Mitigating staff turnover

There is good news for job seekers and existing employees in the hospitality industry.  While national wage increases remain well below 1%, wage growth in our sector is expected to be 3% this year, according to the latest Hospitality Employment Index from recruitment website Caterer.com.

The measure points to an upward shift in the salaries available on its website, with head chef and sales and marketing positions commanding the highest remuneration.

The percentage of advertised salaries over £30,000 has increased by 14% year-on-year and now represents 31% of the website’s vacancies. Meanwhile, salaries under £20,000 have reduced in percentage by 11% since the same time last year.  

Hospitality has long been stigmatised for its low pay, but the Index reveals that the highest year-on-year pay increases are for frontline roles such as waiting staff and receptionist/concierge positions.

As the hangover of recession fades, it is hoped that improvements in pay, particularly for entry-level staff, will help to alleviate our industry’s problems such as high levels of staff turnover and a large proportion of part-time workers. For employers, however, rising payroll costs present a challenge that can only be met by greater productivity.

In our labour-intensive industry, payroll is the biggest cost of all, amounting to 23% of total turnover in London hotels, 27% in England and 33% in Scotland; in restaurants the figure is nearer to 40%. The new statutory workplace pension scheme, estimated at anything up to 3% of annual payroll in employer contributions, will add to these costs.  

From 1 October the National Minimum Wage (NMW) will rise again, this time from £6.31 to £6.50, an above-inflation increase of 3%. Labour leader Ed Milliband recently made the headline-grabbing announcement that under a Labour government, the NMW would rise to £8.00 by 2020, and yet if it continues on its current trend, it is likely to reach that figure anyway.

In response, John Longworth, director general of the British Chambers of Commerce was right to underline that that politicians should not intervene in such matters and instead concentrate on policies that increase productivity and skills.

“A range of existing mechanisms, such as the Low Pay Commission and Living Wage Commission, are already in place to determine the optimal resolution for workers, businesses and long term economic growth,” he said.  “Politicians should instead focus on implementing policies to raise productivity and improve skills in the workplace – which are the keys to higher wages for all in the future.” 

In the face of rising payroll costs and prices held back by customer resistance, businesses must focus on raising productivity, by optimising the talents and abilities of all employees.

Pay is just one part of the answer to motivating employees and retaining them. The opportunity for continuous professional development underpinned by a caring culture that recognises the need for work/life balance is the way to generate loyalty and discretionary effort from employees.

Unsurprisingly, turnover for entry level hospitality staff is the highest of any group of employees, averaging 30%, and yet this group is also the most likely to stay by being offered regular and relevant training, finds research by People 1st.

Irrespective of what the economy is doing, in both good times and bad, successful businesses know that training and continuous professional development must be at the heart of their operations and reach employees at all levels.