|Why not learn from Fortune 500?|
By Lorenza Alessie
Tuesday, 13th March 2007
The looming labor shortage caused by changes in demographic patterns was one of the dominant themes emerging from the World Economic Forum in Davos this year.
In Europe alone, staffing giant, Manpower, forecasts that in a few decades the European Union will have a shortfall of 60 million people of working age. If we add to this the fact that the hospitality industry is probably the most labor intensive and the world’s fastest-growing industry, as well as one of the highest creators of jobs, hospitality leaders should really be giving personnel management the attention and investment it deserves.
The hospitality industry has the reputation of long hours, low pay and above average staff turnover. It is hard to attract qualified staff and it is evident that the gap between demand and the supply of talent is only becoming bigger and bigger over time. In order to find good people, companies are willing to pay good money, but why don’t they invest just as much in retaining them? How can a company increase the likelihood that its top performing managers will turn down an interesting offer from a headhunter when they are ripe for their next move? The answer is quite simple, by ensuring that its top managers are stimulated, happy, and rewarded in their current position and have interesting future prospects within the company.
It is surprising that in such a people focused business as hospitality where investment in staff is critical for business success; human resources practices are often outdated when compared to other industries. This is often due to the fact that Boards and CEOs rarely recognize the importance of Human Resources or give it a prominent place at the decision making table. According to Jack Welch, former CEO of General Motors, without doubt the head of HR should be the second most important person in the organization and should be on at least an equal footing to the CFO. This may seem extreme to many companies, but only when HR holds a position of power and primacy in the organization will significant changes be able to take place to attract and retain talent.
So what can be done to attract and retain talent? We can look into what makes it so great to work for the “2007 Fortune 500 Companies to Work For” and see if these human resources practices can be transferred to the hospitality. Looking into the Fortune 500, it is surprising to see that Nugget Market, a supermarket chain of fewer than a dozen stores, was ranked number 13 by creating a great company spirit and by giving employees good pay and benefits. Marriott was also ranked in the top 500, and is a key example of how training and development helps staff retention.
At Google, which was voted America’s Best Company to Work For, employees can have their laundry done, get an oil change for their car, have their car washed, work out in the gym, and get a massage, and make use of a personal concierge service to arrange dinner reservations and other such personal needs. Furthermore, some conference rooms have been converted into crèches for day care.
Several companies also gave all employees their birthdays off. Some of what these Fortune 500 companies are doing can be as easily implemented in the hospitality industry. Sure there is a cost but this should be seen as an investment since, if Fortune 500 companies are doing this, it is because it works. They save on the cost of staff turnover and gain on productivity. Maybe not all benefits can be offered at all levels, but then why not offer specific benefits only to the top 20% managers – those who are the high potential talent and who will be tomorrow’s leaders of the organisation.
Even if benefits are important and certainly have a key role to play in retention, these do not tend to be the main reason why top managers decide to stay or leave. As mentioned previously, top managers will most probably turn down an interesting offer from a headhunter if they have good internal prospects within the organisation. Good managers constantly look for ways to grow as a professional – good leaders recognise this and make sure to communicate growth prospects within the company and outline a clear career plan to help them get there.
Even if this sounds logical, as a recruiter, it is surprising to see how often employees are counter offered by their existing employer and suddenly presented with future internal career prospects only when their managers find their resignation letter on the table – but, as we all know, most often this is too late.
Ms. Lorenza Alessie, HVS INternational, London Office. LAlessie@hvs.com