Whether it is grabbing your morning coffee, visiting your favorite eatery or experiencing a long weekend at that “getaway” resort, you have probably noticed that the guests are coming back at a faster pace than the staff. Many operators have combated the recent staffing drought by offering generous signing bonuses, raising rates of pay and—when there is insufficient staffing—cutting back on operating hours or service offerings just to get by.
According to the Bureau of Labor Statistics Job Openings and Turnover Survey released this January, 4.3 million workers across all industries quit their jobs in December 2021. It is estimated that a staggering 47 million employees quit their jobs during the entire year of 2021.
- Out of the 4.3 million workers who quit in December, almost 20 percent were in the hospitality and leisure segment (843,000)
- Out of the total separations by employees who either quit, were discharged or “other” (retirement, death) 70 percent “quit” their jobs in 2019. In 2021, that number jumped to 78 percent
- Quit rates in hospitality are accelerating at 81 percent the last six months of 2021 vs. 71 percent the previous 18 months, according to the Bureau of Labor Statistics.
- As illustrated below, in 2021, accommodation and food services—a sub-segment of leisure and hospitality—had quit rates two times the average of all other sectors.
It’s Not About Money
As employees return to work, so have higher wages. Even before the pandemic, the industry was under wage pressure as the gig economy and instant delivery services like Amazon, Door Dash and Grubhub were offering workers’ pay rates above the hospitality average and the opportunity to work flexible hours. In November of 2019, the average hourly rate of pay for a hospitality worker was $14.75 per hour, in May of 2021 when demand for employees increased, the average rate rose 8.5 percent to $16 and in January of 2022 the average hourly rate of pay was $17, up 15.2 percent to 2019. If you are waiting for a wage correction, it’s already here.
Why Employees are Quitting
According to a study in the January publication of MIT Sloan Business Review in collaboration with Revelio Labs, employees across all industries quit their jobs due to a work culture that they consider toxic. The publication goes on to define this culture as one that includes the failure to promote diversity, equity and inclusion; workers disrespected; and unethical behavior. Revelio Lab’s study clarifies that “A corporate culture is by far the strongest predictor of industry-adjusted attrition and is 10 times more important than compensation in predicting turnover.” In addition to a toxic corporate culture, the study finds that job insecurity, failure to be recognized and the company’s response to COVID-19 are added factors. These findings are similar to why employees in hospitality quit their jobs and are aggravated by longer and less flexible hours and sometimes poor treatment by customers.
Employers Can’t Fix What They Don’t Know
In a recent article published in September 2021 by McKenzie & Company titled “Great Attrition or “Great Attraction? The Choice is Yours" noted a disconnect between what employers felt drove attrition versus what employees believed. The article stated that employers blamed “transactional factors” such as low pay rates, employees looking for other jobs or competitors poaching their employees as primary drivers of turnover; where employees raised more “relationship” elements like feeling valued by their manager and company, having a sense of belonging with the organization and working with caring and trusting teammates. This is why employee engagement surveys target questions to employees like “Do you feel appreciated and valued at work”? “Does your supervisor recognize your work frequently”? and “Do you have a best friend at work”? The McKenzie article also states that 40 percent of employees are likely to leave their jobs in the next three to six months even if they don’t have another job lined up.
Leadership Competencies that Improve Retention Rates
Communicate frequently and schedule regular employee listening sessions
- What do your employees need to do their jobs better? (You may be surprised to hear it’s the “little stuff” like tools and supplies)
- What feedback do they have for the “boss”?
- Engage your employees in creating solutions and solving the problems at work.
Re-recruit your existing employees
- Assume your current staff is planning to leave. Focus your leadership efforts on reengaging with your current staff, ask them what keeps them at work? What can management do better? Are you getting what you need from your job? Re-sell them on why they should work for you.
Remove toxic employees
- Good employees don’t like pulling the weight of poor ones.
- Poor performers are often tolerated in staffing shortages and lead to low employee morale.
Promote from within
- Create a plan for employee development and increased responsibilities.
- Look for opportunities like shift lead, trainer, supervisor, assistant manager.
- Revisit job titles to reflect the importance of each role within the organization i.e.; “team member” vs. “employee” or “guest service specialist” vs. “front desk clerk.”
New Retention Practices
There’s an app for that
- Some operators offer employees a “same day pay” option with platforms like Payactiv and cloud pay.
- Apps like Instawork, STINT and gigpro reach out to qualified, prescreened temporary workers who can supplement your existing team.
- Communicate and share company information in real time with apps like Slack, Crew, or connecteam.
Enhancing employee benefits
- Free telemedicine appointments
- Employer paid short-term disability, life insurance
- Enhancing vacation and paid time off benefits
Optimizing work efficiency
- Understand daily demand drivers like covers, arrivals, departures to ensure you are scheduling to optimal staffing levels and allow for shift length flexibility.
- Revisit operating processes with staff to determine modifications that takeaway associate dissatisfiers without affecting guest service
- Improve work areas by ensuring the proper level of supplies, tools and equipment to efficiently complete work tasks.
David Butler is president of Post Script Hospitality at HotelAVE.