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Associate Retention: More Than Just Showing Them The Money
by Josh Davies, Director of Training and Development, Sage Hospitality 

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).

2.   Break CONVENTION. Change your thinking: instead of measuring turnover, measure retention! Make it your goal to keep people, not just avoid losing them, and watch your entire culture change. Use the “Platinum Rule” of communication. Don’t communicate the way YOU want to be communicated with; find out how THEY want to be communicated with. And remember that having friends at work encourages engagement. Host softball teams, company picnics and other activities that get people together and foster friendships.

3.   Use INVENTION. Create team players. Try setting performance goals for teams, rather than individuals, and rewarding the entire team for results. And harness the power of storytelling to foster an intellectual and emotional connection to work. At Ritz Carlton, for instance, employees are encouraged to tell their stories of excellent service. Every day, two of those stories are selected and sent to every hotel around the world.

4.   Go to the Next DIMENSION. Create a world-class orientation program. While turnover is on the rise, the average orientation time is shrinking—to just 1.15 hours in 2006. An orientation is your opportunity to engage new employees and make them productive from day one. After orientation, create a development plan for every associate; it’s difficult to be actively disengaged when your employer cares about your future. Finally, hire and train mid-level managers and supervisors. After 9/11, the mid-level disappeared in most industries, creating a wide gap (and little communication) between managers and associates. At companies like Southwest Airlines, there are incremental development steps, creating more opportunity—and more loyalty.

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 is the Director of Training and Development for Sage Hospitality Resources, a national hotel management group headquartered in Denver, Colorado.  Sage manages more than 50 hotel properties across the country. Josh graduated from American University with a BS in Interdisciplinary Studies, and is a Certified Hospitality Trainer (CHT) with the Educational Institute.  He is currently the President of the Council of Hotel and Restaurant Trainers (CHART).

 
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Contact:

Josh Davies, CHT 
Director of Training and Development  
Sage Hospitality Resources
  1512 Larimer Street, Suite 800 
Denver, Colorado 80202 
TEL (303) 595-7263 
jdavies@sagehospitality.com 
www.sagehospitality.com
 

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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
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