Interface: Applebee's Lou Kaucic reflects on employee retention, diversity and respect

By Scott Hume, Executive Managing Editor -- Restaurants & Institutions, 9/15/2004

Lou Kaucic, executive vice president and chief people officer at Applebee’s International, who has announced plans to retire next July, helped the casual-dining chain reduce employee turnover and create a respected and emulated workplace culture.

Q. Your title hints at the evolution you’ve enacted in human resources at [Overland Park, Kan.-based] Applebee’s. How have you accomplished that?
A. When [Chairman, CEO and President] Lloyd Hill recruited me [in 1997], he said: “We can do more than serve food to people. There’s a way to make this bigger, not just as a company making profit, but in attracting a higher-caliber person and doing greater things.”

The title change happened halfway through my tenure. Lloyd challenged me by asking if we could do better in our people [retention] results and turn it into a core competency. We came up with the maxim that we’re less a food company serving people than we are a people company serving food. I jokingly said we should change my title because I wanted to get out of the old HR mold that [managing people is] a function, it’s transactional. The new title symbolized our turning what was an OK area of our business into a real competency.

Q. Where did you start?
A. With basic blocking and tackling. Compensation was out of whack. We were not paying competitively, had limited benefits and no performance system.

A real push was “mix management.” That’s the notion that not all people are equal in a performance-driven culture. A high performer can outperform an average worker by five times, for example. It has radical implications for a business.

Q. What were the implications for Applebee’s?
A. We established competencies for each role, things such as stamina, teamwork and appearance. Hourly associates rate themselves every six months on a plus, equal or minus basis and then the restaurant manager rates them and we calibrate [the results] on a percentage basis. We only focus on retention of the top 80%. [Other restaurants often] hang on to the bottom 20% to keep turnover down, but we told our managers that we wouldn’t hold them responsible if those 20% end up leaving.

Q. What pitfalls should companies watch for if they implement such a program?
A. You have to validate competencies to make sure you have a handle on the right components. With hourly associates it’s relatively easy; when you get into management, multi-unit and executive levels, it’s complicated.

Every Applebee’s program has to meet three criteria: Is it user friendly, is it cost effective and does it make a difference? In this case, user friendly was critical. The hardest part was getting it down to a manageable number [of competencies] that we knew were still valid. Keep it simple.

Q. You’ve been a strong voice for developing a diverse work force. How best can that be achieved?
A. Of all business challenges, that one ranks up at the top. A few companies do an extraordinary job, but I think the rest of us continue to struggle.

When I started, we had few women and virtually no people of color at the top. There’s no easy way to address that other than to hire talented, diverse people and make them visible in an organization.

The broader challenge is to create a respectful workplace. It’s how you address each other day in and day out. That to me is the ultimate challenge, which is much broader than diversity.

Our average employee is 18 to 24, many from single-parent families where they didn’t have role models and didn’t learn a lot about how to engage each other respectfully. We’re putting a lot of effort into a program called “In This Together,” which trains hourlies and management to get to a G-rated environment.