The hospitality and tourism sector is facing a perfect storm of rising costs, increasing recruitment difficulties and changing employee attitudes. Average labour turnover is in the region of 75% (compared to the UK all-sector average of about 15%), and in some cases exceeds 100%. Given the average recruitment and initial training costs are £750 per person, this is costing the sector £1.1bn annually in recruitment and initial training costs alone. To put this in context, for a business with 40 full-time staff (or equivalent), that’s an average of £22,500 per year even before the impact of such turnover on productivity is taken into account.
People 1st interviewed senior HR representatives from 40 major employers in the sector, including firms such as Compass Group, Costa Coffee, Enterprise Inns, Hilton Worldwide, McDonalds, The Restaurant Group and Travelodge, to find out what issues they face and how they are addressing them. These larger businesses are important because they employ 44% of the sector’s workforce and it is likely that what they are doing today will trickle down to have an impact on smaller employers tomorrow.
Here’s how businesses can address their productivity challenges so that they stay competitive.
Improve management skills: Poor management skills is a factor identified by many businesses in our research as increasing staff turnover and hampering productivity. Some of this is a result of the recruitment problems that mean that people are getting over-promoted without the skills to do their jobs. High turnover at managerial level also causes its own instability and has a negative knock-on effect across the business.
Consider the younger workforce: The available labour pool is shrinking, and the latest Employer Skills Survey showed that 25% of hospitality and tourism businesses reported vacancies, of which 38% considered them hard-to-fill. This is compounded by the fact that younger staff are increasingly motivated by different factors and need to be engaged and managed differently than previous generations.
Look at new technology: Many businesses are beginning to rethink their customer journey and are consequently introducing new technology, some of which is disrupting the way staff work or, on the flipside, is helping them undertake specific tasks more effectively. Many are also looking at look at whether jobs can be redesigned to increase efficiency and flexibility. The introduction of technology as part of the customer journey is often the catalyst for such redesign.
Recruit to retain: How employers advertise is also changing radically, with social media and apps replacing job boards and ads. An increasing number of employers are targeting staff from other sectors in order to attract people with the same interpersonal skills that they are seeking. Some are also targeting older workers and women returners. Many are engaging universities to attract graduates to fill first line management positions. There is also a growing importance on maximising the company brand and the values it represents.
Nurture talent: Undoubtedly, businesses are focusing on talent retention like never before. A number are looking afresh at their existing retention mechanisms to assess their impact and look at what else they need to be doing. As the initial employment period is the most important for retention, many are strengthening the experience for new members of staff. Businesses are also emphasising career progression by making it more transparent through career maps and linking this more closely to performance management and succession planning. Of those businesses we interviewed, half of them felt that they had good systems in place to measure staff retention and turnover and the remainder were focusing on putting these in place.
Make people central to your business: There is a clear rupture with the way that hospitality and tourist businesses have operated in the past. In particular, things that were traditionally seen as ‘HR issues’, like retention, performance management and learning and development, are now business-critical. So your people strategy needs to be a visible and central plank of the business strategy.
Martin-Christian Kent is executive director at People 1st
To help businesses, People 1st has established ‘The Wire’, a largely virtual network that helps business engage with the key themes emerging from this report, share experiences and hear from experts in their respective fields. To sign up to join click here