How Employee Engagement Impacts Labor Shortages

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Andrew Hazelton is a managing director at AETHOS Consulting Group—a global hospitality advisory firm serving the hotel, restaurant, casino, cruise line, club, and travel technology sectors—who handles executive search, compensation consulting, organizational development, and psychometric assessments. Amidst industry concerns about the impact of the rising cost of labor on profitability, LODGING recently spoke to this recruitment consultant about the connection between a stable workforce and controlling costs, and discussed some ways those in the hotel industry can cost-effectively attract and retain the best people—the ones who embody the word hospitality.

Andrew Hazelton, AETHOS Consulting GroupWhy should hoteliers strive to maintain a stable workforce?

I believe you have to have bench strength—i.e., the skilled people in the right roles—to succeed in any industry. But with today’s demand for personalized services, the hospitality industry in particular requires a knowledgeable workforce made up of employees who are essentially brand ambassadors through multiple levels of direct contact with guests—from housekeeping to the front desk; from the valet to the restaurant. The DNA of a great hospitality organization is all about customer service based on recognizing and meeting customer expectations via these “brand ambassadors.” You can’t have that consistently with a revolving door.

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What are the costs associated with employee turnover?

The most obvious and quantifiable cost with turnover is the cost of recruiting and training a replacement. The common wisdom is that it takes six months to train and develop an employee to be comfortable and competent in their job. But there are deeper, hidden costs that are more difficult to quantify. There are costs related to the negative effects of unwanted turnover on overall employee morale and employee well-being—all of which can lead to additional turnover. Then, too, employees called upon to fill gaps or carry a larger workload may be less productive and consistent in delivering on a brand experience. When that happens over a prolonged period of time, it can be costly as a result of its impact not just on employees, but on overall guest satisfaction and the customer experience.

What is the relationship between employee satisfaction and a business’ success?

Today’s business focus is on “employee engagement.” Employee engagement is not so much about being warm and fuzzy as implementing a smart business practice, one that favors demonstrating support and empathy for an organization’s primary brand ambassadors. It is proven that top-performing companies that have higher employee engagement scores also have less turnover. Employees who are engaged show greater loyalty and motivation due their own great brand experience, so they deliver better service and earn better guest satisfaction scores. Think of it this way: employee engagement equals guest satisfaction and this translates to higher occupancy plus greater spend plus greater ADR and a more successful business.

How can a business promote employee engagement?

For starters, it is important to understand that within hospitality, your employees are your customers’ touch points—again, your brand ambassadors—and should be valued and incentivized as such. They should receive proper training and ongoing support, so they know how to do their job and how to promote the brand within it. This means being knowledgeable about the brand’s values and promise to deliver the kind of experience that drives consumer loyalty. Remember, employees want to be understood and valued, so it’s critical to build a culture where leaders invest the needed time and energy to strengthen those working relationships.

Where does compensation come into the equation?

Competitive financial compensation is a vital condition of employee satisfaction, but it doesn’t alone drive engagement. The two most important factors that impact employee engagement are: (1) the relationship an employee has with direct reports; and (2) the relationship an employee has with peers. Engagement essentially requires more frequent conversations, more interaction with employees. At end of the day, an employee is more likely to go the extra mile for a company or a boss they value and respect. This extra mile could be in the form of a guest experience, in supporting/training a co-worker, or even not leaving your company for another job because they feel that they are respected, valued, and taken care of.