How AMC Increased Profits by Turning the Camera on Top Talent
Investing in Popcorn
Americans love going to the movies. So much so that it’s the top leisure activity for adults in the U.S.
AMC Entertainment delivers distinctive and affordable movie-going experiences in more than 340 theaters with about 5,000 screens across the United States and Canada. In any given week, the company’s theaters constitute almost half of the top 50 highest-grossing theaters in the U.S., including the top three. But much of the revenue generated from ticket sales goes to the film studios, so for theaters to turn a profit it’s all about food and beverage sales -- the more popcorn a theater sells the more money it makes.
AMC Entertainment’s biggest challenge was to hire employees who would provide exceptional customer service to increase profits, especially at the concession stand. In this case, this means friendly, fast service, shorter lines and an acute attention to detail. To address this challenge, AMC developed a branded customer service program in the late 1990s. Initially, they sought to improve service levels through training.
“We started down a road of developing a great new training program, with lots of bells and whistles, great curriculum and slick graphics...and somewhere along the way it struck me that it’s very difficult to train someone to be intrinsically friendly,” said Keith Wiedenkeller, Senior Vice President and Chief People Officer at AMC. “We decided to pay more attention to who we were hiring in the first place.”
Changing course, AMC studied job fit within the organization by using an online system that also had the ability to screen candidates for job fit. The goal was to find the characteristics of employees who provided great customer service. Once AMC pinpointed these characteristics, the company refocused its efforts on assessing and selecting the right people for open jobs.
With outside help, AMC implemented an applicant tracking system (ATS) with an assessment tool to help find the candidates who were naturally people-friendly, dependable and sales oriented. This shift was so successful that AMC started using assessments to study the traits of its theater general managers, who autonomously operate theaters within the company.
In doing so, AMC senior leaders confirmed something they had instinctively felt for a long time: that the role of the general manager was the most crucial job family in the organization because it served as the main link between corporate headquarters, its crew and movie-goers.
AMC focused on assessing and selecting the right person for jobs based on skill, talent and cultural fit. The ATS has the ability to integrate assessments with recruitment technology, which allowed candidates to be evaluated directly within the recruiting solution workflow, eliminating the need to switch between applications.
Using insight interviews and an in-depth talent profile to study the top-performing GMs, the study found these GMs were delegators who empowered their management team and spent more time on recruiting, coaching and training their teams. AMC also utilized employee surveys to measure engagement both at its theaters and corporate headquarters.
By assessing and hiring for “fit,” AMC was able to reduce formal training and turnover and instead focus on hiring and keeping team members who would provide exceptional service. After some initial skepticism that a “system” could do this, AMC managers embraced the new strategy. “We started to hear a lot of good things from our managers in the field,” Wiedenkeller said. “Now, these tools are something they say they couldn’t do without.”
Another resource AMC can’t do without is top-performing general managers because the impact they have on the bottom line. Comparing the top-performing GMs against the lowest performers found the best were much more likely to drive high levels of guest service and increase concession sales. The top-performing GMs ran theaters that generated $300,000 more annually in concession sales. So, in theory, placing five more top performers would increase the company’s revenue by more than $1 million.
After implementing the “fit” strategy, theaters run by managers who most closely aligned with this approach increased profit per customer by 1.2 percent, which translated into millions of extra dollars of net income. In return, these theaters saw improving employee engagement scores, resulting in 11 percent lower turnover rates.
At the same time, overall employee engagement scores in the top group of theaters rose 6.3 percent over a five-year period. In other words, AMC discovered that engagement impacts business results, not the other way around.
These results, multiplied across more than 320 theaters, would have a major impact on AMC’s total shareholder return as well. Overall theater profits rose to the highest in the industry in just five years.
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