Benefiting from double-digit annual growth and such much-discussed compensation strategies as the leasing of a BMW for all general and regional managers, The Cheesecake Factory Inc. is winning battles in the industry's human-resources recruiting wars.

The Cheesecake Factory intends to open five more of its ultrahigh-volume restaurants this year and another 10 in 2001, bringing the chain to 51 locations. Assessing the company's progress in finding the managers it needs to fulfill its aggressive growth plans, founder and chief executive David Overton declares, "We're fully recruited."

In all, Cheesecake Factory now employs approximately 8,200 people at its Calabasas Hills, Calif., headquarters and in its 36 restaurants, including more than 300 general managers, executive kitchen managers and managers.

Another 300 people are employed in the company's commissary and central commercial bakery, says Linda Candioty, executive vice president.

The company's longest-tenured employee and the recognized "keeper of the culture," Candioty was Cheesecake Factory's first personnel director. She counts among those who report to her vice president of recruiting Heidi Martin-Gilanfar and vice president of staff relations Jennifer Bispo.

Lisa McDowell, vice president of performance development, has responsibility for training, education and the company's cadre of field consultants, in which capacity she reports directly to Overton. Formerly with T.G.I. Friday's, McDowell oversaw the money-saving decentralization of Cheesecake Factory's training system about two years ago.

Recruiter Martin-Gilanfar says the company hired 180 restaurant managers in 1999 and is on track to add another 200 this year as it begins seeking another 225 managers for 2001.

It might be tempting for much larger chains to dismiss Cheesecake Factory's human-resources success as a non-threatening victory by a fly-sized competitor. However, such thinking might prove dangerous and contribute to the management brain drain Cheesecake Factory is convinced it has engineered.

"We basically hire the top 10 percent of management out there, based on testing and what recruiters tell us about who they send us," Overton says.

An entry in the company's annual report states: "During 1999, only 3 percent of all applicants for restaurant management positions were accepted. We seek only the very best."

If Cheesecake Factory indeed is getting the cream of the management crop, there can be little doubt that much of the company's good fortune is tied to its pay scale, bonus system, free-car policy and stock-option program.

Martin-Gilanfar says the pay scale starts in the "high $30,000 range" for restaurant managers with limited experience and rises with promotions to senior manager, assistant general manager and general manager. She says a general manager is paid a salary ranging from $65,000 to $100,000, depending on the volume of his or her restaurant, and quarterly bonuses that, over the course of the year, amount to 25 percent of base pay.

Executive kitchen managers can earn a bonus of 20 percent of their base salary, bringing the total compensation package for the position to between $65,000 and $120,000, Martin-Gilanfar says. She says assistant general managers get bonuses equivalent to 10 percent of their pay.

Apart from the value of the stock options, typical Cheesecake Factory managers earn about $80,000 in salary, and a bonus most often pushes the total to six figures, Martin-Gilanfar says. Bonuses are paid out about 93 percent of the time, she adds.

General managers and executive kitchen managers are fully vested in the stock-option program after five years and are not required to put up any of their own cash to participate, the company says.

Chief executive Overton and others at the company say the stock options of some individual general managers recently were valued as high as $350,000 to $450,000. Company literature uses more conservative estimates, citing program payouts after five years of as much as $250,000 in cash and equity for general managers and $150,000 for executive kitchen managers.

Cheesecake Factory adds icing to the compensation cake for eight regional managers or "area directors of operations" by providing each of them with the leased BMW 500 series automobile and insurance. Area kitchen operations managers receive 300-series BMWs as part of their compensation, as do restaurant general managers.

New to the Cheesecake Factory menu of employee incen- tives this year is "CakeStake." The program rewards salaried employees at headquarters and in the restaurants with stock options amounting to between 8 percent and 12 percent of their base pay - if the company achieves 95 percent of its profitability goal.

To qualify for CakeStake stock options, employees must have worked for the company at least six months during the year for which profitability goals were met.

While the inability to find sufficient numbers of hourly employees almost has reached crisis proportions for many restaurateurs, Cheesecake Factory senior vice president of operations Peter D'Amelio says hourly staffing is more an "issue" than a "problem." The challenge of hourly staffing is not crippling, he indicates, "but we have to stay on top of it every single day."

A policy of providing medical benefits for employees who work at least 25 hours a week certainly has helped Cheesecake Factory successfully compete for staff, Overton indicates. And "we pay very well," he adds. Still, the chief executive concedes, "some markets are more difficult [to staff] than others."

But "difficult" is a relative term. Staff relations vice president Bispo reports that annualized hourly staff turnover was between 70 percent and 80 percent in 1999, which is about half the most-often-cited industry average rate of 150 percent.

People Report, a human resources bench-marking organization used by many foodservice companies, including Cheesecake Factory, last year presented the chain with a "Best Practices" award. Cheesecake Factory, with a 1999 managerial turnover rate of about 17 percent, had the highest management retention rate People Report ever encountered, officials of the group are said to have told the chain.

So far this year, Cheesecake Factory is experiencing a management turnover rate of about 15 percent, Martin-Gilanfar says. A People Report survey of industry trends recently found an average management turnover rate of about 37 percent among casual dining chains, she adds.

When a manager leaves the company, "family is probably the biggest issue," Candioty says. "They'll leave the industry, looking for Monday-through-Friday, 9 a.m.-to-5 p.m.-type of employment."

The fast pace of Cheesecake Factory's high-volume operations is also a factor in the departure of managers and other staffers, Candioty acknowledges, but "it's also why they [other employees] stay."

Though Cheesecake Factory executives are proud of the compensation packages they have created, they stress that the company's culture and human-resources programs play equally important roles in making the chain an attractive place to work.

D'Amelio insists that two nonmonetary retention tools are employees' "pride" in Cheesecake Factory's focus on quality food and service and workers' appreciation for the high caliber of manager hired by the chain.

McDowell and Candioty indicate that the company's comprehensive, 14-week training course for new managers and 15-week curriculum for kitchen managers increasingly are seen as valuable career tools by job candidates. At the end of that restaurant-level training, new hires gather at headquarters for the Cheesecake Factory Institute, a five-day skills seminar that touches on everything from leadership and finance to "groveling."

Candioty actually teaches a class on groveling during institute sessions and says the concept originated at the company’s first restaurant in Beverly Hills, where she managed the door and the floor and Overton ran the kitchen. She explains that the company's first policies and procedures manual - the informal and verbal but nevertheless binding "Linda's Rules" - included "use the bread ends," "clean the bathrooms" and "if you can't take care of a guest problem using any other means, get ready to grovel."

The Cheesecake Factory culture, once fully absorbed, leads employees to feel as if they are part of something larger than themselves and cause most to use the word "Cheesecake" as an adjective, Candioty says. As a result, company employees spying a product or act not up to the chain's standards might express disapproval by noting, "That's not Cheesecake," she explains.

To foster corporate culture and a feeling of belonging, Cheesecake Factory makes a point of recognizing employee skills and time in service, the latter through a program offering workers gifts, such as sweat shirts and letterman-style jackets, for tenure of three, five, 10 and 15 years and longer.

A recent tally showed the company had three employees with 23 years of service, eight with 20 years, 53 who had 15-year tenures, 80 marking 10 years of Cheesecake Factory employment, 188 with five years on the job and 534 employees celebrating three-year anniversaries.

Employees who excel at their position can become one of up to 27 STAR, or Staff Taking Additional Responsibility, team members at each restaurant. STAR employees receive extra recognition and pay with their expanded duties, but they are not necessarily the managers of tomorrow.

"After they perform and have been in a position for a while, they are certainly welcome to apply to become part of the management team," D'Amelio explains. But he adds that Cheesecake Factory does not view STAR as a management "farm team" because of a belief that "a lot of companies make a mistake when they take great people and move them out [and up] and make them average in another job."

Human resources departments always have played important roles at well run companies, and the labor shortages, new workplace regulations and employment litigation of the past decade have only underscored their value. Overton is among those who say such organizations make the difference between success and failure.

"Really and truly, HR is the right arm of operations," proclaims the Cheesecake Factory founder. Of his human resources team members, he says, "they’re the wheels this company moves forward on."