Staff turnover and strategies to combat
By Mariano Faz, Head of TFG Asset Management and Yung Dang, Assistant Asset Manager
We recently launched a research study "The impacts of staff turnover on a hotel's Income Statement" which revealed that a 30% voluntary staff turnover rate could cause a potential loss of AED 8 million on the top-line and AED 6 million on the bottom-line. If your hotel is experiencing high number of departing staff, it would be advisable to take a step back to review your people strategy.
Strategy I: Apply correct recruitment strategy
The key to reducing staff turnover starts with recruiting the most suitable employees for the positions available, emphasising the importance of identifying the correct fit. In order to do so, the HR department will need to establish a comprehensive recruitment process to screen each candidate carefully and understand their skill set as well as their suitability for the role.
An interviewer should challenge the candidate by asking situational questions to examine their problem-solving skills, cross-checking for references and asking them questions related to the hotel brand to analyse their understanding of the company's approach to business.
The HR department should ensure the salary package offered to candidates meets market rates. HR professionals should assess the market and take into account the changing expectations of employees in the digital age, in order to develop new and effective HR practices.
Our interviews with the hospitality experts revealed that large international hotel groups successfully attract talent through the implementation of succession planning programmes. These hotel groups present potential employees with a path for long-term career development, which is a primary concern for young graduates. They also nurture existing talent by creating fair competition for promotion which helps to boost motivation and loyalty among employees. Succession planning reduces the need for basic training, as promoted staff already appreciate the brand's strengths and operational processes, and therefore actively embrace greater responsibility.
Strategy II: Improve training, learning & development programs
Our research revealed that one of the main factors that improves a company's ability to attract top talent and avoid staff's intention to leave is the provision of customised training programmes that support professional development.
Staff training programmes can be costly. Hoteliers may contemplate the risk of investing in career development for employees who then resign; however, retaining employees whose skills have not been cultivated may have repercussions in the future. It is generally agreed that all employees should have access to basic training in order to promote an understanding of the brand, its values, protocols and standards. It is imperative to note that training programmes can be expensive hence the recruitment process needs to be designed and executed correctly to minimise the risk of employing unfit candidates, who will add further costs in this respect. It is also important for customer-facing employees to be trained to communicate with clients in a professional manner. Training staff to deliver a consistent brand message and effectively and efficiently deal with complaints will improve overall customer satisfaction.
Another advantage in crafting effective training, learning and development programs is that promising talent is typically identified during training exercises. From then, the best talent should be offered extensive training to further their career development.
In regards to training programmes, forward-thinking companies have implemented creative and easy-to-use online portals and video-sharing systems. This includes building internal knowledge sharing programmes and developing mobile apps that provide employees real-time access to training modules. However, these services may not appeal to all staff members. Hence, it is then critical to involve managers, who know their employees best, to help develop training programmes that cater most effectively to their requirements.
Despite the costs associated with training and development programmes, from a hotel asset manager's perspective, it has been demonstrated that the benefit of reducing staff turnover outweighs the costs of such programmes. Employees with a willingness and enthusiasm to learn are more likely to demonstrate higher levels of productivity.
Strategy III: Rethink organisational structure
The top-down hierarchical corporate structure is gradually becoming obsolete as a business model across all industries. The bureaucratic nature of hierarchical organisations may demotivate creative employees. In a dynamic hotel environment, it is important management nurtures and encourages creative talent. Hotel executives must at all times be transparent in their dealings with employees. Management should brief staff about annual budgets and ensure each team member understands their department's Profit & Loss accounts. It is important to infer the notion of ownership and accountability to individual employees so they embrace their role in meeting departmental targets.
Secondly, communication should be simplified as much as possible, flattening the chain of command and eliminating bottlenecks.
Strategy IV: Rethink the HR Management Role
There is a long-standing misconception that HR Management largely assumes an administrative role. Ulrich (1997) coined the term 'administrative expert' whereby operational effectiveness or output is their main goal. This perception of the HR department is still considered purely administrative; that is, that they are responsible for meeting government regulations and ensuring overall compliance with their organisation's internal policies.
HR department should be the ambassador of the brand to potential candidates. HR departments should focus on investing in talent management schemes and learning and development programmes, aside from handling administrative work such as visa applications, procedures for recruitment and termination, and arranging staff accommodation, transportation and insurance. The HR manager is an organisational architect who is responsible for ensuring operational structures are designed in a way that meets both the company's and employees' needs. Such models promote stronger performances in the workforce and a higher Return on Investment (ROI) for the company.
Based on Deloitte University Press's recent publication "The Global Human Capital Trends 2016", skills in the following areas are required:
- Organisational networks – to analyse, build and develop the existing talent and expertise.
- Team-building and team-leader – develop potential team leaders who can later develop people.
- Employee engagement and culture – Understand the current culture at the hotel and propose improvements to the workplace culture.
- Analytics and Statistics – HR professionals must be proactive in studying the market trends and embracing changes. Mee suggested that HR must be proactive in benchmarking them with the market KPIs.
- Crafting experience – HR professionals are the brand ambassadors. They need to find the most effective way to communicate brand value to current and potential employees.
HR professionals employ a range of tools and KPIs to measure the overall performance of their company's workforce. HR functions should take a holistic approach to Human Capital analytics – and spend time seeking to understand the impact, correlation and causation of HR metrics on overall business performance. Multi-dimensional analysis is critical if organisations are going to extract value from workforce insights – in general the best approach is to try to focus efforts on helping to understand and solve specific business problems. In general, within the hospitality industry, it makes sense to focus key efforts on specific workforce clusters that are guest or customer facing – as trends within these groups (e.g. recruitment and Attrition, Engagement levels, Productivity, Learning & Development, Reward & Recognition etc.) are more likely to have a direct impact on revenues and customer advocacy.
To download our research, please click on the following link: http://www.hospitalitynet.org/news/global/154001038/4081228.html
Mariano Faz is Head of TFG Asset Management in Dubai. www.tfgassetmanagement.com. He is responsible for the asset management of the company’s Hospitality and Real Estate portfolio which comprises over 3,000 units in the UAE and an additional 3,000 hotel units under development. During his tenure, Mariano has guided the strategic planning efforts to achieve investment objectives on behalf of owners.More from Mariano Faz
In her role as Assistant Asset Manager at TFG Asset management, Yung is responsible for conducting feasibility studies for new hotel projects and producing market performance as well as financial reports analysis. Her reports provide consultancy, daily decisions support and interactions with the company’s main management companies such as Auris Hotel Group, Wyndham Hotel Group, Millennium Hotel Group, Regus International.More from Yung Dang
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