Jeff Osterfeld knew nothing about running a restaurant, but after graduating college in 1983, he decided to give it a try.
He opened Jeffrey’s Delicatessen in the Dayton Mall and quickly found that it was hard work. Osterfeld learned not only how to run a restaurant and the ins and outs of the industry, but he also had to do most of the jobs on his own.
“I feel like in the first 10 to 15 years of the business, from having one store and growing it to 30 to 40 units, I was forced to handle all the different positions and do everything myself,” the founder and CEO says. “I couldn’t afford to hire the right people, and for that reason, I tended to micromanage.”
As the business grew into several locations in the Cincinnati area under the newly created Penn Station East Coast Subs name, Osterfeld knew he needed more people to help keep up with the demands of growth and success. But he first needed to find people who shared the same commitment that he did for the sub sandwich restaurant.
“I became frustrated and disillusioned that people didn’t take the same passion to work every day that I did,” Osterfeld says. “When you create the business, there’s an innate emotional attachment to the success of the business. Other people didn’t treat it the same, and I became frustrated with that.”
Once he found a way to get the right people in place, it was only a matter of empowering them to help him grow the company. The results are a successful quick-service food company with 2008 revenue of $112 million and more than 200 locations.
Here’s how he did it.
Find the right people
Getting the right people in place in your business, especially if you started the company on your own, can be tough. You want to find people who share the same passion and commitment for the business as you do to help you grow.
“You’re only ever going to be as good as how good your employee base is,” Osterfeld says. “You can take any well-run company or any good concept and ruin it in a short period of time with poor people.
“The flip of that is, you can take some pretty underperforming companies and inject a new employee population that is immensely talented and turn that company around in pretty short order. In the end, people will always make the difference.”
Osterfeld uses a strategy of trying to find people that can move up in the company. He has a commitment to hiring from within, so he looks for employees who can become future leaders when he is hiring.
“When you hire from within, employees after awhile understand that and are more motivated when they see a company that’s not only growing, but as they grow, they are taking the employees to fill the upper-echelon positions from the existing employee base,” he says. “If you continually bring in outsiders, their sense of thinking is that there’ll be no room for growth. You’re going to have a hard time holding on to employees and garnering any loyalty with your existing employee base.”
Osterfeld says take the time to go through the interview process and make the right judgment on whether the candidate has the talent and aspirations to eventually move up to a higher position.
“I look at that individual before we hire them and ask myself, ‘Is this somebody who can come in and grow with the company?’” Osterfeld says. “Do they have enough talent and aspirations to want to move up within the company?’ If you do that, and you’re not shortsighted about your hiring, you’ll find that in four, five, 10 years, you have enough talent in the lower levels to replace the people in the upper levels; as there’s turnover in management or as you grow, there are new positions that become available.”
Osterfeld also keeps his eye out for young people who are talented and can bring something to the industry. While building his golf course, The Golf Club at Stonelick Hills, Osterfeld met a young man on the construction crew who impressed him by showing up on time every day, sometimes even coming early and staying late. He kept in touch with the young man throughout college and eventually offered him a job after he graduated.
“You ask yourself constantly whether or not you think that particular individual has talents that fit within your organization,” he says.
Empower your employees
Once you have those right employees in place, you need to spend time with them to get to know them and find out what motivates them so that they will be successful employees for your company.
“It’s just staying connected to your employees and having an ongoing relationship with the individual employees,” Osterfeld says.
You need to treat your employees like individuals and take an interest in them both personally and professionally. Take time out of your day to talk with them and learn more about who they are as a person, where they want to head on their career path and what is going on in their lives outside of the workplace. Find out if they’re happy at your company, what they like and dislike about their job and what their goals are. You can then use this information to motivate your employees toward the things they want to achieve.
“For some people, it’s strictly money; for others, they do or don’t want responsibility,” he says. “Some may want to travel and some not. Some may want to be in operations, another in sales; they may require all sorts of different needs and wants. Just understanding that you care puts you ahead of the game.”
Osterfeld says it sometimes can be difficult to find the time do this, but pushing yourself to do it will have value for your company.
“You simply have to be cognizant of the fact that establishing a connection with those employees has a value and make that effort on a day-to-day basis to remember a name, to spend a little time to talk to people about what they like and dislike, where they’re headed, and how they’re connected to the company,” Osterfeld says. “Show them that you care.”
Being able to motivate your employees comes from not only understanding what motivates them but also from being able to challenge them.
“When employees see you growing as a business, they realize that new positions are going to be created, and there is competition for those new positions,” Osterfeld says. “You motivate them by challenging them to grow with the company, to take on additional responsibilities and move up as the company grows. The degree to which you find out what their motivations, interests and goals are professionally, and you stay in tune to that, you’ll motivate them. As soon as you become, in their eyes, disinterested in what they want out of the business, you’ll end up losing them sooner or later.”
One way Osterfeld has motivated and empowered his employees is through the general manager program. The program puts the ownership mentality behind the counter in his stores, directly tying profits to general managers at each location.
Osterfeld created the program back in the mid-1980s after getting frustrated about how some of his stores were being run day to day. With this concept, general managers were hired for each location and would evenly split profits from that store with the owner.
“Those general managers are not only motivated properly on a day-to-day basis, but we have a lot less turnover, because they split the profits 50-50 with the owners,” he says. “They also need less supervision. What you get is an ownership circumstance behind the counter, and every day, they are as concerned as the owner about sales and expenses, because the only way for that general manager to make money is to maximize sales and minimize expenses. So they do the things necessary to make sure that happens.”
Implementing a program like this was hard at times, as Osterfeld ran into problems when interviewing prospective franchisees who simply did not want to share profits with someone else. But once franchisees found out that putting general managers who were vested in the company behind the counter meant they were able to grow the business and add multiple units faster, it became easier to convince them. The program also helped draw more quality employees to the business.
When creating a program that will empower and motivate employees, you need to make sure it’s quantifiable and that employees will see some measure of their success. Having a contract that both parties sign is good, because it puts the agreement in writing.
You’ve also got to be consistent and not have different deals or goals from one employee to the next so that there is no resentment among them.
“We don’t have a verbal agreement; we have a written, quantifiable agreement,” Osterfeld says. “And the franchisor and the franchisee both realize that it’s in our long-term best interest to make sure that we not only sign a contract that they’re comfortable with but that we honor the parameters of that contract.”
To get people to help your grow your business, you have to learn to delegate responsibility to the talent you have hired. But if you are a micromanager like Osterfeld was, who felt like he had to do every job in the company, it can be hard. Overcoming that hurdle took him some time to realize that the company was better off if he didn’t try to do every job there and delegated some of the responsibility to others.
“In time, you learn that to grow you’re going to have to delegate, and … unless you delegate and trust people, you’ll not get anywhere,” he says. “If you give responsibility to employees but don’t let them make some of the decisions that come with those responsibilities, they sense that, and they realize that you’re still micromanaging.”
Following this recipe has been successful for Osterfeld. After 25 years and 202 locations, he has only had one location fail. He attributes his success to finding the right people who have a vested interest in the company to run the business day in and day out.
“The smart leader is somebody who is self-aware enough, critical enough of themselves to make judgment about what they’re good at and what they’re not so good at and hire accordingly,” Osterfeld says.