Delivering Service in a Labor-Scarce Economy

By Mark Heymann Chairman & CEO, Unifocus | January 20, 2019

With unemployment holding at historically low rates, hospitality and food service are among the industries most affected by the labor shortage, according to the Bureau of Labor Statistics. The immigrant workforce, a vital source of labor for the hospitality industry, is being impacted by a government crackdown at a time when the U.S.-born population is aging and shrinking. Adding to the challenge is that with job opportunities outpacing available labor, more workers are targeting higher skilled (and higher paying) positions, leaving lower-paying service jobs unfilled.

For hotel operators to continue to meet guest expectations with lower staffing levels, ingenuity will be required, from rethinking how service is delivered to considering nontraditional labor sources that can be trained for hospitality work. And, they will need to examine how a lower-paying industry can attract a larger percentage of the shrinking labor pool.

Raising Wages While Minimizing Impact

Is it possible that the labor shortage could spur the industry to raise average wage rates? Most people assume that a wage increase automatically means a raise in base wage rate. This is not necessarily the case. The use of pay-for-skill and performance pay can increase wages while limiting the impact of the higher net wage on the organization. Pay-for-skill can be implemented in conjunction with cross-utilization, thereby reducing time lost due to minimum shift requirements.

This creates a job enrichment culture (improving engagement) and reduces the number of full-time employees, effectively reducing total benefit costs. A pay-for-performance structure can measure aspects of an employee's job, like quality results, shift production, and other individual or team metrics. This approach, sometimes called gain sharing, assures that as the employee's compensation increases, there is a direct benefit to the organization.

A Shift Toward Self-Service

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.