Where Are the Innovative Ideas for Retention Management?

By Linchi Kwok Assistant Professor of Hospitality Management, Syracuse University | March 24, 2013

According to a recent report in The New York Times, the U.S. continued to add 157,000 payroll positions in January 2013. Yet, the unemployment rate rose to 7.9% for the month. When a high unemployment rate remains, many people feel they are fortunate to have a job. In turn, companies may not make retention management a priority and depend, instead, on a steady stream of unemployed individuals who are able to easily fill open positions. Is that right?

The recession has been challenging companies to run a leaner operation. Employers eliminate redundant jobs and set higher expectations for current employees to fill in any gaps. Companies are no longer rushing to fill the empty positions. When a position must be filled, however, some may prefer to hire candidates who are currently holding a similar position in the field and, thus, save the training and development expenses on new hires, while the others may add new requirements and responsibilities to the job, making it almost impossible to find a qualified candidate to fill the position. In the end, if a position is not filled, the work will be completed by existing employees, which in turn can save companies even more on labor costs.

Such job enlargement tactics (i.e., employers adding additional but similar tasks to employees' work), if planned out carefully, can benefit both employers and employees. For instance, Chili's Restaurants eliminated bussers and asked servers to work in pairs to clean their zones in 2011, as reported in The Wall Street Journal. Servers at Chili's no longer need to share tips with bussers and have incentive to turn over tables faster. They are motivated to provide efficient service by turning tables around faster. At the same time, the restaurants can save wage and health insurance costs for the bussers --- under the new law that will take effect in 2014, employers with 50 or more full time employees need to provide affordable health insurance to those who work 30+ hours a week. Despite lower store traffic and smaller sales for the quarter, this job enlargement tactic as well as other operational changes allowed Chili's mother company (Brinker) to double its earnings.

Unfortunately, not every employee favors the job enlargement idea. Oftentimes, employees feel they are asked to do more without additional compensation. Resentment increases among employees, and some employees leave the organization for better opportunities. Others may stay, but become less productive. When the economy turns around and more companies start hiring, unhappy employees will very likely end up leaving their organization for a better job. Companies must now take retention management seriously because when the economy finally recovers, it might be too late to address this issue. No company can afford to lose its top talent to the competitors.

I see retention management as a system-wide approach to encourage valuable employees to stay with the employer. Money certainly plays an important role, but is not the only reason why people want to commit to their employers. Companies must review every aspect of human resource management before a system-wide retention management strategy is developed. The questions therefore arise: Which areas should hospitality companies visit? What innovative ideas are there for managing retention? And finally, what lessons can be learned? This paper provides a review of several important human resource functions that affect retention management, followed by several examples where companies have adopted innovative strategies in managing retention. In the end, suggestions are made to hospitality companies by outlining the lessons learned from those innovative ideas.

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