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Why Prioritising Employee Welfare Could Lead to Your Company’s Success

Innovation is a natural by-product of an engaged and contented team. Haidilao is a helpful use case to show how mentorship, training, and employee engagement ultimately lead to a company’s success.

Despite its unremarkable start and relative obscurity among hotpot restaurants in Sichuan, Haidilao has emerged as a success story. The success of Haidilao is evident: it has over 180 restaurants globally, with more than 20,000 staff and an annual turnover of nearly five billion yuan. Their edge on the market comes from a unique management philosophy – that innovation is a natural by-product of an engaged and contented team.

This article explores how building a healthy employer-employee relationship has led to this F&B powerhouse’s success, and how it can be emulated in other companies as well.

Haidilao’s success can be credited to its highly motivated and hardworking crew

Many people misattribute Haidilao’s success to its heavy emphasis on customer service. However, that level of customer service excellence can only be achieved with motivated and hardworking employees.

Motivating employees is one of the most challenging problems for a business owner to solve. Demotivation is contagious; a small group of disgruntled employees can spread their negativity and infect entire divisions. Haidilao tackles this problem with a balance of care, respect, and strictness towards its employees.

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Many employees migrated from rural areas to developed cities. Acting out of concern for their welfare, Haidilao provides accommodation for these employees to ensure that they are well-rested and comfortable. Food is also provided, ensuring that their employees return home to a positive and healthy environment after work.

To satisfy customers, Haidilao employees are empowered to go beyond procedures and systems. Employees, especially those in contact with customers, are allowed to offer discounts in the event of complaints or mishandling. Employees also have the privilege of giving small gifts to customers should they wish to. In cases where customers don’t order enough servings for themselves, for instance, a plate of eight meatballs for a table of ten customers, an employee can request the kitchen to provide enough for everyone.

Haidilao spends a lot of money on training and mentoring employee

People are an essential resource that drives the growth of a business. Haidilao recognises this and invests significantly in training and teaching new hires who lack experience and education, turning them into experienced managers.

New hires must undertake a training programme with a manager acting the role of a mentor. Each new staff will dedicate six hours a day to learning basic service guidelines and standards for six months. Following that, they are given training in etiquette before advancing onto training in service excellence. This well-structured training illustrates how Haidilao prioritises its employees’ learning and career development.

Haidilao seldom hires external managers. Instead, they favour having internal employees rise through its ranks. Most managerial positions at Haidilao have risen from junior positions, such as cleaning, waiting, and kitchen staff. When they reach a managerial position, they are rewarded with attractive salary packages and other rewards that benefit their families financially.  This attainable and attractive promotion motivates employees of every level to work hard.

According to Haidilao, innovation is a natural by-product of an engaged and contented team

The pursuit of innovation is not one of Haidilao’s core values. Instead, the focus is on the welfare of the employees. For Haidilao, innovation is a natural by-product of a proactive and satisfied workforce.

Employees at Haidilao are encouraged to think about improving customer experience and satisfaction for the benefit of the business. Dozens of ideas are implemented each month, with individual stores being used as the testing ground for a specific idea. These trial ideas can vary from tweaking a recipe for a special sauce to improving customer greetings. If the proposed ideas benefit the customer, they will be implemented across all the stores in the chain. Individually the ideas could be small, but collectively, over a long period, the cumulative changes that Haidilao makes to its business make it difficult for competitors to compete with them.

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Haidilao emphasises having the correct culture to guide and unite personnel

With business booming, Haidilao’s employee count also expands rapidly, which also brings about a new challenge of promoting the company culture. As new hires are not likely to appreciate the company’s culture as the first employees did, Haidilao ensures that 30% of each team consists of veterans. That way, Haidilao’s work ethic toward new hires is passed on every time a new branch is opened.

Additionally, the criteria for promotions at Haidilao are kept transparent and fair. Each promotion passes through peer reviews to better understand the candidate personally. This conveys to employees that progress is determined by how much they contribute to the company, regardless of their background, appearance, or qualifications.

Another example of the generous compensation offered by Haidilao is the monthly stipend given to the elderly parents of their employees. Many employees are from rural China, where many seniors lack a social welfare safety net to assist in their senior years. For China, where filial piety is an essential Confucian virtue, Haidilao’s stipend scheme allows employees to fulfil their duties as children to support their elderly dependents, building employee loyalty.

Part of Haidilao’s culture is treating one another like family. As part of this culture, the company treats its employees with respect and provides financially for their families as well. As a result, they find that the employees adopt a similar attitude to the customers that dine in the restaurants.

Final Takeaway: The customer-centric and employee-centric philosophies of Haidilao create a successful recipe for them.

Haidilao provides excellent service, delicious food, and a pleasant customer experience that aims to exceed customers’ expectations. Their customer-centric and employee-centric ideologies create a level of service excellence that can only be created through motivating and caring for their employees.

So next time you talk about your organisation’s success, don’t forget about the welfare of your employees. By building a strong employer-employee relationship, you too can gain this unique competitive advantage.

This article is co-created by NexPage, a translated book summary app, and Workipedia.

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