Top 5 Reasons for High Employee Turnover in Hospitality Industry

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Employee turnover in the restaurant and hospitality space is significantly higher than other industries. What can restaurant and hotel managers do to correct this trend? We reached our to our friend Dr. Swathi Ravichandran for some answers.

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Swathi received her MBA in Marketing and a PhD in Foodservice and Lodging Management from Iowa State University and is currently an Associate Professor and Director of the Hospitality Management program at Kent State University (KSU). Swathi’s expertise includes human resources, legal and marketing issues for the hospitality and foodservice industries. We have no doubt Dr. Ravichandran’s insights will help our customers run their businesses even better and the Iceologists are honored to have her as a guest blogger. We’ll let Swathi take it from here.

Top 5 things managers in the hospitality industry are doing to exacerbate employee turnover:

Managers of hospitality operations are only too familiar with the problem of high employee turnover. According to the 2012 U.S. Census Bureau data, the voluntary turnover rate in the accommodation and food services industry was 34.7 percent compared to an average of 16.4 percent across all industries. The American Hotel and Lodging association estimates that average annual employee turnover can range from 60 to 300%. Imagine being a manager working with as many as three new sets of employees in one year or an employee who may have multiple supervisors in the same year!  Could you be partly responsible for your employee’s decision to leave?

Warm Body Syndrome

Remember the saying “you are only as strong as your weakest link.”  If you have ever used the following excuses when making a less than ideal hiring decision, you are guilty of warm body syndrome.

“I can always fire him (her) after the probationary period if things don’t work out.”

“I NEED someone to cover tomorrow’s shift and don’t care if (s)he is not perfect.”

“This is just a temp/seasonal job. I’ll be rid of them soon enough if things don’t pan out.”

And my favorite: “Why should I waste my time writing a job description, interviewing, talking to references, and training the right candidate?  They are just going to quit in a couple months anyway!”

Firing an employee is not always that easy with threats of discrimination and wrongful termination lawsuits.  It is also not cheap to constantly recruit and train new employees, not to mention the lost revenue that inconsistent service could contribute to!  Employee turnover can melt your profits!

Following the “sink or swim” training approach

I have taught Hospitality Human Resources Management for about 10 years and without fail, every semester, my students identify the “sink or swim” approach as the one most extensively used in their jobs.  Why is it that employers don’t hesitate to allocate a part of their budget for updating their software, purchasing new linen, silverware, or cutlery but start to penny pinch when it comes to training?  To be fair to the employer, it could be because they feel that the time and money spent on training goes down the drain as employees quit in the short-term anyway!  Other oft-cited reasons for not following optimal training methods include: “I don’t have time;” “I’d rather have them on the floor, delivering service;” “I don’t have the time to train trainers.”

However, several research studies have shown that training reduces operating expenses and increases profits, leads to more satisfied guests, reduces work stress and improves work relationships, makes it easier to recruit new staff, and last but not the least, lowers employee turnover!

Not conducting performance appraisals

Think about it…when was the last time formal performance appraisal sessions were conducted in your hotel or restaurant or country club?  A year ago?  Six months ago?  If you answered yes, you are probably ahead of the curve.  The sad truth is that many establishments never conduct formal performance appraisals.  Your better employees, the ones you want to retain, care about their jobs and want to know if they are making mistakes. They also want to be appreciated if they are doing a good job!

While most employers offer instant feedback, especially when an employee commits an error, setting aside time to discuss employees’ performances one-on-one, can help:

  • determine individual and departmental training needs
  • make fair decisions about raises, bonuses, and career development
  • determine change in organizational policies and procedures
  • validate hiring decisions

Given the high turnover rates in the hospitality industry, quarterly employee performance appraisal sessions are recommended!

Ignoring your employees, especially your top performers

Get to know what motivates your employees. Some of your employees may have a need for achievement; they are motivated by mastering complex tasks and solving problems. They love a challenge! Others may have a strong need for affiliation in that they love creating warm, friendly, and lasting relationships with their co-workers and customers. Getting to know your employees, both personally and professionally, shows them that you care!

Ignoring your employees may lead them to move on to greener pastures, especially as unemployment rates continue to decline! Praise and compliments have been found to be powerful rewards for service workers in hospitality. And they don’t cost a thing! Practicing management by walking around, developing employee recognition programs, and creating a climate of recognition are other proven tactics to retain employees. The top performers will additionally appreciate participation in career development programs and upward mobility opportunities.

Ignoring new laws and standards

Ignorantia juris non excusat, means ignorance of law is no excuse.  The Patient Protection and Affordable Care Act is the latest in a long list of legislation that every hospitality employer should have command of.  The hospitality industry faces more than its fair share of lawsuits related to discrmination (based on age, race, religion, and disability), sexual harassment, and employment of undocumented workers.  These result in potentially millions in compensatory and punitive damages (in 1994, Denny’s agreed to settle race bias lawsuits for $54 million!) but more importantly, damaged reputation.  Sure, lawsuits impact sales revenues but employees don’t take pride in working for such organizations either!

Taking time to understand the reasons behind employee turnover will save you time and money in the long run! It’s worth taking inventory of how your management style may be contributing to employee turnover in your restaurant or hotel.

Do you have any tips for retaining your best employees? Any questions about human resources or hiring in the hospitality industry? Leave a question or comment for the Professor here!

Our team is available to help you get started today!

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