Our Rudy’s “Country Store” & Bar-B-Q restaurants increased average unit sales from just over $3 million in 2000 to $8 million in 2011. From its inception in 2007 through 2011, Mighty Fine Burgers, Fries and Shakes increased annual unit sales from just over $2 million to more than $3.5 million in 2011, triple the unit sales of its best competitor. These results would not have been possible without Topgrading. – Ken Schiller, President and Co-owner
K&N MANAGEMENT (500 EMPLOYEES)
Industry: Restaurant Chains
Below is the original K&N case study, which is worth reading since it shows Topgrading methods and results and contains practical insights and advice for would-be Topgraders.
But first, here is a 2018 update, based on conversations with CEO Ken Shiller and Topgrading Director, Danielle Robinson.
The Company: The company has grown to about $80 million in sales (up from $60 million in 2011). Ken estimates the contribution of Topgrading to K&N’s success since the original case study to be:
“I consider Topgrading to be the key driver in our impressive sales growth, since achieving our mission and vision is 100% linked to having a team of A Players. In fact, our senior leadership team recently created a list of Key Culture Drivers for our organization and Topgrading was a unanimous selection. It truly is hardwired into our company culture.”
Results: Headcount has grown slightly from about 500 employees to over 600. An important result: with Topgrading, companies have more A Players, but fewer employees overall. Their first Rudy’s (restaurant) in 1994 had $25k in sales and in 2017 did $300k. Percent A Players throughout the company has improved from 86% to 89%. In addition to Ken’s advice (below) in the original case study, his advice to would-be Topgraders who are CEOs is:
“It is frustrating when I hear fellow business owners or CEOs comment that Topgrading takes too much time and is too expensive, when the exact opposite is true. While it does require an upfront investment, the return on that investment is the difference between world class results and mediocrity. I am often amazed at how short-term thinking constrains organizations from achieving winning results.”
Topgrading Department: Danielle’s department of 3 is separate from Human Resources. Her department hires for all jobs.
- Entry level: There is a 10-minute in-person screen in the restaurant, then a solo Topgrading Interview at the corporate office. They conduct only one reference (recent manager) call since almost all the reference calls are positive.
- Professional/Manager level: The screening interview is in person, since a professional image is key in the restaurant business. Danielle and the hiring manager conduct a tandem Topgrading Interview, using the auto-populated Topgrading Interview Guide. Candidates get approval from supervisors to take reference calls, which are conducted using the Topgrading Reference Check Guide.
In addition to advice given in the original case study (below) Danielle has this suggestion to would-be Human Resources Topgraders:
“The Topgrading method of hiring gives you piece of mind that you are hiring a solid candidate because no stone is left unturned in the interview process. It is definitely worth the upfront investment of time and resources.”
- Improved from 21% to 86% A Players hired, total company.
- Centralized hiring with Topgrading Director and HR conducting tandem Topgrading Interviews.
- Value of simplified process for entry jobs, but necessity of performing all steps rigorously.
The K&N case study is one everyone can relate to. It’s a small growth company, and it runs restaurants we all are familiar with. I’ve chosen K&N as one of the featured case studies because the business is understandable and the case study shows how “work in progress,” doing the basic Topgrading steps first and gradually embracing the remaining steps, succeeds.
The Company: K&N Management is a retail food company with two brands—Rudy’s “Country Store” & Bar-B-Q, and Mighty Fine Burgers, Fries and Shakes. There are 500+ employees in eight stores. The company was founded in 1994 by Ken Schiller and Brian Nolen.
Topgrading at K&N Management: In 2006 Schiller read a magazine article on Topgrading and, frustrated with hiring failures, he and Nolen launched Topgrading. The Topgrading Director, Danielle Robinson was hired. Smart & Associates conducted a workshop for senior managers, and store managers read Topgrading and met in order to plan how to implement Topgrading in the stores.
Using the Topgrading Cost of Mis-Hires Form, the average cost of mis-hiring an entry-level employee was estimated to be $28,000, and for a store manager, $320,000. K&N was one of the first companies to use the Topgrading Snapshot to prescreen candidates.
Topgrading Results: Hiring of entry-level A Players has improved from 21% to 86%, and for management, the improvement has been from 62% to 92%. Success promoting people has improved from 65% to 90%. The A/B/C Player determinations are derived from Job Scorecard ratings, part of the performance-management system.
Additional Business Results: K&N Management was a recipient of the 2010 Malcolm Baldrige National Quality Award. Like other case studies in this book, K&N sees the award as building its recruitment brand. It is sure to attract more A Players because intuitively people associate super quality with super people, so I encourage all companies, big and small, to go after “best company awards,” although I have a caveat. I’ve seen some companies spend so much time and money getting such awards that actual business results were harmed.
As mentioned above, K&N Management operates two high-volume, fast-casual restaurant concepts with over 500 team members. The restaurant industry is well known for knee-jerk hiring practices that result in extremely high turnover. Every reader can relate to this fact—“Huh? A Players in fast-food restaurants?” Schiller points out that K&N stores are a notch up from fast-food outlets, but he believes that having A Players visible to the public in industries where C Players are the norm must be good for business. Schiller: “Topgrading is the turnkey hiring process that guarantees we are using the discipline required to select the right people that will follow our processes, embrace our culture, and delight our guests.”
When was the last time you ate at a restaurant that obviously had a lot of employees who were trainees? Yesterday? Me, too. And we all probably have a favorite family restaurant—no, not a store that serves mostly families but one in which the family members are long-term, dedicated, service-minded A Players.
Danielle Robinson, with the interesting title of Topgrading Director, said,
Since we started using Topgrading, we have decreased the number of involuntary terminations within our company from 37% in 2009 to 14% in 2010. We have been able to do this as a result of hiring A Player team members and implementing an effective coaching process. We have also increased our number of internal promotions; 63% of our General Managers were once hourly team members. Topgrading has allowed us to promote people already familiar with our culture and expectations, rather than always having to search outside the company for A Player managers.
PROGRESS ON THE 12 TOPGRADING HIRING STEPS
As stated, the company is a “work in progress,” meaning that some of the Topgrading steps are done extremely conscientiously and some are just beginning to be implemented. Specifically:
Step #1 Measurement: Done—see above.
Step #2 Job Scorecards: Done.
Step #3 Hire from Network: About 40% of new hires in the stores come from referrals. Employees get “bounties” of $500 ($10 when a person
starts the job, and the rest over a period of 1 year).
Step #4 Career History Form/Topgrading Snapshot: Used for management. “I love the Topgrading Snapshot. It is such a time-saver! It takes seconds to see the most important information and reject weak candidates, rather than having to read the entire résumé.” (Danielle Robinson)
Step #5 Telephone screens: Not used, but will soon be tried.
Step #6 Competency Interviews: Competency questions are used in the Topgrading Interview for management applicants and entry positions.
Step #7 Topgrading Interviews: Used for management; Danielle and HR are the typical interviewers. A scaled-down version is used for entry positions.
Step #8 Interviewer Feedback Form: Not used, but not needed because the Topgrading interviewers are so experienced.
Step #9 Executive Summary: Not done, “but we should.”
Step #10 Candidate arranges reference calls: Done.
Step #11 Coaching in first couple of weeks: Done at 90 days but will be tried earlier.
Step #12 Annual Measurement: Not done yet, but are considering doing annual talent reviews and getting stats on success hiring and estimated costs of mis-hires.
Best Insights and Advice from Executives to Would-Be Topgraders
- It is immoral not to redeploy C Players.
- A Players attract other A Players.
- C Players will cause A Players to leave.
- You raise starting pay when you are not satisfied with the top 10% willing to work for current pay being offered.
- Do not hire a person that does not align with your culture.
- Topgrading helps you learn how to break down and define life balance.
- It was challenging, at first, to get buy-in from some of our managers, but as they saw the results, they realized the process worked very well.
- Using the TORC process is a great way to keep candidates honest with what they are telling you.
- The Topgrading process may take longer than you are used to, but stick with it, because it works.
- The Topgrading Snapshot is an invaluable tool when it comes to reviewing candidates. It drastically cuts down on the amount of time spent on this task.
Chat With Danielle Robinson
Brad: We are very fortunate to have Danielle Robinson with us today. With an increasing interest in small and midsized companies in Topgrading, I think the next book is probably going to be “Topgrading Small Businesses.” It will have a whole lot of information from people like Danielle who can not only just tell a story which she is going to do, but also to provide some advice and counsel.
Danielle will give an overview for about 5 or 10 minutes — what the company is like, what kind of hiring success they’ve had, what kind of jobs they have, what kind of hiring processes they use, how have they Topgraded, and what kind of results they you gotten. Then I’ll take your questions for Danielle – just email them to me.
Brad: Danielle, thank you so much for spending some time on a Friday afternoon sharing your Topgrading story.
Danielle: Well, thank you so much for asking me to be a part of this call Brad. I really appreciate it, and it’s quite an honor for me as well as our company. I guess we’ll just start off and talk a little about our company and what we do.
K&N Management operates the Austin Texas franchise of Rudy’s Country Store and BBQ, as well as our original concept, Mighty Fine Burgers, Fries, and Shakes. We have 7 restaurants total and we’re just in the Austin Texas area. We have approximately 450 total employees in the restaurants and corporate office; most of our employees range in ages 18 to 45. We’re a privately held company with two owners and we’ve been in business since 1994. That’s starting with the Rudy’s franchise and then opened up Mighty Fine Burgers in 2007. Both restaurant concepts are classified as fast casual dining and we offer counter service where guests can eat there or take food to go.
As far as how we came upon Topgrading one of our owners was traveling and read an article about Topgrading in a business magazine and our company was really looking for some sort of plan to get all managers in the company interviewing, evaluating and coaching the same way and get better results. We were continually losing A players, keeping C players way too long. We were often under staffed and would sometimes re-hire C players because we needed people. So, continuing to mis-hire and hold on to these C players resulted in a lot of issues that affected products and service and ultimately the bottom line.
Before we began Topgrading we estimated our A player percentage was approximately 25% and our current A players percentage is now 89%. We’re pretty excited about that and obviously it shows that Topgrading definitely works.
Brad: How did you do it?
Danielle: We made it our company focus in 2006 and to roll it out we did a workshop with all of our managers. The owners, directors and general managers at these locations read the book Topgrading over a 12 week period, and they broke into teams and determined how they would implement Topgrading. The system that everybody came up with that we implemented, and it included creating job score cards for all positions, conducting Tandem Topgrading Interviews for all management hires and promotions, conducting Topgrading base interviews for all hourly employees, checking references and also conducting bi-annual scorecards.
That’s pretty much how we implemented it and then the following year our owners decided to implement a new position called Topgrading Director, which is the position I was hired for and that was created so there would be one person managing talent. So now all our hiring is done through the corporate office, which creates more consistency in the talent being hired. We started out with 25% A Players I 2006 and now, 4 years later, we’re up to 89%. Topgrading has been working really well for us.
Brad: A couple of questions are coming in and I’ll ask some as well.
Who would you say is the driver of Topgrading? Is it you, or the CEO?
Danielle: Both of our owners bought into it and the owner who’s more involved in this side of the company with hiring, it really comes from him from the top down. He’s the one that read about it in the business magazine and he’s the one that’s pretty much pushed it forward from that point on. He feels pretty much that one of the most important things we do in our company is Topgrading because that’s what obviously what brings in the people that run our stores.
Brad: Topgrading has to be driven from the top. If someone doesn’t like high performance standards, HR can lean on them and say, “You know, Joe… you have 10 people reporting to them, you give them all top performance ratings but they’re not all top performers.” Then if Joe can run to the CEO and say, “Danielle’s pressuring me too much and wants me to get rid of people who are really A Potential, blah blah blah.” And if you’re not supported by the CEO, boom, its dead. There’s just not much you can do because the other key people are at your level and you don’t have a line of authority over them. When people at the top drive it, they reward it, reinforce it, and back you up on that high performance standard. HR obviously has a very important roll but it can’t be everything, it can’t be the whole story.
Danielle: Right, and it’s great to have the support of the owner with Topgrading because any time there might be a potential issue everyone knows that this is the most important thing so everyone is going to fall in line and do what’s necessary in order to maybe get somebody into a position because they are an A Player. Even though there is maybe not a position available but we’re going to bring someone in anyway because we know it’s driven from the top down and that’s what’s expected.
Brad: Someone asks, “What is your major advice on what to do or not do for a smaller company to successfully Topgrade?”
Danielle: Well one piece of advice that I feel is huge. You want to make sure you stick with the process even though at times you may feel that it takes too long or sometimes in an interview you have that feeling that someone is an A Player so why do I need to go through all the steps, I’ll just hire them. No matter what, stick with the process because there have been a handful of times that I could have mis-hired someone had I not followed the process completely. Once you get their past supervisors on the phone and start checking references you realize, oh, this person isn’t quite what they said they were in the interview. You need to follow the process even if you need someone right away.
Brad: Next question that came in is: “What were any major hurdles, stumbling points, setbacks that you had?”
Danielle: Well, one was when we were getting Topgrading off the ground we did have a bit of resistance from some of our managers who felt that the process took too long and that you might lose good people while you’re waiting to get a hold of references. That was probably one of the biggest obstacles and really we just stuck with the process and those managers learned that that’s just the way it was going to go. But ultimately, it’s worth it in the long run because you know you’re going to get a solid A Player if you wait and check those references and just wait for the time it takes get a hold of somebody.
Brad: How many tandem interviewers are there? I assume you personally do a lot of the tandem interviewing for the store manager and that sort of thing. Who do you tandem with?
Danielle: It is usually me and our HR Director… we are the two that usually do the tandem interviews together and if she’s not available our executive director will do the tandem interviews with me.
Brad: Another question from someone that does retailing. “Do you do any version of Topgrading within the stores below the store manager level?”
Danielle: Really it’s all done through the corporate office. I do the Topgrading Interview process with hourly candidates. It’s not quite as extensive as what we do with managers. A lot of the questions for managers won’t apply to the hourly candidate. We go through school history, work history, and then ask some focused questions that apply to the job.
Brad: Next question. “You went from 25% to 89%; it sounds like you’re there, so what are your plans for the future with respect to Topgrading?”
Danielle: Our plan for the future is to continue fine-tuning the process. Each day, even though I’ve been doing this now for 3 years, each day is a learning process — there is always something new that I learn. There is something that we did recently as a company, not just with the hiring process but with the coaching process. We recently got everyone recalibrated as far as managers on the scoring system with our job scorecards. That’s something we’re always looking to do —making sure everyone is calibrated and has the same standard throughout the company as far as coaching goes.
Brad: Someone kind of reacted as I do and I think now there are 6 books on Topgrading, and we always recommend the hiring manager be a tandem partner with a lot of times it is HR. You said it’s you and HR that are typically the tandem interviewers but the boss of the person who will be hired is not one of the tandem interviewers — is that correct?
Danielle: Right, and the reason for that is, we could bring in a General Manager to do the tandem interview with me when we’re hiring a store manager or restaurant manager but we’ve decided not to do that because since I do it on such a regular basis it’s pretty consistent with the results and if we have the same two people doing it all the time, me and our HR director for the most part, we get consistent results and it frees up the General Managers to take care of the business in the restaurant.
Brad: We have a couple other questions: Ken says, “When you’re a very small company one to one and a half people we don’t have the budget to hire a Topgrading expert. How do you do tandem interviewing?”
Danielle: If you don’t have someone to tandem interview with at first then you start out with yourself. Get real familiar with the material; make sure you know it inside and out before going into that interview. Then eventually as you’re able to hire someone else that can do the tandem interviews with you, then just make sure they’re well trained and then you can have them help you out.
Brad: I have a supplement to that. I would suggest, like if you were my next door neighbor and you have a tiny company, you’re not going to afford four thousand dollars for a Topgrading professional, find someone, just someone you know. Perhaps another neighbor, a business associate, and teach them a little bit about Topgrading interviewing just let them sit in. Just to have them present, take some notes. They can follow the interview guide and get a sense of what the chronological interview is all about and here’s a really cheap way to get training. Go to a Topgrading shop, scroll down and you’ll see the Topgrading Career History Form and there’s a 27- minute video teaching people what it’s all about. This is probably the best pre-screening instrument on the planet. Really important for getting solid data on people so you don’t waste your time on interviews on them. If you scroll down a little further you see the Topgrading Interview Guide and there’s a free 47-minute course. I’m hesitant to recommend that you go solo. Like at GE, I was training some really sharp people and they never got to above 50% high performers hired and as soon as Welch approved the tandem they when right up to 90% plus.
Let me get to one more question here: “As you reflect on the new selection process what one specific skill as interviewers would you point to as a point of difference in making the process really work? What’s crucial to make it so successful?”
Danielle: I think what it really goes back to is following the Topgrading process. I don’t know if you’d call that a skill as an interviewer, maybe just learning the process and becoming real familiar with it but as far as a skill as an interviewer if you know how to interview then Topgrading can be pretty easy, just follow the process, follow the format and it really does work.
Brad: It helps to have some intuitive skills on top of it. What we’ve worked on for all these decades is the craft, Topgrading Interview Guides, tweak the questions and people said you have to stick with that guide, you have to ask those questions, if you change the wording much you bias the answers. If you skip important questions like what your mistakes or failures, TORC questions to ask about the bosses and how the bosses would rate you. You don’t want to skip those; it becomes longer but just stick with the process and let it work its magic.
Brad: Are you going to achieve 90% A Players hired?
Danielle: Of course!
Brad: I love that attitude!
The reason we’ve lowered our minimum acceptable success rate to 75% is we’ve got a couple dozen who are about there or a little bit above that and not a single one of them are satisfied. We’ve gone from 25 to 75 and we’re not stopping. We have the confidence that they’re going to get there because what they do as Danielle said in her last bit of advice is, ‘stick with the disciplines and you get the result.’ If you compromise on the disciplines (you go from tandem to single, you go from full chronological interviews to only half that, you don’t do the reference calls….) what’s going to happen? Danielle?
Danielle: You end up with people who are not A Players and you mis-hire.
Brad: That’s right, they’re mis-hires and they cost you a lot time and money.
Thank you, Danielle. Thank you to everyone who’s been on this call, everybody have a great weekend and I look forward to talking to you in three months.