Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 7

Can Chipotle Source Employees as Ethically as It Sources Food?
With a strategy to sell "food with integrity," Chipotle Mexican Grill has pleased the taste of Americans and turned into a fast-food success story. In contrast to the typical fast-food chain, where recipes and menus are driven by marketing goals, Chipotle starts with the goal of selling delicious, fresh, sustainably grown foods. As hungry customers snap up its burritos and tacos, Chipotle is scheduling the addition of more than a hundred new outlets per year. Keeping up with growth is a major challenge for human resource management in the restaurant business. At fast-food restaurants, triple-digit turnover is normal, so restaurant managers are constantly in hiring mode. Thus, while Chipotle has 30,000 employees, it forecasts a need to hire 100,000 workers over three years.
The pace of growth has also challenged the company to hire enough managers. Under the leadership of co-CEO Monty Moran, the company has emphasized promoting managers from within. The goal is to retain the best performers by giving them raises and promotions. Chipotle's talent management efforts include career paths along which crew members become general managers with the potential to earn $100,000 or more. In fact, most of Chipotle's store managers started out making and serving the food.
Along the way, however, Chipotle has hit some bumps in recruitment. About half of Chipotle's employees are Hispanic, which the company sees as a plus because Chipotle sees this ethnic group as an important source of customers as well as employees. However, in hiring these workers, it needs to distinguish between those who are permitted to work in the United States (because they are citizens or immigrants with the necessary government documents) and those who are immigrants without authorization to work. Federal agents for Immigration and Customs Enforcement inspected the company's records in Minnesota, Virginia, and Washington, D.C., and determined that Chipotle had hired more than 500 undocumented immigrants. As a result, the company had to lay off hundreds of employees. At the affected restaurants, managers scrambled to keep operating while hiring and training replacement workers as fast as they could. In addition, Chipotle has spent more than $1 million in legal fees and risks being fined.
Meanwhile, to avoid further legal embarrassments, the company signed on to the government's E-Verify screening program, which uses a database to spot illegal workers. One practical result of compliance has been that workers who lacked documents no longer apply to Chipotle. That helps the company stay on the right side of the law but also has reduced the company's pool of applicants. Those who still apply do not always have the necessary skills and experience. In some markets, managers report interviewing up to 40 candidates to fill each job opening. And at a job fair in the state of Washington, Chipotle recruiters interviewed 100 people but found only eight of them to be qualified. Employee turnover has suffered as well, rising from 125% annually, in contrast to 100% turnover before the immigration enforcement. Moran suspects that many of the employees who quit were worried their documents would not stand up to government scrutiny, so they left to avoid trouble. Many immigrant workers in restaurants are in the United States on temporary visas that expire after a year, so even if hiring them is legal, they may not be able to stay legally employed for long.
In Moran's view, Chipotle's struggle to fill jobs is a by-product of overly harsh immigration laws. Moran has been urging the federal government to improve the process for legal immigration and hiring of immigrants. He wants good workers to be allowed to stay in the United States for the long term, so the company can let them build careers, as its strategy requires, rather than return to their country of origin after a year or two. Replacing and training workers with temporary visas every year is expensive and disrupts the development of teamwork in a work crew. So far, however, Moran's message has failed to sway politicians, so Chipotle must continue to staff its restaurants with workers who can prove they have the necessary documents under current law.
Immigrant workers have been an important part of the labor pool for Chipotle (and many other restaurants). If you worked in Chipotle's HR department, would you recommend that it continue to recruit immigrant workers or target another group of workers for hiring? Why? Which other groups, if any, would you target?