how much of a difference having good employees in all Nathan had a tough challenge ahead in trying to areas of the business makes," commented Nathan. Convince his franchise owners and managers to think "For the fast-casual food industry," remarked more strategically about their pay systems. He needed Nathan, "you are dependent upon your people. If you to help them realize that paying wages and offering don't treat your people well, they won't treat your cus- other compensation benefits that were better than tomers well. If your customers aren't treated well, you their competitors may mean lower profit margins have no business." For months, Nathan agonized over up front, but that the returns would be greater in the how he could develop a competitive compensation long run. He also needed to offer evidence to show plan that matched the objectives of the organization, that this was not just about being fair, but it was about but that fell in line with the tight budget of each in- being strategic. The restaurant business is a fast and dividually owned franchise unit. He stated, "We, of fierce industry and companies come and go all the course, leave the final compensation decision to the time. What was it going to take for Costa Vida to stay franchise owner, but we do all we can to educate and for the long haul? persuade our franchisees to be competitive and fair. In the long run, this is how they can maintain a supe- Questions rior level of customer satisfaction." NathanpointedoutthatastrongbenchmarkforthemhasbeenIn-N-OutBurger.In-N-OutstartedinCaliforniaandisknownforitsgreatcompensa-tionpackage.Theystartoutalltheirnew"associ-ates"(akaemployees)ataminimumof$10anhour.Theyalsoofferflexibleschedulestoaccommodate1.Whyisitimportantforpaytobeexternallyfair?2.Whyisitimportantforpaytobeinternallyfair?3.WhatshouldCostaVidascompensationstrategylooklike?Hint:Whatarethecompanyobjectivesandhowcanemployeepayhelptoachievethoseobjectives? school and other activities, paid vacation, free meals, 4. What should the pay structure look like? What and a 401k retirement plan. For full-time associates they provide medical, dental, vision, life, and travel pay mix would you recommend? 5. How should Nathan communicate a new cominsurance coverage. Their reason for paying so high pensation strategy to his franchisee owners and is based on a strategy that lower turnover and more managers? In-N-Out does for their employees is truly amazing," 6. What effect will paying higher wages have on Costa Vida in the short term? What effect will it from one fast-food chain to another, but we rarely see have in the long term? Explain. employees coming from In-N-Out
