The True Cost of Lack of Visibility and Poor Employee Management

The True Cost of Lack of Visibility and Poor Employee Management

Employee turnover in the hospitality industry is a problem. It’s higher than most other sectors, and we are behind the curve on giving a proper focus to engagement and retention — as well as not recognising the benefits it brings. This isn’t overly controversial, but for some it has become an inevitable feature of hospitality. However, others in the industry are getting on the front foot and reaping the benefits of better people management, leading to significant reductions in staff turnover. S4labour have taken a look at what the real costs of high staff turnover are, as well as uncovering some of the real causes (and solutions) to the problem. 

The Cost

Accepted wisdom in the industry puts the figure of replacing an employee in the region of £1,000. However, data from the Society Of Human Resource Management puts the figure at 16% of annual pay. Taking an average across the range of hospitality roles, this puts the figure way over the £1,000 per employee mark, and closer to £3,500 a go. 

Data from YouGov.com reveals that 1 in 3 employees in hospitality will leave their job over a year, but for many roles replacements will need to be found 2 or 3 times over the course of a year — leading to turnover rates in many hospitality businesses of 70% or higher. That would mean to maintain a team of 50 people, the cost to the business is at best £30,000 but possibly as high as £122,500 per year. Of course, costs vary depending on the position and pay rate, but there is a substantial reward for bringing staff turnover down.

Why Does It Cost So Much?

The reasons for the big cost to replace someone are multiple, complex and when added together… they start to mount up. Firstly there are soft costs, including recruitment; admin; and interviewing which will contribute to lost time. With lost time, there are lost opportunities — time spent on admin is often time lost. Therefore limiting sales and training that would drive productivity for the rest of the team. In good times, there are plenty of suitable interview candidates. However currently there is an acute lack of labour, so the chances of interviews going poorly, probations not working out, and the inability to find the right fit for quite some time, are all quite high. Once you have a replacement, the costs continue to stack up. Onboarding H.R. and payroll setups only add to the administrative burden. Training not only takes up a manager’s time but the new team members’ time too. There is a steep learning curve in hospitality, and those who have not experienced the front line before will take time until they become sufficiently productive — especially when compared to the person whom they may have replaced. 

What Is the Solution?

These are issues felt by the entire hospitality industry, and whilst they may be unavoidable there are ways to significantly mitigate the severity of the problem. Those who are giving this a real focus are using data trends to identify, and manage, areas of the business that are driving staff turnover. Ultimately, they are doing something about it.

Where can you start? Every shift is different. It goes without saying that every business is different; there is no one answer on how to reduce staff turnover. Some of these issues will require you to survey your team, giving them a voice to tell you what their stresses (or even the things they love about work) are. However, there is also a hidden treasure trove of insights within your people data — potentially transforming your ability to retain talent. 

At S4labour, we have some amazing forward-thinking operators who have been helping guide the future of our H.R. offering. When we have been speaking to HRD’s about the issues they are facing, the solutions often come back to improving visibility of the workforce. After all, if you can’t see what’s gone wrong, how can it be rectified? Gaining visibility is key in identifying weak points in your staff retention, or pressure points within management that helps prioritise management time, training and focus areas. 

For example: do you know which sites, or which managers, are having the best outcomes? How many people leave your business for a different sector or are they moving to competitors? If so, why? If you don’t know this, you can’t do anything about it.  Some of the main causes for people leaving the business include: not being recognised for their service; being overworked; not being paid correctly; or poor relationships with management.

Being able to see if, when and where WTD breaches are happening will help identify stresses in the business that typically lead to high turnover. Recognising work anniversaries or birthdays has a big boost on morale and generates higher levels of staff engagement. Trends in lateness, or sickness, can be early indicators of dissatisfaction at work (either those arriving late or by those observing tardy behaviour). Having the data to show either improving or worsening trends is critical in how you focus resources in doing something about it. Supporting better management and having appropriate discussions with teams is a lot cheaper than continually supporting a revolving door workforce. 

If you would like to know more about data giving you the right insights to reduce your staff turnover, please book a demo below:

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People Insights That Drive Better Actions

People Insights That Drive Better Actions

There is a minimum requirement when it comes to H.R.: you must have proof of right to work; written contracts; work time directive awareness; constant compliance etc.. However, mistakes happen, things get lost, and valuable time is therefore wasted — especially when recruitment, sales or deliveries are your focus. After all, supporting employee retention and growth is only growing in importance. Getting your people processes right is a golden opportunity that can drive a real impact on the bottom line — meaning employee insights become pivotal. 

Knowing behaviours of managers and teams drives insightful actions; and understanding why they occur brings the following questions: 

  • Are you aware of breaching working time directives?
  • Which sites have more sickness?
  • Are certain employees always late?
  • Are some sites improving or worsening their absentee rates?
  • Do you have a consistent trend of high employee turnover?
  • When are your new starters finishing probation?
  • Are you exposed to fines for missing key employee information?

The list continues. People management issues aren’t only about team members, it’s about managers too. No people manager should be expected to keep track of H.R. related issues via pen and paper; it can limit success and drain valuable time. Every working time directive breach could result in a fine — the stakes are high, especially when it comes to young workers. In a situation where employee turnover is much higher in one site compared to another, it can’t be ignored. Is it management, culture, or failed probations? Insights are required to investigate. 

Still, with the investigation, the focus must remain on positively influencing the bottom line of business financials, whilst simultaneously managing teams effectively. High staff turnover has a huge cost on businesses, not just in the cost to replace and retrain, but the lost skills and opportunity cost.  

Insightful data drives informed actions. For example, how can you be prepared for audits if there is no record of working time directive breaches? Using data to track behavioural trends for employees and sites is becoming an increasingly reliable tool to identify potential areas of problems. 

Those who are doing well on this are using the insights that their data brings, tracking trends and taking faster actions to prevent costly issues. Understanding sickness trends, absenteeism, WTD breaches, lateness and more are all indicators of where you need to focus your energy. In essence, knowing which sites or managers require further support or investigation.

 If you would like to know more about data giving you the right insights to reduce your staff turnover, please book a demo below: 

Book a Demo