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Good Employee Retention Strategies Can
Break the Myth ...  The Grass Is Greener
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By John R. Hendrie, February 2006

There have been a slew of articles recently about the crisis of Human Capital.  Advisory Boards, Associations, pundits all decry the turnover figures within Hospitality (50%), point to the changing and contracting labor pool, note the Unions cranking up enlistment activities, and government on the local, state and national stage legislating “living” wage and benefits. 

Much has been touted about Retention Strategies, Cost Containment and Talent Management.  Some companies are at the forefront of change and enlightenment; most are not, accepting the “revolving door” of staff as the cost of doing business.  Will this picture change?  Probably not, for the subject has a redundancy and a long history.  When business is good and growth is booming, few really ever take a long, strategic look.  Turnover at an unearthly rate takes place during upturn as well as downturn.  Sadly, it is part of our Hospitality psyche.

But, to affect change, one needs to consider three factors, which should dictate a retention strategy: 

  • The cost of Turnover
  • The Labor Pool realities
  • What your Brand represents
The Cost of Turnover:

Time is money, and your costs accelerate, based upon the level of the open position and the size of the organization.  Let’s just start with the basics.  For recruitment, there is the cost of advertising to begin an applicant flow.  The selection process includes culling through applications, several “cuts” to decide who will be interviewed, often two to four interviews for the hire decision, processing time, new hire orientation, and then sufficient on the job training (which is also down time for the trainer and the operation).  The higher up in the organization the vacancy is, the greater the cost for the process.  For the sake of this example, let’s use $300 for entry level, $2,500 for Salaried/Middle Management, and $10,000 for Senior/Executive Management.  Do the math on your own operation, appreciating that the above costing assumption is very conservative.  That is money walking out the door!

Labor Pool Realities:

Consider first the Generational Differences.  There are the Matures (1909-1945), who used to believe in “cradle to grave” employment, now totally disillusioned.  Then the Boomers (1946-1964), beaten up by the marketplace, transitioned, downsized, darkly skeptical.  Next, the Generation X’ers (1965-1978), who want a balance in their lives, crave good communications, and approach work like 1099’ers.  Lastly, there are the Millenials (1979-1988), who want it their way, now.  The “onion” layers are just beginning, for a hard look at the further demographics show, for the bulk of the Hospitality Workforce, a heavily female population, mostly immigrant with different cultures and languages, less educated, feeling quite disenfranchised.  What a tough market from which to draw!

What Your Brand Represents:

Well, we are in the Experience Era, and we know that our Guests and patrons look for value, uniqueness, high level service, a quality product and exceptional delivery.  Our Brand is our story, and we promote ourselves like crazy to entice that wary Consumer.  And, we depend upon our Ambassadors, our worthy staff, to make the Experience memorable.  They represent our interests and dictate our success.  But, wait a moment, there is a disconnect.  Fifty percent of our people are leaving, their departure is costing us money, and the replacement effort is ever more challenging.  If this does not move Hospitality Businesses to establish a forthright Retention Strategy for 2006 and beyond, we deserve the reputations we invite and the devaluation of our product and service.  Most bemoan the obvious; few take the initiative.  But, for those who see the situation as critical, consider some of the following components for a successful Retention Approach. 

Retention Strategy:

“A fair days work…”  This simple phrase has immense implications.  To perform, our employees need the tools, the direction, the encouragement, and the environment in which to achieve.

1.  Why are people leaving?  Your Human Resources offices should be doing Exit Interviews.  The information gleaned from these exercises often demonstrates problems and reasons with an easy fix apparent.

2.  What do your current employees feel about the organization?  Employee Surveys do surface information about the organization and items which are actionable.  Do not survey if you are not prepared to address the issues.

3.  Communication.  Your workforce is diverse, and your communication systems and mechanisms must recognize the audience.

4.  Work environment.  A quick look at your employee locker room is often indicative the value you place on the staff.  Your employees want and deserve respect, involvement and particularly leadership.

5.  Training and Development.  We must provide the necessary tools to perform the current job and opportunity to improve the skill set and ability to move onward in the organization.  

“…for a fair days pay”.
6.  Retention is impacted by reward, and this starts with a meaningful compensation package, both wage/salary and benefits. You get what you pay for!  Additionally, there is a requirement for recognizing and rewarding performance excellence.
Conclusion

This is not rocket science or even Best Practices – this is just common sense.  The answers have been around for generations, however, the impetus, always hovering, was seldom grasped. Your employees are just as discerning as your Guests. We have been smacking crocodiles, and the swamp becomes deeper, murkier and more deadly.  The numbers do not lie; matter of fact, a good Retention Strategy is more than supported by the money saved on Turnover.  We all tend to look over that fence, admire the landscaping and the greener grass we assume is the better alternative.  Tend to your own yard properly, and you can put the neighborhood to shame!

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The author, John Hendrie, believes that Remarkable Hospitality is the portal to that memorable Visitor Experience. To learn more, please visit:  www.hospitalityperformance.com
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Contact:

John R. Hendrie, CEO
Hospitality Performance, Inc.
978-346-4387
www.hospitalityperformance.com
 

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Also See: The Hotel Manager's Scheme to Establishing Guest Relationships: Room the Guest / John R Hendrie / February 2006
Human Capital Crisis in Hospitality / John R Hendrie / January 2006
The Decline of Service and the Devaluation of Product in the Hospitality Industry; Who's in Charge and Who Will Lead the Way? / John R Hendrie / January 2006

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