How hospitality employers can boost productivity through L&D
L&D could be the solution to a more productive hospitality industry, says Martin-Christian Kent.
Recent figures show that the productivity of UK workers has dropped back to pre-financial crisis levels as economists warn that the UK's productivity continues to lag behind its major trading partners such as the US, France and Germany. This is the first quarterly fall in productivity since the end of 2015, according to the ONS.
Low productivity and high labour turnover have long been facts of life in the hospitality and tourism sector. So although employers in the sector invest significant amount of money in learning and development, this investment often doesn’t pay off as a significant number of employees don’t stay long enough to become fully skilled and this in turn impacts productivity.
When it comes to increasing productivity levels, skills are a critical factor. Yet, hospitality and tourism faces one of the highest instances of reported skill gaps of any UK sector. In 2015, 18% of businesses in the sector reported that their staff lacked the necessary skills to meet their business needs, a figure only topped by the care and manufacturing sectors.
This adds to the challenges businesses face to stay competitive. Just how serious these challenges are became clear when senior HR executives from 40 large businesses across the UK hospitality and tourism sector were interviewed for a recent report, The performance and talent management revolution: Driving productivity in hospitality & tourism.
What was found is that the UK’s hospitality and tourism sector is facing a perfect storm of rising costs, increasing recruitment difficulties and changing employee attitudes. As a result, many employers are starting to focus on productivity improvements to help offset rising costs while maximising their customer experience and profitability.
In a sector where average labour turnover is in the region of 75%, boosting levels of staff retention is a key piece in the productivity puzzle.
That means an increased emphasis on recruiting staff who are more likely to stay with their business, plus a much greater focus on retention, career progression and improving the skills of managers – all areas in which learning and development can play an important part.
In a sector where average labour turnover is in the region of 75% (compared to the UK all-sector average of about 15%) - and in some cases exceeds 100% - boosting levels of staff retention is a key piece in the productivity puzzle.
As one HR Director interviewed put it, “26% of people we hire leave within the first 12 weeks of working for us…it’s very difficult to build on something when you’re continually having people leave the business.”
Given the average recruitment and initial training costs are £750 per person, this low level of retention is costing the sector £1.1bn annually in recruitment and initial training costs alone. To put it in a wider context, for a business with 40 full-time staff (or equivalent), that’s an average of £22,500 per year notwithstanding the cost in lost or reduced productivity.
All of these are powerful incentives for employers to look at how learning and development can play a greater role in their broader talent management strategies.
While senior managers in some organisations still do not see the value of L&D and continue to be reluctant to invest properly in training based on concerns that person won’t stay for long, for the majority of employers in the sector, the way that L&D is perceived is undergoing a significant change and its long-term value in particular is more fully appreciated.
Most of the businesses we spoke to speak extremely positively about the training they offer and don’t want this to change. But one symptom of the growing focus on productivity is a shift away from the traditional approach of automatically putting whole cohorts of teams through specific training programmes.
Instead, L&D is increasingly supporting retention efforts and being linked more closely to specific development needs.
One interviewee's perspective: “We’re looking to change the way we’re training - we’ve still got quite a traditional training model in place at the moment which is very programmatic and quite formal training-led.
"What we’re trying to do is drive from much more of a capability perspective and say, “Actually, what do you think the capabilities you need for your role or career path are? And where are you against those and how can you develop them?” Rather than saying: “You’re at this grade/level – this is the programme that you go on.”
Some businesses interviewed are also beginning to look at whether jobs can be redesigned to increase efficiency or to provide more flexibility. Often associated with this is cross-training to develop a more flexible workforce - for example, training staff to move between front office and food and beverage.
Poor management skills are another factor identified by many businesses as increasing staff turnover and some of this is a result of the sector’s recruitment problems. High turnover at managerial level causes its own instability and has a negative knock-on effect across the business.
This feature will be concluded next week.
About the author
Martin-Christian Kent is executive director, People 1st. To download a free copy of the research report visit: www.people1st.co.uk/performance-talent-revolution
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