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When the employee stared back blankly, Dunn felt resentful. “I didn’t understand why they weren’t thrilled,” he says. He didn’t see that while his world was constantly growing and expanding, his employees’ world was sliding downhill. They were still bus- ing tables or cooking burgers and thinking, “Forget the new restaurant; you haven’t said hello to me in months; and by the way, why don’t you fix the tea machine?”

“I just got too good, and too busy, to do orientation,” he says. So he decided to tape orientation sessions for new employees, to make a film just like the one he had been sub- jected to when he worked at Bennigan’s. On tape, Dunn told new employees one of his favorite stories, the one about the customer who walks into a chain restaurant and finds himself asking questions of a hostess sign because he can’t find a human. The moral: “McGuffey’s will never be so impersonal as to make people talk to a sign.” A film maybe, but never a sign.

Since Dunn wasn’t around the restaurants all that much, he didn’t notice that employees were leaving in droves. Even the departure of Tom Valdez, the kitchen man- ager in Asheville, wasn’t enough to take the shine off his “glowing ego,” as he calls it.

Valdez had worked as Dunn’s kitchen manager at TGI Friday’s. When the Hendersonville McGuffey’s was opening up, Dunn recruited him as kitchen manager. A few months later, Valdez marched into Dunn’s office and announced that he was heading back to Indianapolis. “There’s too much b.s. around here,” he blurted out. “You don’t care about your people.” Dunn was shocked. “As soon as we get this next restaurant opened, we’ll make things the way they used to be,” he replied. But Valdez wouldn’t budge. “Keith,” he said bitterly, “you are turning out to be like all the other companies.” Dunn shrugged. “We’re a big company, and we’ve got to do big-company things,” he replied.

Valdez walked out, slamming the door. Dunn still didn’t understand that he had begun imitating the very companies that he had so loathed. He stopped wanting to rebel against them; under the intense pressure of growing a company, he just wanted to master their tried-and-true methods. “I was allowing the company to become like the companies we hated because I thought it was inevitable,” he says.

Three months later, McGuffey’s two top managers announced that they were moving to the West Coast to start their own company. Dunn beamed, “Our employees learn so much,” he would boast, “that they are ready to start their own restaurants.”

Before they left, Dunn sat down with them in the classroom at Hendersonville. “So,” he asked casually, “how do you think we could run the place better?” Three hours later, he was still listening. “The McGuffey’s we fell in love with just doesn’t exist anymore,” one of them concluded sadly.

Dunn was outraged. How could his employees be so ungrateful? Couldn’t they see how everybody was sharing the success? Who had given them health insurance as soon as the partners could afford it? Who had given them dental insurance this year? And who—not that anyone would appreciate it—planned to set up profit sharing next year?

Sales at both restaurants were still dwindling. This time, there were no changes in the liquor laws or new restaurants to blame. With employees feeling ignored, resentful, and abandoned, the restrooms didn’t get scrubbed as thoroughly, the food didn’t arrive quite as piping hot, the servers didn’t smile so often. But the owners, wrapped up in themselves, couldn’t see it. They were mystified. “It began to seem like what made our company great had somehow gotten lost,” says Laibson.

Shaken by all the recent defections, Dunn needed a boost of confidence. So he sent out the one-page survey, which asked employees to rate the owners’ performance. He was crushed by the results. Out of curiosity, Dunn later turned to an assistant and asked a favor. Can you calculate our turnover rate? Came the reply: “220 percent, sir.”

Keith Dunn figured he would consult the management gurus through their books, tapes, and speeches. “You want people-oriented management?” he thought. “Fine. I’ll give it to you.”


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