KFC keeps staff recognition and bonuses on the menu

KFC’s culture of staff recognition and bonuses is helping to dispel some myths about the fast food sector as a rewarding career option, says Ben Jones

The fast food industry has not, historically, been seen as the most attractive place to build a career, particularly for those starting at the bottom of the ladder. But the sector is working hard to overcome this perception, with one of its major players, Kentucky Fried Chicken (KFC), at the forefront of the battle.

When it comes to remunerating staff, however, the company does not have a vast pot of money to play with. Misty Reich, vice-president HR at KFC UK and Ireland, says: “It is very difficult to compete on cash-based compensation, particularly for our hourly employees because of the cost basis. We have nearly 24,000 employees in our UK business. Small moves in base rates of pay have significant multiplier impacts from a cost standpoint, so we are looking at being creative about where can [we] differentiate and where should [we] differentiate that will make a difference.”

For all the talk of fast-service restaurants being a transient career option, the average length of service for a typical employee, such as a restaurant staff member, is two years.

Reich believes the company’s culture of recognition sets it apart from its competitors. “It is not something you can really fabricate,” says Reich. “It comes off as being very inauthentic if it is not in the DNA of a business and it is very much in our DNA.”

Positive effect on retention

This has a direct, positive effect on staff retention, she says. “People really become attached to the culture and they find it quite difficult to replicate outside of our company, so employees tend to stay.”

KFC also puts a significant focus on making employees feel valued. This is manifested in the way employees treat each another, and is also achieved through the company’s reward package.

For example, all employees are eligible for a bonus through a range of schemes. The company’s quarterly plans give all staff the chance to earn a bonus on top of their income, whether they are paid on an hourly rate or receive an annual salary.

Employees are judged against two performance measures – customer satisfaction and operational basics, such as how clean the restaurant is – which act as hurdles they have to clear before they can begin to receive bonuses. Beyond this, bonuses are based on sales made as a restaurant.

Bonuses paid in vouchers

The bonuses are paid in the form of retail vouchers up to the value of £200 per employee each quarter. Reich explains using vouchers rather than cash is intended to create a sense of fun for staff.

“There is a lot of complexity that comes with cash, but there is also fun that comes with the retail vouchers,” she says. “This is not necessarily intended to be an income supplement. It is meant to create energy, engagement with the goals of the restaurant and, for a team member, it is fun.”

Meanwhile, managers and senior staff can earn cash bonuses depending on how they fare on a balanced scorecard, which takes into account various metrics, including sales and customer satisfaction.

Reich says the aim is to use the bonuses to create an ownership mentality among KFC employees. Career progression is also considered to depend on this. The company tracks the promotability of its restaurant staff by carrying out an in-depth review of their performance twice a year, with the aim of deciding which of them has the ability to move forward in the organisation.

KFC’s efforts to change the outside perception of its restaurant staff, allied to the effects of the recession, which has attracted both staff and customers, means the brand is enjoying a boom time. In February last year, it announced plans to create 9,000 new jobs across the UK in the following three to five years.

Benefits offering improved

The company has also been working to improve its benefits offering. Last year, for example, it worked with Jelf Employee Benefits to select a new healthcare provider and look into the possibility of introducing total reward statements.

But there is still a way to go before Reich will be completely happy with the package. KFC currently offers a voluntary benefits scheme for all employees, which it introduced with provider Perkz in 2009, but up to now it has not offered a flexible benefits scheme. This is something Reich is looking into and she expects to spend the next 12 months investigating all the options around flex, potentially rolling it out in about two years, if it suits the business.

“What I do not want to do is take the opinion of consultants, or my own opinion and crank out some whizzy flexible benefits offering that really does not meet the [firm’s] needs,” she says.

Although Reich is proud of the company she works for, she believes one area it could improve is communication. Using the language of KFC’s main business of frying chicken, she describes its present standard of communication as “unsizzly”, but pledges that it will improve.

Total reward statements

To achieve this, an intranet is in the pipeline, along with total reward statements. Reich hopes the statements, which will come into operation for the first time next month, will create more of a dialogue between employees and KFC’s hierarchy.

“I would like to stimulate, through total reward statements, the amping up of the level of discussion from staff giving us feedback and input into their benefits,” says Reich.

Companies she believes manage employee communications well include O2, Starbucks and, perhaps surprisingly, McDonald’s. “I would be remiss if I did not confess that I think McDonald’s has done some good things,” she says

“I think it is interesting how it has taken an almost consumer approach to how it talks about its jobs and its benefits.

That is impressive. I have communication envy, but that is OK because we are going to become stunning at communication.”

Feedback from franchisees

A further challenge for KFC is that a number of its restaurants are franchises, which it has to be taken into consideration when putting benefits in place. Although each individual franchisee decides who administers core benefits such as pensions, KFC looks to its franchisees for feedback on other benefits.

Many of its non-cash benefits are available to franchisees, should they choose to offer them to their staff, and its voluntary discount package was negotiated to include franchise participation.

So Reich and her team have a number of challenges to face over the next few years, not least the 2012 pensions reforms, which she describes as “daunting”.

But there are strong signs that the fast food industry’s image as an employer is changing for the better, and an evolving benefits package at one of the industry’s leading players looks set to make that change go from strength to strength.

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KFC at a glance

Kentucky Fried Chicken (KFC) was founded in 1952, although Colonel Harland Sanders, the driving force behind the business, started serving his original recipe fried chicken in 1930 at a petrol station he owned.

After a motorway was built that bypassed his town, Colonel Sanders was forced to go on the road to sell his chicken. This led to the first Kentucky Fried Chicken outlet being opened in South Salt Lake, Utah, in 1952.

By the 1960s, Kentucky Fried Chicken was sold in more than 600 franchised outlets in the US and Canada, and the first UK restaurant opened in Preston, Lancashire in 1965. Today, there are more than 700 outlets in Britain, both franchised and company-owned.

In 1986, KFC was bought by PepsiCo, having been bought three times before by different companies. In 1997, it was spun off into an independent company, Yum! Brands.

Yum! Brands has its global headquarters in Louisville, Kentucky and its UK base in Woking, Surrey. The company also owns Mexican food chain Taco Bell, fish-and-chips business Long John Silver’s, A&W Restaurants, Pizza Hut and WingStreet.

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Career history: Misty Reich

Texan Misty Reich says she fell into HR by accident after taking an internship with US telecoms company AT&T in 1994.

She stayed with the firm for more than 10 years, rising to become vice-president of HR for two divisions, before joining Yum! Brands in 2005 as chief people officer of its A&W Restaurants and Long John Silver’s businesses.

She moved up to become vice-president of global talent management at Yum! Brands at the beginning of 2006. Since August 2007, she has been vice-president, HR for KFC UK and Ireland.

Reich was not daunted by her career path involving a move overseas. “I joined Yum! Brands, our parent company, explicitly because I wanted to move abroad,” she says. “I wanted opportunity, I wanted to stretch myself and this opportunity came up and they offered it to me and I was extremely fortunate to be able to come over here.”

Reich is proud of the fact that people seek her out for advice. “There are individuals I have hired or individuals I have had the opportunity to develop and as I look back, that is what I am most proud of,” she says. “Particularly the people who still stay in touch and especially people that still seek me for out for coaching and advice and they are progressing and still driving their careers. I get a real buzz out of that.”

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Bonuses add spice to KFC benefits menu

Petra Bool, restaurant general manager at KFC’s Bracknell restaurant, has worked for the company for 20 years.

Bool has private medical insurance for her family and is a member of the company’s pension scheme, but she most values KFC’s quarterly bonus plan. “There are very set guidelines on what we have to achieve to get a certain amount of money value as a bonus, so, four weeks before you get paid, you can work it out – how much you are going to get, what you can afford and what you are going to do with all your money,” she says.

“It is enjoyable because you are getting rewarded for the hard work you are putting in and for the achievements you make.”

But financial rewards are not the only reason Bool has stayed with KFC for 20 years. “It is probably the people I work with,” she says. “I get great joy out of taking some people on, training them, and making them into team leaders, assistant managers, in building the next manager and giving them some learning on their way. I think that is very enjoyable to do, to see people grow.”

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KFC’s benefits offering

Pension

• Stakeholder pension scheme open to all salaried employees with more than three months’ service, with no company matching contributions.
• Defined benefit scheme, which was closed to new members in 2006, has an employee contribution of 7% and employer contribution of 14%.
• A defined contribution scheme is available to all employees. Contributions vary depending on grade to a maximum of 6% employee and 9% employer.

Health and wellbeing

• Eyecare vouchers for office-based employees and business-needs drivers.
• Income protection for all salaried staff.
• Private medical insurance (PMI) for salaried employees.
• Employee assistance programme.

Family-friendly perks

• Ad-hoc flexible working arrangements.
• Enhanced maternity and paternity pay for salaried employees.
• Childcare vouchers.

Holidays

• 20 days for staff at all levels, up to 30 days after 10 years’ service.

Other benefits

• Voluntary benefits programme.
• Performance-based bonus and recognition schemes.
• ‘Employee of the quarter’ scheme.
• Champs Club for top 50 restaurant managers and Champions Club for top 15 restaurant managers.
• Free meal for all staff when on shift (subject to shift length, according to employee’s contract).
• Tasting kitchen at company HQ, allowing staff to try potential new products.
• Company car for business-needs drivers and senior staff.
• Free fruit for head office employees.