By Bill Caswell

The American Hotel & Lodging Association estimates there are more than 900,000 unfilled positions in the U.S. hospitality industry. This talent deficit will be a significant obstacle to overcome, and more companies are getting serious about developing real solutions.

What’s the problem?

One of the primary causes of this employment drop-off is the shifting values of Millennial and Generation Z populations. This younger workforce has a natural aversion to the 24-hour nature of the hospitality industry, preferring jobs with more work/life balance, flexible schedules and ample vacation time. The nature of the hospitality industry – around-the-clock customer service, seven days a week – is difficult to adapt to these generational preferences.

Another driving force behind this trend is the franchise business model. The hotel industry has broadly embraced this strategy for good reason: Franchising elicits growth, offers flexible structuring options and, above all, increases revenue. However, this model also gives direct management control to the hotel franchisees, leaving the culture in the hands of individual owners. As a result, it was difficult to implement a top down solution when the talent shortages first began to emerge.

How do hotels solve the employment deficit?

A strategy that has grown in popularity in the past few years, and one that we specialize in at North Highland, is employee experience (EX). Hotels are beginning to take what they have learned about customer experience and apply it to employees.

Simply put, employee experience refers to anything and everything employees experience during their time at a company – from the first contact as a potential recruit to the last interaction following employment. The more positives those experiences are, the more likely a hotel will be able to attract younger employees and retain them.

When developing an employee experience program, it’s best to start by defining your goals. These can differ from one hotel to another, but the overall outcome of a solid program is simple: employee happiness and fulfillment.

Within employee satisfaction, there are several layers that make up a successful program. An effective recruitment process is a crucial foundation for your EX strategy because it accurately determines the makeup of your employees. Failures at the recruitment level cascade down to the rest of the organization, especially in the hospitality industry.

Another important goal of EX programs is employee retention. Losing employees is costly and can severely hinder a hotel’s ability to grow. Having an effective strategy to keep employees at your company will save turnover costs and add value to the overall employee experience.

What are the benefits of an EX program?

One of the most important benefits of an effective EX program is increased revenue. According to a study conducted by Jacob Morgan and published in the Harvard Business Review, companies that invested substantially in EX achieved four times the average profit and more than doubled the average revenue of those who did not.

EX programs can also produce other benefits, including larger talent pipelines, greater productivity and innovation. Using the “best of” lists from top business publications, Morgan’s study showed that companies that adopted strong EX strategies were included 28 times more often among Fast Company‘s Most Innovative Companies and twice as often on Forbes‘s list of Most Innovative Companies.

One of the less heralded benefits of a quality EX program is a better customer experience. A growing body of research shows there is a direct correlation between happy employees and satisfied customers. In fact, that same Harvard Business Review study found that EX-focused companies were included twice as often in the American Customer Satisfaction Index than those who placed little emphasis on employee experience.

To put it simply, the links between happier employees and revenue may be hard to measure, but the relationship is intuitive to most hospitality leaders. An effective EX program produces happier employees. Happier employees serve customers more effectively, and they remain with the company longer. Superior customer service benefits revenue, and employee retention saves money.

Pitfalls of adopting an EX strategy

While the potential ROI of an effective program represents a tremendous upside, there are common missteps companies make when developing and implementing EX strategies. For example, organizations often do not consider the actual needs of their employees. Effective EX can be confused with small perks such as a ping pong table, parties or extra vacation time, to name a few. While these may play a role in your employees’ happiness and can be tactics within your overall strategy, they may only serve as a kind of espresso shot – a nice but temporary high with no long-term impact on overall happiness.

Instead, invest in an employee experience that serves as a cure and not a temporary bandage for disenchanted employees. Make sure your company’s workforce feels their efforts and contributions are valued. Consider every touchpoint employees have with your company and design an environment that encourages engagement. Personalization is paramount. Today’s employees want to feel original and have a sense of individuality, especially when it comes to joining a new company.

Another mistake is insufficient investment. Often, companies do not set aside enough budget and resources to ensure a successful EX program. Regrettably, when budgets are cut, it’s also often one of the first things to go. While the right investment to ensure success may seem sizeable, it is probably a relatively small percentage of your overall budget. (The same goes for the budget to create the program in the first place; a simple survey or one-size-fits-all program is not enough).

If your company wants to develop a winning strategy for a better employee experience, you have to fully commit and allocate appropriate time and support. Create a dialogue with your workforce with face-to-face interactions and have regular conversations to ensure you are considering their input. Third-party integration is also an option when developing and implementing an EX strategy. Consulting with experts in employee experience can go a long way when it comes to investing company dollars wisely.

What is the future of EX in the hotel industry?

Employee experience will only continue to grow in importance as the hospitality industry evolves and uses data to customize experiences for individuals – whether customers or employees. As the talent deficit persists in the hospitality industry – especially across hotels – EX programs will become a necessity to ensure successful recruitment, retention and overall employee well-being.