How the hospitality industry can improve employee retention

Businesses in the hospitality industry saw an increase in sales over the summer bank holiday weekend last month. However, staffing issues likely prevented pub sales increasing by a further 8%. Staff shortages are forcing businesses to leave vacancies unfilled and reduce opening hours and rate of production. The cost of these shortages is estimated to be £1.4bn during the year July 2022 to June 2023.

Across the UK, hospitality businesses are struggling to stay open and offer their usual standard of service. 61% of hospitality businesses are experiencing staff shortages and 42% are reducing their opening hours to account for their lack of staff. According to the CEO of UKHospitality, a third of businesses are having to close early or on certain days in order to retain and protect their staff’s wellbeing.

Over the last two years, the hospitality industry has had the highest job vacancy rate of any sector. The UK’s average vacancy rate is sitting at 3.2%, but the vacancy rates of the hospitality sector are at 5.1%, and the South West is one of the worst-hit areas.

Retention through probation

Despite the rates of vacancies being high, the issue lies more within employee retention rather than recruitment. Around 30% of hospitality employees leave within the first 90 days of their job because it does not meet their initial expectations. If a business is able to retain an employee beyond their first 90 days, they are 50% more likely to stay with the business for the long-term. It is important for employers to not sell a falsified version of the job to potential recruits and to make them aware of the challenges.

For the retention of employees, ensure there are open channels of communication. During the pandemic, businesses in the hospitality industry that looked after their staff and communicated with them clearly were more likely to retain their talent. If there is an open, positive work culture, employees will feel encouraged to stay. Allowing staff to provide feedback to managers and resolve any issues early on will build trust and help with retention as well.

Competitive wages and benefits

There is a preconception that jobs in the hospitality industry are a stopgap or weekend job, however many full-time employees see this as their main line of work. Jobs in hospitality can provide opportunities to develop skills and an advancement in a variety of career paths.

Recognise and reward your employees for their hard work. This will keep them motivated and make them feel like a valued member of the team. If your company offers competitive wages and benefits – such as health insurance, paid time off from work, or help later in retirement – you are likely to see a higher retention rate. To create a competitive benefits package, you can provide additional perks.

Our team will support you with all your employment tax issues and reward packages, as well as helping you reduce your costs and manage risk. They can design and implement a share incentive scheme or help to support your internationally mobile employees. They also deal with every aspect of reward packages and employment tax issues.

Additional employee benefits

Other additional perks will add to the attraction of working for the company. Examples include free meals or, if it’s a hotel, a free membership at the hotel’s gym facilities. Maybe you can offer a salary sacrifice or exchange scheme. There is no ‘one size fits all’ solution as different companies have different needs, but the right employee benefits scheme creates value for employees and employers alike. You can read our employee benefits factsheet for more information.

Hospitality businesses that have strategies in place to boost employee retention are more likely to create an effective workforce that delivers remarkable customer service. We can support your business at all stages of salary exchange implementation, covering five distinct phases:

• Scheme design
• Documentation drafting
• Employee communications
• Updating HR and payroll processes
• Payslips and obtaining clearance from HMRC

Get in touch with our Employer Solutions team for further information on how we can help your hospitality business retain staff during this crucial time.