Hospitality Staffing is Prime for Disruption: How Intelligent Systems Are Changing the Game
When we think about technology in business, the hospitality sector isn’t necessarily the first one to come to mind. Hospitality is ultimately about the human touch, and bringing in algorithms and automation can seem like a risky move away from one-on-one interactions with customers. Yet for larger hospitality companies, technology has become an essential part of doing business – and now it’s improving staffing as well.
Just like other big companies that use raw materials, hospitality businesses have been able to take advantage of innovations in supply chains over the past few decades. Bringing in raw materials with less lead time has allowed restaurants and hotels to match their inputs to demand with unprecedented precision, reducing waste and keeping inventories healthy. But this kind of “just-in-time” supply hasn’t been as easily available for labor... until now.
Filling Shifts in a Flash
Over the past several years, the growth of flexible work has opened up new opportunities for companies to fine-tune their labor supply and reduce downtime. Flexible work platforms are growing in popularity by leveraging artificial intelligence to match skilled workers with businesses in real time, ensuring hospitality companies have the right staff with the right skills at the right moment. Companies post shifts and workers sign up for them using apps on their mobile phones.
Though companies typically have the best results when they post shifts at least a few days in advance, the vast majority of roles posted on the online platform have an average time-to-fill of under 12 hours. This number has been dropping quickly over the past year, because of one enormous trend: increasing supply.
From March 2021 to March 2022, the flexible work network on Instawork doubled to 2 million flexible workers. By early 2023, there were more than 4 million users connecting to businesses in dozens of cities across the United States and Canadas.
This huge influx of people interested in flexible work has made our labor market incredibly liquid, as well as keeping pay under control. For most of 2022, hourly rates for the hospitality shifts transacted on the Instawork platform were fairly constant, with pay changing by only 1% or 2% in the vast majority of roles.
Fill rates for shifts have also risen to levels that would be unusual for traditional forms of hourly work. To accomplish this, flexible work platforms need to combine technology with human intelligence to ensure high quality and reliable staffing -- at scale. A rich database of the hourly worker universe is necessary and should include dozens of relevant data points to capture their skills and experiences. Predictive algorithms with machine learning can then be used to match the hourly worker with the right roles and businesses based on their skills and experience.
In the past, hospitality workers might only have found out about available shifts by word of mouth. Now they have instant access to a wide variety of opportunities in the palms of their hands.
Technology is also increasing staffing efficiencies for businesses with results improving the bottom line. They no longer have to spend most of their time hiring and recruiting. Intelligent systems connect them with skilled workers while also optimizing payout rates, ensuring the worker is satisfied with their pay and the business gets the best value.
Leveraging existing tools is also key. Mobile phones should be leveraged for improved outcomes. Workers can receive reminders about their upcoming shifts and can clock in when they enter the “geofence” for the shift – an imaginary perimeter around their place of work. A reputation mechanism, whereby companies and workers can rate and comment on each other after each shift, helps the market to make better matches.
The Future Is Flexible
The resulting efficiencies have helped to enlarge demand for flexible labor. In survey data from our 2023 State of Hospitality Staffing report, 73% of respondents said they intended to use flexible labor in 2023, up from 66% in 2022. Looking back at the past year, 72% said their use of flexible labor had increased.
Staffing continues to be a challenge in the sector, with 62% of respondents saying they expected recruiting to be as difficult in 2023 as it was in 2022. As of its last count, the Bureau of Labor Statistics still found about 400,000 fewer workers in leisure and hospitality than there were immediately before the pandemic. Some workers moved to other industries, and some left the labor force altogether.
Yet in recent months, a combination of inflation, higher interest rates, and eroding savings have been pushing people back into the workplace. And increasingly, workers are dipping their toes back into hospitality via flexible work platforms. These experienced professionals still want the feeling of being part of a team whose sole purpose is to take care of and delight other people.
Technology has made it easier than ever for these workers to come back to hospitality, and for companies to find them. To be sure, using flexible work can require some adaptation on both sides, especially as flexibility becomes a key feature of core payrolls. But the gains in efficiency and satisfaction are too big to ignore.
ABOUT THE AUTHOR
Debarshi Kar is the CTO at Instawork and has over 20 years of experience leading teams at fast-growing startups. He was an early pioneer in social gaming, building disruptive products that produced over $1B in revenue, co-founding Mesmo Games which was acquired by Sony.