July 17.2017, 10.51am

Feel the Churn: Tackling High Turnover Rates in Hospitality and Retail

If employees are the lifeblood of any business, the hospitality and retail sectors are both in need of a tourniquet. Staff turnover is the biggest challenge facing both industries but there seems to be an acceptance that it’s just the way it is. This apparent willingness to take on perennial infusions of new hires means that the core reasons for this churn are often ignored.

A recent study found that the turnover rate for the restaurants and accommodations sector was 72 percent in 2015. The turnover rate for store associates in the convenience store industry was 54 percent, according to the Convenience Store News 2016 HR & Labour Study. Another survey found that 38 percent of HR and payroll professionals at retail organisations had noticed an increase in employee turnover in 2016.

Those are worrying numbers by any standards. HR professionals working in retail and hospitality need to address not just the symptoms of this particular problem but also the underlying causes.

Diagnosing the root causes of this problem can help you to find a real, long-term solution, rather than applying a temporary bandage. Stemming the flow can also address the contagion effect associated with a high turnover and improve company morale.


Why is turnover so high in retail and hospitality?


There are some obvious reasons for this high churn. Many of the jobs on the frontline are filled by young, part-time, student or temporary staff. Half of the European workforce in hospitality are under the age of 35 so that naturally results in a lot of movement.

You’re also asking people to work antisocial hours in demanding roles where they often have to deal directly with customers who may or may not be happy. Many hospitality and retail workers are just picking up a cheque, happy to take on the work as a stop-gap position.

Some of the jobs in these industries are associated with lower wages, poor job security or poor working conditions. That can make it tricky to hire good people, especially when the opportunities for professional growth or career development are limited. Against this background, it can take a concerted effort to attract and retain the best, especially for entry level positions.


It all starts with recruitment


It may seem obvious but hiring the right number of people is essential. People can quit because they feel overworked but being overstaffed can result in people leaving due to a lack of available shifts.

Not all turnover is bad. The aim is to lose underperforming employees and retain high performers. Filling vacant positions with the right people is key. Experience can be gained but hiring employees with people skills and the right cultural fit is vital in people-facing industries like retail and hospitality.

Employee referrals are one way to get good cultural fits but aptitude tests and job-related, skill-based assessments can reveal if a candidate is suited to the role. Take vetting seriously and ensure that you thoroughly check references.

Employee retention efforts begin with your first interaction with a candidate but orientation and onboarding for new employees is vital. Proper training equips employees with the skills to succeed, gives them confidence and builds trust towards their employer.


Wages and perks matter


You need to keep your key compensation and benefits packages current if you want to retain employees in a competitive labour market. Your employee value proposition is what will define you and solidify your reputation as an employer.

Bonus packages can keep employees motivated, boost morale and prevent them from becoming disengaged once they’ve mastered repetitive tasks. Even major brands have started improving benefits to improve customer service and retain workers.

For instance, the Zetter Group launched a profit-sharing scheme in 2014 and paid staff an extra 1.9 weeks’ salary in the first year. Walmart and McDonalds both noticed benefits after introducing pay hikes for employees.


Give employees opportunities to grow


Employees need to be nurtured, developed and given the opportunity to grow, especially in a workforce dominated by millennials who crave training and development opportunities.

They also want to do work that matters, which can be a challenge in retail and hospitality. Patagonia tapped into this desire by offering employees two-month paid sabbaticals to work on environmental projects they’re passionate about.

Career pathing employees means offering leadership programmes, training and the potential to advance. Promoting from within creates a culture of progression and makes people feel like they have a career rather than just a job.


Employee experience and engagement are critical


Long-term employees are simply employees who stay in the job a bit longer on an ongoing basis. HR needs to talk to employees about retention from day one. Find out what they want and need and then act on the feedback.

Engagement surveys are important, as are leaving interviews. Knowing why people want to leave can help you address existing issues and prevent further churn.

Investing in employee happiness pays off, as many major brands have proven. Recognition and praise are two simple cost-effective approaches to cultivating a productive, contented workforce. People prefer to work in a positive work environment where good work is rewarded.

In industries where shift work is the norm, being fair with schedules is essential to avoid staff dissatisfaction and retain your top talent. Millennials also enjoy collaborative work so encourage team-bonding initiatives to strengthen the bonds between workers.


Industry specific HR technology can provide a framework for success


An automated, high-tech HR and payroll system makes it easy to track time and wages in industries where people work irregular hours. The upshot of this is that it eliminates the sort of payroll errors that can frustrate employees and negatively impact employee satisfaction.

A millennial-heavy workforce expects modern, tech-driven HR systems. They want mobile POS and regular feedback. HR technology makes it easy to provide feedback, chart an employee’s progress towards targets and measure performance.

For instance, the industry giant Valor Hospitality Group uses survey technology to measure employee engagement four times a year. Using technology to provide a better employee experience is the future. Walmart have even started using VR for training purposes, showing a clear desire to invest in employees.

Ultimately, the biggest advantage of HR software is the way data analytics lets you chart performances, identify issues and measure the success of your recruitment strategies. That gives you the necessary insights needed to diagnose why you’re experiencing high employee churn and what you can do about it.

Accepting the prevailing trends in terms of turnover is simply admitting defeat. Giving yourself the means to tackle the root problems is the first step to stopping the flow of talent and defying the trend.

Want some more top tips on managing millennials in the workplace?

The Ultimate Guide to Managing Millennials

Simon DowdBy Simon Dowd

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