How to Address the Hospitality Hiring Crisis

Go visit five restaurants or hotels and ask managers their biggest concern.  You’re likely to hear the same thing – attracting and retaining quality workers. According to the U.S. Bureau of Labor Statistics, the number of restaurant employees dropped from 12 million to six million during the pandemic, while hotel occupancy rates declined nearly 64%. However, even as the economy reopens, these employees aren’t necessarily returning to work.

Specifically, since pre-pandemic, there are about two million fewer 16-34-year-olds – the most common age of restaurant employees – in the labor force. Meanwhile, the leisure and hospitality industry added 5.4 million jobs, yet, employment in this sector is down by nearly three million people. With so many jobs available, why are restauranteurs and hoteliers having trouble staffing them?

There are numerous reasons why managers find it hard to fill these vacancies:

• Tippers aren’t as generous as they once were. Per a recent Harris Poll conducted for Fast Company, 19% of American said they tip less now than before COVID-19. Even amid loosening restrictions, many restaurants still operate on a drive-thru or carryout-only basis – and tipping isn’t as generous or common. With U.S. waitstaff making an average salary of $7 per hour, tips are heavily relied on to make ends meet. That bleeds through to hotel staff, too, as cleaners, bartenders and servers also rely on tips to bump their salaries.
   
• For many, unemployment benefits, which were recently boosted, are sufficient incentive not to seek work. Is that surprising, especially since more than half of the nation’s average workers can collect more in unemployment than from their prior job?
   
• Loyal long-term employees who were let go because of financial hardship feel let down and underappreciated by their employers. Why go back?
   
• It’s a worker’s market, despite what unemployment numbers reveal. With lessening restrictions, many businesses are re-opening– and they’re all hiring at the same time.

Hospitality leaders must think outside the box to differentiate themselves from the competition. This means identifying ways to incentivize potential employees to join and stay with them. While compensation is a critical component, other ideas such as upping benefits’ packages, providing earned wage access (EWA) solutions and financial education can also help sweeten the pot.  

Attract the Help You Need

Below are some tips restauranteurs can use to distinguish themselves from the competition – to attract and retain employees:

• Enable access to their money: Many employees live paycheck to paycheck and resort to expensive solutions to financially bridge their needs between pay periods. On top of that, many lack access to traditional banking services. Address this reality by giving employees immediate access to their earnings using paycards and on-demand EWA solutions.

Don’t forget servers, bartenders and cleaning staff – who need immediate access to their tips as they often represent the majority of their income. These tools offer employees an easy and secure way to manage their wages, even if they don’t have bank accounts and allows you to eliminate maintaining cash on-site.

• Provide financial literacy: Regardless of upbringing, education or background, many folks simply lack the ability to manage their finances or save for the future. Offering financial literacy education provides employees with the understanding and skills to budget and manage their money well.
• Consider compensation: With so many businesses reopening simultaneously, competition for talent is challenging. Ensure your compensation is at market, or above – consider a signing bonus and adding one or two dollars to hourly wage rates. Small changes like this can make a world of difference to many potential employees. Another idea is to provide stay bonuses – for example, employees that hit the six-month mark and are in good standing receive added one-time compensation.
• Safety first: Most hotels and restaurants implemented safety measures to combat the pandemic. While authorities have loosened COVID-19-related restrictions, think about keeping some of these precautions to help employees (and patrons) feel safer. Consider maintaining distance between tables and requiring employees to wear masks. Don’t yet discard protective seals on doors or signs in rooms offering room-cleaning options.
• Make it fun and appealing: The interviewing process is stressful – everybody knows that. Why not make recruiting a fun and memorable experience? Chipotle and some hotels are offering signing and referral bonuses. If you have the room, consider equipping a break room with a TV and a gaming console. It might even help to build camaraderie amongst your crew.
• Up the perks: Consider offering what the competition doesn’t. Adding a 401(k) plan, paid time-off, sick days and health and mental care will help you stand out to potential employees. If you don’t already have one, why not implement a career path program? This could encourage your team to stay and grow with the company. Put yourself in your employees’ shoes – what would you want if you were them?
• Stand out from the pack
  Over the past several months, we’ve seen businesses close their doors – in some cases for good. It’s been a tough time for everyone, especially those in the hospitality industry. Now, as restrictions lift and restaurants begin to re-open, employers need team members who provide high quality customer service to tired travelers and those just starting to venture out.

The challenge for employers? It’s a worker’s market and many are incentivized to stay home rather than rejoin the labor market. Take time to brainstorm what your organization can do to differentiate itself from the competition. Offering additional compensation and ways to immediately access pay, financial education, and new perks or benefits can help bring potential employees to your door.

This is a complex problem with no simple solutions, and it’s not going away anytime soon.  The pandemic demonstrated that tried and true hiring tactics are not as effective anymore. If you’re the employer that employees desire, you’ll have an easier time attracting and retaining the best talent. In the end, their success equals your success.

About the Author

Brian Radin is president of Comdata Prepaid.