Replace Resignation with Retention and You Change Your Perspective
Although it has always been a significant concern, there has been a consistent rise in turnover rates for restaurant employees over the past few years. Findings from the Bureau of Labor Statistics indicate that over 6% of employees in the hospitality sector leave monthly while the yearly turnover rate is 73.8%. The figures by themselves are a cause for alarm, but the impact of the turnover on the hospitality industry is even more significant.
On average, restaurants and other businesses in the hospitality industry lose $5,864 on every employee turnover. If you have 500 employees, with the current average turnover rate in the industry, you can lose upwards of $2 million annually. This is a vast amount of money that you could channel towards more meaningful initiatives such as upgrades and marketing.
While it is a problem that has plagued this industry for a long time, it is only getting worse given the current unemployment rate. If you consider all factors, it is easy to understand why employee retention for restaurants and companies in the hospitality sector is challenging. It is for this reason that we have developed this retention strategy for restaurant and hospitality employees.
Incentivize Long-term Employment Using Benefits
Employee benefits remain a significant factor in retaining your current employees and attracting new talent regardless of your industry. Healthcare and retirement benefits are vital.
Most employees make the decision to work with a company based on the retirement benefits the company offers. Additionally, almost half of the employees decide whether to stay with their current employer after considering retirement benefits. Retirement benefits are a unique incentive to long-term employment. By utilizing the employer match combined with a unique schedule to provide incentives for employees, it is possible to get employees to stay with your company even during retirement. Employees want to know that a company is working towards providing a secure financial future before committing to their long-term futures.
It is clear that retirement benefits are an essential element, but most businesses in the hospitality industry do not offer solid retention benefits through retirement plans. There are lots of challenges such as the increased burden on the human resource department and low employee participation. One of the most common scenarios is a case where a highly compensated employee is usually limited in relation to the 401 (k) contributions as a result of failing the non-discrimination test and poor participation. Often, this culminates in increased turnover rates in relation to the highly valuable employees that can be hard to replace.
Healthcare benefits are another vital element in avoiding employee turnover. Before deciding to work with your company, almost 46% of employees consider the health care benefits package you offer. This is according to a Willis Towers Watson study, which also indicates that 55% of the employees view healthcare benefits as an important factor towards staying with their current employer.
This should not be surprising considering ever-growing medical costs. Although employees need to understand that their futures are covered, they also want to know that their present is well taken care of. Coming up with a solid healthcare plan remains one of the best ways to achieve this.
Embracing technology can help you reduce the turnover rate of your hospitality business in two ways.
Naturally, businesses in the hospitality industry feature a constantly busy environment. Employees often have to juggle between different tasks at the same time, which can have a significant impact on employee morale and productivity.
By integrating modern technology into your business practices, you allow some of the tasks to be delegated to automated systems while employees manage the essential tasks. With less work to do, it is easier to keep employees motivated, which contributes to employee retention.
Improves the Overall Work Environment
Effective integration of technology creates a highly efficient work environment. It takes less time to process tickets which contributes to customer satisfaction and streamlines BOH and FOH. It becomes easier to achieve lower employee turnover rates by creating an enjoyable working environment for employees in the hospitality sector.
Retaining Restaurant and Hospitality Employees
The high employee turnover rates continue to plague the hospitality and restaurant industries. Through poor employee retention, companies lose thousands of dollars on individual employee turnover every month. There is an urgent need for lasting solutions to mitigate the impact high employee turnovers have on the industry.
Companies based in the hospitality and restaurant industries need to provide incentives geared towards getting employees to commit to a future with a company. Providing incentives such as retirement and healthcare benefits can have a positive impact on employee turnovers. Similarly, integrating technology into your business practices can also contribute. It reduces the amount of work the employees have to do and provides a comfortable working environment that contributes to employee satisfaction.
The COVID-19 pandemic brought the entire nation to its knees. Large businesses sent staff home, some to work (many with slashed salaries), and some without a job. Small businesses disappeared entirely. Those fortunate enough to have a job tried to adapt to the new “work-from-home” routine. And those newly laid off or furloughed attempted to figure out how to look for a new job during a pandemic.
The workplace culture — and the hiring/recruiting practices essential to populating that culture — arguably has been changed forever.
Whether you are looking for staff, or looking for a position, it will be challenging doing it alone in the emerging post-pandemic world.
- For corporations, especially, it is essential to make Human Resources part of your business strategy, not just an afterthought.
- Individuals, meanwhile, need to ensure their job searches — and the way they present themselves — is consistent with the skills and experience important to companies in the new workplace environment.
Here are some insights into the new reality.
The Macro Situation
- A huge number (41%) of individuals who suffered a job loss have been unemployed for almost a year now, resulting in a crowded applicant market. The S. had approximately 23 million unemployed last April and the current number is still about 10 million.
- According to Statista, 47% of companies discouraged remote work and required employees to show up in the office before COVID-19. However, the past year saw even the most rigid employers allow staff to work from home. Now, almost 44% of companies have shifted to full-time remote work.
- According to Gallup, 59% of American employees who have been working remotely during the COVID-19 pandemic would prefer continuing to work from home as much as possible, after public health restrictions are eased.
Employer Hiring Challenges
For employers, the go-forward challenges are significant.
- Companies that previously laid off workers need to be concerned about lingering negative perceptions that may exist among employees/applicants.
- Employers that shifted to an office-less framework need to determine a set of traits that remote employees should possess and add new stages to the hiring process, such as behavioral and aptitude tests.
- Large unemployment numbers likely are causing a huge number of applicants — many unqualified — and employers can waste a lot of time simply reviewing and trying to determine qualified persons.
- Candidates increasingly are concerned about their health and safety. Employers have to validate that they’re going beyond just staying compliant to reduce fears so that employees will feel safe returning to the office.
- Employers will have to audit existing hiring processes, determine what had been working in the past, what hadn’t been working, and figure out how the new normal is going to change their recruitment strategies.
- They also will have to adapt their sales pitches based on additional benefits that they may be offering. For instance, the commuter stipend is no longer useful so they may have to introduce better home office setups, childcare benefits, and other wellbeing benefits.
Employee Search Challenges
Individuals, meanwhile, have new concerns that didn’t exist prior to the pandemic.
- Many have determined in the past year that remote work fits their personal and professional needs and are interested in continuing on that track. However, they also would be interested in not limiting the number of opportunities that are presented to them.
- They are also afraid that the new normal no longer includes jobs that clearly fit their pre-pandemic talents. And they may have to learn new skills to pivot.
- The glut of applicants can easily cause qualified applicants not to get noticed by prospective employers. With remote working becoming the norm, they may even have to face competition with a geographically diverse pool of candidates.
- When returning to the workplace, individuals may face different health risks depending on the kind of work they do, where they do it, and their own health conditions.
- They might feel apprehensive about working with a company that made hundreds of employees redundant in the past.
Skilled and experienced recruiters provide an important solution for employers and job seekers. Identifying, recruiting, interviewing, and onboarding aren’t the only tasks a recruiter needs to provide in 2021. New skills needed include virtual interviewing and assessment, virtual background checks, virtual hiring, and also reshaping an employer’s identity. Most importantly, the right recruiter is focused and aligned with the employer’s goals.
At Incipio Workforce Solutions, we learned a great deal in 2020 and turned that experience into better systems, processes, and procedures to help our clients achieve their objectives. For example, many companies realized the six-month or yearly performance review no longer was effective. We’ve developed much better ways of setting goals and tracking effectiveness on both a personal and professional level.
Want to know more about Incipio? Get in touch with us right away to learn how we can help you achieve your goals.