The Looming Turnover Storm

Even in the best of economic conditions, employee turnover is an issue for hospitality companies. The cost of hiring, training and setting the newly hired hospitality worker up for success in his/her new position requires a significant investment. 

After the economy tanked, hospitality companies had to ask themselves the hard question: Do they work with less staff and possibly jeopardize service standards for the sake of the bottom line or do they adhere to staffing guidelines? For most hotels and restaurants, the answer wasad for them: either make staffing cuts or go out of business. They began laying off workers, cutting employee hours and implementing so-called “hiring freezes.”

While those who lost jobs were hardest hit, the outlook for employees who managed to keep their jobs was also grim. These employees, shouldering the burden of staffing shortfalls, began logging longer hours and handling multiple duties. At the same time, they doubted their own job security and often felt taken advantage of.  An increasingly stressed and over-burdened work force arose and continues today.  

As the economy recovers, however, this dissatisfaction, coupled with improving job opportunities, will engender a turnover storm, particularly in those companies who haven’t been focused on their human capital. Good companies will pull talent from organizations that can’t control this turnover. And those who start to hemorrhage employees will pay dearly; estimates commonly range from 50 percent to 400 percent of the departing employee’s salary, depending on the nature of the job, according to this New York Times article.

Hotels and restaurants have learned to operate with a smaller staff that works longer hours. But at what cost?  What has it done to guest satisfaction? How has it impacted employee morale? Hotels and resorts that provide a secure work environment where employees are valued will more easily weather the economic resurgence without losing valuable talent. It will be these companies that attract the best outside talent, as well, much of which has been waiting for several years for the  opportunity to move to a better company. And these forward-thinking companies will be able to maintain and raise hotel service standards with the least disruption.

For excellent advise on this topic, Chip Conley’s book, “Peak: How Great Companies Get Their Mojo from Maslow”, provides excellent examples of how employee fulfillment influences a hospitality company’s bottom line.

© 2018 Coyle Hospitality Group 2016. Reproduction of any material without written authorization is strictly prohibited.

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