News for the Hospitality Executive
|by Josh Davies, Director of Training and Development,
July 2007 - It seems that every day we get a new prediction or statistic of the coming labor crisis that threatens to cripple our industry. Magazines and newspapers trumpet the news in an attempt to get companies to come up with new and innovative ways to recruit employees.
Turnover in the hospitality industry averages more than 100 percent, and Cornell University estimates that the cost of turnover is about $5,000 per associate in lost productivity and wages. The reality is that as an industry, we don't have a labor crisis or a turnover problem—we lack retention.
Making things worse is a coming demographic shift that threatens to cripple our industry. Because of growth in industries such as retail, grocery, and health care, we are going to climb from an estimated 147 million employees to over 190 million by the year 2030. At the same time, the Employment Policy Foundation estimates that we will only have 155 million employees in the workforce. The “double whammy” of massive retiring baby boomers, and the end of the super-sized Generation Y means that every employer is going to be going after a shrinking pool of eligible candidates. We’ve seen NO increase in the 16 to 24-year-old workforce, which is the primary labor source for our entry-level jobs.
Obviously, it’s in our interest to keep the employees we already have. How do we do it? Contrary to conventional wisdom, the road to retention is NOT paved with higher pay and more benefits. And “more training” isn’t necessarily the answer, either. According to the American Society for Training and Development (ASTD), the percentage of profit U.S. companies spend on training has increased from 6.5 percent in 2003 to 10.4 percent in 2006—but turnover has INCREASED during that same period. In fact, most surveys indicate employee loyalty is actually driven by three things: 1) care and concern for employees, 2) fairness at work (including pay) and 3) the feeling of accomplishment.
In other words, your company’s culture has a much bigger impact on retention than what you pay or how much you train. How do you create that culture? With four simple strategies.
1. Show ATTENTION. Give associates daily recognition for their accomplishments, and when possible, get their feedback on topics such as setting policies. At Morton’s Steakhouse, for instance, the president travels to every restaurant, every quarter, to collect feedback directly from employees—without the managers in the room. As a result, this company’s hourly turnover is an industry-low 30 percent (and Morton’s now sells French fries, based on employee suggestions).Retention is a critical part of the success of our businesses, and yet because it isn’t measured on a P&L, we often don’t see the impact of heavy employee turnover. By looking at strategies that create a retention culture, we can take steps to increase our retention and get ready for whatever the labor market throws at us in the future.
Josh Davies, CHT
|Also See:||Good Employee Retention Strategies Can Break the Myth ... The Grass Is Greener / John R Hendrie / February 2006|
|A Call to Battle! Answers to Recruiting, Recognition and Retention, the 'Triad of Trouble' for the Hospitality Industry / John Spomer / Dec 2000|