With the average turnover rate for the hospitality industry at a whopping 84.9%, compared to the national average for all jobs at 47.2%, the hospitality labor shortage is real. At OysterLink, we’ve been closely following these trends, including a report by the law firm Schmidt & Clark showing that almost 3 million people left the leisure and hospitality industry in the first quarter of this year.
- Instabilities causing high turnover rates
Low pay, lack of opportunities, long hours and too much pressure are just some of the many reasons why hospitality employees choose to leave their jobs. According to the National Restaurant Association, 32% of employees leave because of a lack of growth opportunities. In the same study, 22% quit because of poor pay and benefits, 20% because of poor job fit, 17% because of workplace culture, 7% because of scheduling issues and 2% because of job security.
A majority of leisure and hospitality staff receive insufficient employee training. They most likely are not shown a career plan for their occupation upon joining a company. They just see a challenging path with stressful work without a clear destination. If they don’t know where they’re going, then they’re wasting their time. They’re most likely going to take a detour. These detours seem clearer and more straightforward, so they choose not to go back. In reality, a lot of hospitality staff don’t wish to come back after getting laid off or furloughed during the pandemic. Those who left on their own probably don’t want to stay there because of the poor working conditions… and why should they?
- Why this is an issue?
According to a report by Cornell Hospitality, the cost to replace a hospitality employee is around $5,864, and that was back in 2006. I can only imagine how more expensive it is today. Also, with fewer employees, expect to pay more overtime costs. Training new staff can affect your bottom lines if it keeps happening. There’s definitely a difference when working with a well-rested, well-paid and well-respected team versus a stressed, low-paid and undervalued one. A high turnover rate can also ruin your company’s reputation, which can further scare off potential applicants.
- How to build stability in hospitality
Thanks for even reading up until here. This shows you really care about our hospitality industry. I’ll list what we can do as employers to make our company, restaurant or hotel more stable to keep our staff, keep them happy and keep our standards high. I prevent high turnover rates in OysterLink and other companies I’ve led over the years with my very own “PIE” method. “P” for “Pay fairly,” “I” for “Invest in your staff” and “E” for “Empower with tools.”
Pay fairly
Pay competitive wages to attract, create and keep the talent you need. Do so in a way that’s both fair for your staff and your bottom line. I do this by checking the salary averages on the market and finalizing an amount proportional to their role, their responsibilities and their cost of living.
Paying fairly also isn’t just about paying your staff more and more. This also covers benefits. More of your staff will stay because they’re getting more than just their pay at the end of the day. With benefits, they can have something to fall back on during emergencies with their healthcare or insurance; their own time to unwind and relax with paid time off; and a job they can consider a career with 401(k) contributions and retirement plans.
Invest in your staff
Build and empower your talent so they feel a sense of pride in their work. Given how 38.33% of hospitality workers are below 25 years old, you have a very impressionable roster that is often likely easier to train.
Talk to them about their career growth path when they join your company, and what steps they should take to keep climbing. Hold training sessions so they can feel more confident and equipped to perform their role and take on more tasks, as needed. This will make them more confident and equipped to take on more responsibility within your company, which will then reflect in their increased satisfaction and that of your customers or guests.
Acknowledge high performers with performance-based incentives or bonuses. Make sure your supervisors and managers are kind yet firm with their juniors when it comes to meeting your standards. Set up an atmosphere of friendly “competition” where they all become skilled workers who can learn from one another.
Empower with tools
Allow me to get one more thing straight: AI is not going to replace our hospitality staff completely. At least not until I’m (maybe) 55. However, it’s important to use such tools to make it easier for your employees to do the things they’re good at.For instance, AI-powered tools like Upserve and Knowcross help restaurants and hotels gather data on customer preferences. Employees like servers and concierges can then use these data to provide better recommendations or more tailored services to guests without having another time-consuming task on their workload.
This goes to show that when you streamline operations with automation tools, your employees can focus on offering your customers or guests a more personalized approach to their service.
To sum everything up: Having more sustainable practices like this lovely “PIE” will definitely help you make your establishment a more stable one for more loyal and competent staff — and turn the tables on this turnover issue.
