Delivering Service in a Labor-Scarce Economy
By Mark Heymann Chairman & CEO, Unifocus | December 22, 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