raising of the needed skills and the expected performance levels of the employees. Whenever skill requirements and performance levels are raised, the normal practice is to expect your current workforce to adapt and to meet those higher expectations through additional training.

But what would you do in a business situation where instead of the occasional need for incremental change, you were faced with a business environment that demanded both continuous and rapid change. You could call it chaotic change: a situation where products, customers, competitors, operational processes, and performance expectations needed to be constantly improved to the point where even with training, most of your current employees simply couldn’t handle it. When corporate leadership insists that in order to be successful “everything must change,” should “everything” include changing or “rebooting” the entire workforce?

What Does Rebooting Your Workforce Mean?

There are two categories of rebooting the workforce. The first is a situation where the current workforce has simply failed in its performance.

For example, this month, the school superintendent removed and then replaced the entire 150-person teaching and administrative staff at the Miramonte School in LA because of their failure to effectively handle student abuse issues. Similar rebooting has occurred within failed sports teams and at Cabela’s sporting-goods. The second category of rebooting may also involve performance issues, but the primary driver is the fact that the organization is faced with a completely new business environment. And in order to succeed, it needs a level of performance and skills that most of the current workforce simply cannot provide.

The Case of Wendy’s Rebooting its Workforce

The Wendy’s fast food restaurant chain is a bottom performer in its industry. It has more than 64,000 employees and its revenue per employee is $45,590 (compared to 400,000 employees and a markedly higher revenue per employee of $65,900 at McDonald’s). The industry itself is facing dramatic challenges from previously unheard of areas including new competitors for ready-prepared foods like Starbucks, Fresh & Easy, and even Costco. Customer expectations for food have also expanded dramatically to the point where the range of products as expanded to a wide range including breakfast, luxury products, healthy and sustainable products, and high-end coffee products. In order to be competitive, stores must be dramatically remodeled and marketing has to be improved and expanded so it goes beyond traditional advertising outlets (including social media).

In late January, the CEO, Emil Brolick announced a plan that requires literally everything to improve dramatically. All employees must be capable of providing dramatically increased levels of customer service, they must be able to continually learn new processes, and how to handle and sell completely new products. As a result, the CEO has declared that only “five-star athletes” are capable of handling these complex and ever-changing set of new requirements. To meet the changing needs, a key part of his plan is “rebooting” the workforce. Which to him means it will be necessary to re-interview every employee and manager and then only retaining those few individuals who meet the new “five-star athletes” standard.

15 Reasons Why Rebooting Your Workforce May Be Necessary and Beneficial

Cleaning house and starting fresh is certainly not a new concept. It is, however, certainly unusual to “clean out” your entire workforce. Some of the reasons that support this dramatic move include:

Reasons You May Need Completely Different Workers

As competitors change, the type of employees need to change also — if your organization is now competing against completely new competitors or even firms in different industries, it will require employees with a broader range of skills and the ability to compete. Hiring employees away from these competitors may be a more effective approach than trying to retrain your current employees.
An increased need for innovators — if your organization’s new goal is to dominate your industry like Apple does, you will need to dramatically ramp up your innovation rates. Unfortunately, it is unlikely that you have innovators in your current workforce (they simply weren’t needed) and developing innovators is problematic. As a result, external recruiting may be the only option for dramatically increasing the percentage of innovators in your workforce.
New technology, products, and processes may require agile employees — an environment that includes constantly changing technology, processes, and a continual stream of new products may require a different kind of employee: one who is agile. Some individuals are just fast learners with the agility and speed to rapidly accept and perform after major changes, while other employees simply can’t handle a fast paced environment. Because the previous business model didn’t require agility, it is unlikely that many of your current workers will have the new required agility level.
Current employee burnout may not be fixable — in some jobs (i.e. french fry cook), job burnout or extreme boredom may be unavoidable. As a result, many of your long-term employees may be burned out. Once they reach that stage, they may not be fixable and under the new expectations, you have no choice but to replace them. Fortunately, the fast pace of change in the new work environment may help to reduce burn out.

Reasons You May Need Completely Different Skill Sets, Attitudes, and Performance Levels

Current employees may not be able to meet your expected performance levels — if you expect a significant (i.e. 20% or more) improvement in organizational performance, improving employee performance by at least that amount must be part of the plan. If your previous hiring and retention practices resulted in a workforce comprised of average performers (three star performers), it may be too expensive and time consuming to raise their performance level. And there is another possibility, and that is that these average performers have no interest in ramping up their performance. Or even worse, the individual simply might not be capable of dramatically raising their performance. For example if no one on your basketball team is taller than six feet but new competition requires that you have seven-foot players, no amount of training, incentives, or coaching will turn a six-foot player into a seven-foot one. Your only real option is recruiting a group of seven-foot players.
Current employees may be unable to ramp up their skill levels — the continuous introduction of new products, processes, and technology will require completely different and often higher levels of skills. Current employees might not have the capacity to raise their skills to the needed levels.
Retraining may not work — although retraining is a traditional solution to upgrading your workforce, raising the skills of current employees may be expensive compared to hiring during a time when there is an abundance of highly skilled talent in the workforce due to the weak economy. Retraining is also time-consuming and it may not meet the timetable set for the overall corporate transformation. One final problem is that the retraining might not work, so you will end up hiring replacements anyway.
Employees may be unable to change their attitudes — employee attitudes will also have to improve dramatically. After years of being allowed to work “with a bit of an attitude,” your current employees may be unwilling or unable to change their work attitude and commitment.

HR-related Reasons Why You May Need to Reboot Your Workforce

A superior workforce is hard copy — part of your overall corporate improvement plan would include gaining a competitive advantage in every area. In the case of restaurants and pre-prepared food providers, buildings, products, marketing, and equipment can be easily copied but a fast-learning agile top-performing workforce is hard to duplicate. This competitive “people advantage” is hard to duplicate even when other firms know how your HR operates. For example, even though books have been written on their people management practices, no competitor has been able to duplicate the innovative and productive workforces at Apple, Google, or Facebook.
Your employer branding may require a dramatic shock — after years of hiring average people, your employer brand image could be rock-bottom and as a result, recruiting top performers may not be possible. This is especially true in retail, where potential applicants have numerous chances to interact directly with your current workforce. Given this negative image, it may take a dramatic and public move like “rebooting your entire workforce” to send a message to top performers that things have changed and that if you work here, you will be working alongside the best.
With tenure, employee ROI may flatline — although it’s not true in every case, research has shown that it’s not uncommon for employee performance to level off after a few years of tenure in the job. This may be especially true for dull, routine, and low-paying jobs. With periodic raises over time, longer-tenured employees become more expensive, so you need to make sure that their performance and skill matches their higher pay level. With high unemployment rates, the ROI may be higher and it may be easy to increase employee productivity (i.e. costs versus the value of their output) by externally recruiting replacements with the appropriate skills, attitudes, and performance levels. Incidentally, even the “top graded” new-hires may reach this costs/output plateau, so the recruiting process will also have to be upgraded.
High-performers may not cost any more — in the quick service restaurant industry, paying the minimum wage is common. As a result, there may be little or no pay differential between average and top performers. If top performers cost no more, it makes economic sense to hire and retain only top performers.
Job security may be part of the problem — if you want continual improvement, offering too much job security may actually cause people to reduce their performance because there are no negative consequences from “staying the same.” If rebooting the workforce is a continuous process, this threat may increase the likelihood that your employees will maintain a high level of performance.
Homer Simpson may work here — under the old environment, there were certainly an absence of a performance culture. As a result, it was unlikely that poor performers were identified and released. Under the new performance culture, improved performance management processes may help you find slackers and individuals who are good at hiding their weak performance and their inappropriate skill set.
Keeping ahead of the competition when rebooting becomes common — although Wendy’s is currently taking the lead in rebooting its workforce, if it is successful, other firms will surely follow. If you expect to stay ahead of your competitors, now might be the appropriate time to begin planning at least a partial “reboot” of your workforce.

Final Thoughts

Historically, the typical HR response during a business downturn was to protect jobs and to “place people first.” Because we are all people, that may be a natural response. There is of course some logic in retaining the employees who you have invested so heavily in. However, if the issue was instead equipment like computers, it would not be unusual for executives to order the complete replacement of all obsolete computers.

So the question arises, “has the economic and business environment changed so dramatically that the time has come where rebooting the entire workforce should become a standard practice?” I have included the many negatives related to this practice in this article but it is clear to me that a trend has begun. If the practice’s proliferates, the remaining question is, “Are you bold enough and then do you have the courage and the ‘cojones’ to even raise the topic with your executives?”