How to solve a problem like productivity

Chancellor George Osborne recently pledged that tackling Britain’s poor productivity is now his priority for the current parliament. At a national level we work longer hours than Germany and France but produce less per worker than they do. Furthermore, based on output per worker, a new People 1st report reveals our hospitality and tourism sector contributes 53% less than retail and 58% less than manufacturing.

However, such comparisons are unhelpful. There are perfectly valid reasons why productivity is lower in hospitality than retail or manufacturing. Most people want to eat dinner between 7 and 8.30, for example, leaving emptier restaurants and quieter kitchens during the shoulder periods. For safety and security reasons, hotels must employ staff during the night.

Measuring labour productivity in the tourism and hospitality industry is not difficult. It is simply the amount of sales revenue produced for every £1 spent on labour.  However, research highlighted in Hospitality Digest 2014, an Institute of Hospitality publication, found some big differences. The average for labour productivity across all hospitality businesses was £3.24 in sales for each £1 spent on labour, yet the more successful, and productive, businesses were generating as much as £18.44 – six times as much.

So what is it that the more successful and highly productive businesses do and, more importantly, what can other employers learn from them? In short, they have better staff retention levels because they invest in training and development and provide clear career progression pathways for their workforces. They underpin this with a supportive and caring culture that recognises the need for work/life balance, thus generating loyalty and discretionary effort from their employees at all levels.

Designing and delivering Continuous Professional Development (CPD) programmes is a significant undertaking. Companies do not have to do it by themselves. Some successful firms, including Shire Hotels and Concord Hotels choose to partner with the Institute of Hospitality.

But simply boosting the supply of skills alone will not necessarily improve productivity. You may indeed invest in individuals just to see them leave. They may even go and work for one of your competitors. It happens all the time. People move on for a wide variety of reasons and businesses have to accept this.

Training needs to be accompanied by investment in innovation, re-thinking the ways in which services are designed, work is organised, staff are rostered, technology is utilised and skills are deployed.

Restaurateurs Sat and Amanda Bains recently announced plans to switch to a four-day week in order to improve the working conditions of their staff. In the short term it will cost them, but their hope is that the long-term benefits in terms of attracting and retaining a dedicated workforce, will outweigh the initial risk. Furthermore there is growing support for the Living Wage movement and the recognition that pay is linked to higher loyalty and commitment from staff, and thus lower staff turnover and HR costs.

Indeed, you are not going to get better results from your housekeeping team simply by cutting their break times and telling them that, instead of 13 rooms, they now have to clean 17 rooms per shift. Driving up productivity is about working smarter, not harder.

This feature first appeared in the August 2015 issue of Hotel Owner