Summer was approaching, and Jacob Hanchar was desperate to staff his ice cream shop as businesses slowly began to reopen due to Covid-19. He had tried everything.
Well, almost everything.
With no one answering the company’s job ads, Hanchar made an unusual decision:
He more than doubled the shop’s hourly wage, from $7.25 to $15.
Over the course of a week, the shop received over a thousand job applications.
What follows is a master class in emotional intelligence–and a major lesson in how looking beyond the short-term in your business strategy can reap huge rewards.
(If you enjoy the lessons in this article, be sure to sign up for my free soon-to-be-launched emotional intelligence course, where I share a similar rule every week that will help you make emotions work for you, instead of against you.)
Back in March, Klavon’s Ice Cream Parlor in Pittsburgh was expecting to employ between 11-15 people. They only had three.
“Name your site. We’ve done Monster, we’ve posted online, we’ve done LinkedIn,” Hanchar told Pittsburgh’s local CBS affiliate at the time. Hanchar went so far as to ask the competition about asking employees to work split shifts, but nothing worked.
Of course, coronavirus concerns played a role, but Hanchar believes unemployment checks did, too.
“If I can get my unemployment benefits and I don’t have to go out and risk, then I’m probably going to stay at home,” Hanchar said.
Hanchar knew full well the business couldn’t survive much longer. With 80% of the shop’s revenue coming in summer months, he needed employees, and he needed them fast.
The company announced via social media and local media outlets that it was raising its wage to $15 an hour. Immediately, applications came pouring in.
“We stopped counting once we reached a thousand.”
P.S. As of today, Klavon’s raised its minimum wage to $15/hour. https://t.co/kCgIORlExX
— Rossilynne Skena Culgan (@rossilynne) April 1, 2021
“We filled the sixteen positions practically overnight,” Hanchar told MSCNBC in an interview. “We did on-the-spot interviews as soon as people were coming in.”
Over a month later, the move seems to be paying off.
“From a top-line perspective, we have more people coming into our shop as a result of raising our wage because people want to support a business that’s taking care of their employees,” Hanchar said. “Also, our costs are going down because of less turnover.”
Turnover has always been a challenging issue in the restaurant business, but so is burnout, according to Hanchar.
“A lot of people work two or three jobs,” he explains. “And now they’re just working one job. So people are showing up on time now. They’re reporting to work in a better mood. Customer service has improved. Things like that that you don’t always account for.”
“If we have been loyal to our employees and we continue to have that loyalty, that pays back in terms of return on investment and improving business.”
What’s emotional intelligence got to do with it?
As a business owner, it’s natural–and praiseworthy–that you want to cut costs where possible. That’s intelligent, and prudent.
But many times, a company leader’s refusal to even look at raising wages is an emotional one. Because they’ve gotten away with paying minimum wage for so long, that they fear if they change, they’ll be making an irreversible mistake.
That approach is lazy. It doesn’t allow business owners to see things in context or encourage them to pore through the data.
In contrast, emotional intelligence allows you to keep emotions in balance, so you think more clearly and can see the big picture.
Hanchar says the decision to raise wages wasn’t made rashly.
“I had to really study this in-depth and really take a look at our forecasts, and really think through how I was going to manage all this,” he explains. That involved comparing his wages to that of competitors. Predicting customer retention, churn rate, and other factors like employee satisfaction.
“It’s not just strict, double-book accounting. You have to think about all comprehensive aspects of the business, and take every factor into account.”
Additionally, as a business owner, you’re goal is to build an emotional connection with your customers. When a business has a reputation for taking care of its people, that makes socially-minded customers feel good.
And of course, if you take care of your people, they’ll take care of business.
Still, all the emotional intelligence in the world won’t eliminate the need for a great product.
Not to worry, Hanchar says they’ve got that covered.
“I think we have the best chocolate chip cookie dough in the world.”