Why employee retention is better than recruitment in the hospitality sector

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Why employee retention is better than recruitment in the hospitality sector

Anyone who has ever worked in a business is aware of how difficult it is to attract and retain the best employees. It’s critical that business owners take every step possible to ensure that their top performers stay with them for as long as possible. This is particularly relevant in one of the most difficult hiring markets we’ve ever seen, where hospitality operators are struggling to recruit for a variety of roles amidst the ongoing staffing crisis, and vacancy rates are still 72% higher than they were pre-pandemic, according to the latest labour market data from the ONS.

In this blog, we look at a few reasons why it might be better for your business to focus on retaining the employees you already have instead of hiring new ones.

Firstly, both terminating an employee who is leaving and hiring a new employee have hard, direct costs. Oxford Economics and Unum’s research indicates that the average cost of turnover per worker earning £25,000 or more annually is £30,614. Therefore, the cost of turnover will be close to £92,000 in a single year if you replace three employees earning this wage. You must consider the costs associated with hiring the person (either internally or through a third party), introducing and training the new employee, and handling the employee’s departure.

Secondly, when you hire a new employee they will need time to become acquainted with your company’s culture and working environment. This is a soft cost because, while it does not directly affect your finances, it does have an indirect impact on your business. This process may consume the first few months of their employment, during which time they are not fully productive within their role. This cost can be difficult to estimate, but it can often have a big effect on your hospitality business’ bottom line.

Another factor to consider is that there is no guarantee that a new hire will add value or stay with your company for an extended period of time. Even if they are an excellent fit, there is no way of knowing how things will turn out in the future, which poses a very real business risk. If things don’t work out with your new employee, you’ll have to start the hiring process all over again.

The opportunity cost of hiring a replacement employee is another thing to consider. What will happen to their current role, for instance, while you’re hiring and training them? And how long can that position remain vacant before it has an impact on customer service and your business’ operations? This opportunity cost is probably going to have the biggest effect on your profits, especially in a challenging and competitive market.

Here are some tips for you to consider as part of your retention strategy for your hospitality business:

  • Invest in your employees’ careers – One of the best ways to keep talented staff from leaving is to invest in their career development. By offering employees career development opportunities such as training and mentorship, companies can show their employees that they are committed to helping them succeed.
  • Place emphasis on managers – Leadership qualities can be learned. Make sure management abilities are considered when evaluating performance, and provide training and mentoring to managers at all levels, particularly if they are first time supervisors.
  • Recognise the contributions of employees – Creating an environment in which employees feel their efforts are acknowledged and valued is important for any successful business. Regularly assessing performance and rewarding employees for good work can boost morale, reduce turnover rates and increase productivity.
  • Re-evaluate compensation – Rewarding employees with competitive salaries and bonuses, as well as providing incentives, can go a long way towards motivating employees to do their best work.
  • Review your benefits package – Developing a comprehensive benefits package, including health insurance, retirement plans, and paid leave policies can also be beneficial for both employees and employers.
  • Make work-life balance and wellbeing a priority – Provide flexible scheduling and encourage employees to take time for themselves, Not only will this show that employers are invested in their employees’ wellbeing, but it can also lead to greater productivity, as employees who feel supported by their employer and have a healthy work-life balance are more likely to be productive.
  • Make ways for growth – Investing in employees’ professional development and offering opportunities for training, growth and advancement can help to retain talented employees. Training hospitality staff not only helps to create a more knowledgeable and competent team, but it can also increase employee loyalty and job satisfaction, as employees can see the potential for future career development.
  • Strengthen organisational culture – Creating an inclusive, positive work environment and strengthening the organisational culture will help to make employees feel valued, which in turn will reduce turnover. Encouraging employees to communicate openly and listen to one another can help create an atmosphere of trust and cooperation.
  • Provide the right tools – Providing employees with the right tools, resources and technologies can help to improve their productivity and efficiency in the workplace and reduce stress. A hospitality operations platform handles front-office, bookings and reservations, seating, housekeeping, and other aspects of the many moving parts within a hospitality business. Streamlining operations with the right PMS increases efficiency. Outsourcing and automating stocktaking processes lets top management focus on revenue-driven decisions rather than daily operations.

Delegating, encouraging communication, using tools to streamline operations, and creating a sense of a team are additional strategies for successful staff retention.

Marcus Jones, Managing Director of Capcon Ltd, comments: “The success of your hospitality business depends on the success of your staff, so give them all the resources they need to succeed. With a series of clear processes, systemised operations, integrated software solutions, and structured training programmes, you will undoubtedly ensure increased revenue, positive feedback, optimal employee retention rates – and as a result, enhance customer satisfaction and boost your bottom line.

“Businesses are almost always better off in the long run if they keep good employees rather than replace them. Success will follow if you continue to identify, develop, and leverage talent within your hospitality business.”

Talk to us about Capcon’s hospitality profit enhancement and risk management services. We will assess your current systems, processes, and staff development programmes before making recommendations and implementing processes to improve efficiency, boost employee and customer satisfaction, and enhance profitability.


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