By: Patrick Quek, January, 1997

Patrick Quek is president and CEO of PKF Consulting, an international hospitality consulting firm headquartered in San Francisco. Assistance for this article was provided by Ms. Caveni Wong, Research Assistant in the San Francisco office of PKF Consulting.

I do not believe any other industry in the world is as dependent upon the quality of its personnel as the hospitality industry. Just the word, “hospitality”, implies a personal experience delivered by a human being. Anyone can build a building or offer beautiful fixtures and furnishings, but what guests most frequently mention when recalling a memorable hotel stay is a direct experience they had involving a hotel employee.

Addressing the “people issues” head-on, the Educational Institute, college and university hotel management programs, and corporate personnel departments have promoted human resource management to the forefront of critical hotel operating issues. All hotel managers, from large chain properties to small independent motels, now have access to such materials as interview checklists, training videos, and pamphlets on the latest employment rules and regulations.

A Family Photo

Realizing the importance of personnel management, PKF Consulting recently completed a comprehensive study of human resource issues in the U.S. hotel industry. Based on a survey of 535 hotels across the U.S., the study concentrated on such issues as diversity in the workplace, employee recruitment and retention, and performance reward systems. The intent of the survey was to provide the industry with a snapshot of its workforce; What does it look like? How does it act? What does management do for it? Diversified Workforce Immigration is an issue that not only makes political headlines, but presents a distinct challenge to business owners and operators. Increasingly, immigrants are finding their way into the hospitality industry. PKF Consulting’s survey found that the average hotel has 5.2 nationalities represented in its workforce. With more than 50 percent of the surveyed hotels having four or more nationalities in their workforce, balancing the variety of customs, holidays, and value systems of multiple nationalities is quite a challenge for supervisors and managers. Diversity also means a multi-lingual workforce. The majority of hotel employees speak English as their first language; however, 23 percent of the employees surveyed speak English as their second language. Meanwhile, a full 6.3 percent do not speak any English at all. In an effort to fill positions, only 21.3 percent of the hotels require their back-of-the-house employees to speak English.

Recruitment

With the national unemployment rate hovering around the 5.0 percent mark, many industries are finding it difficult to recruit qualified employees. This has always been a challenge for hotels, an industry known for relatively low pay scales. Despite these difficulties, it appears that traditional recruiting and hiring methods are still being used by hotel managers. When seeking to recruit employees, such conventional methods as classified ads and walk-ins are used much more frequently than finding employees through personnel agencies or educational institutions. Managers continue to rely on traditional face-to-face interviews and reference checks in evaluating job applicants, with psychological or skills tests remaining a rarity. Given the direct relationship between employee performance and the success of a hotel, it might be prudent for hotel managers to look at alternative forms of recruitment and evaluation on the front-end of the employment process in order to ensure the hiring of qualified employees.

Retention

Once employed, a fifty percent chance exists that any given employee will leave his job within one year. The high turnover rates that have always plagued the hotel industry, however, appear to be leveling off. Overall employee turnover has gone from 47.8 percent in 1985, to 55.3 percent in 1990, and 53.2 percent in 1995. It is interest to note, however, that the turnover numbers actually reveal a trend of growing turnover rates among management, as opposed to line-level staff. Historically, the popular notion has always been that employee turnover in the hotel industry occurred almost exclusively in the line-level ranks. Now, the probability of managers or supervisors leaving their jobs is just as great as the odds of a line-level employee walking out the door. Another interesting finding of the study was the fact that 80.7 percent of the employees who left their jobs in 1995 did so voluntarily. I believe this is an unfortunate indicator that the hotel industry is viewed by most employees as a way station on the road to a career in another industry. What the hotel industry needs to do is aggressively promote the hospitality a career path not only for new recruits, but existing employees. Certainly this industry is filled with personal stories of bellmen that have worked hard, climbed the ladder, and eventually become the general manager.

Rewarding Performance

Direct and indirect personnel costs comprise over 50 percent of the operating expenses at most U.S. hotels. Given the relatively significant amount of dollars already spent on wages and salaries, limits have to be placed on the amount of additional compensation that can be used as an incentive for performance. This forces management to be creative in the ways they motivate employees and enhance productivity. While the vast majority (82 percent) of the hotels surveyed have non-monetary reward and recognition programs for superior performance, only 54 percent offer some form of bonus pay. When it comes to annual raises for hourly employees, 57 percent of the hotels base their raises on some form of merit evaluation, as opposed to a structured dollar amount or percentage increase.

For hotel managers or other interested parties desiring the complete results of the survey, a copy of the full report can be obtained by writing the PKF Consulting Research Department at 425 California Street, Suite 1650, San Francisco, CA, 94104, or call (415) 421-5378.

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