How to… increase productivity

27 August 2015
How to… increase productivity

Exploring previously untapped talent pools could be the perfect way to find loyal staff that could help improve productivity, says Simon Tarr

The productivity puzzle has been the big economic topic of debate in 2015, as the Chancellor's productivity plan has highlighted. Our sector cannot be exempt from this soul-searching and nor should it be, as the gains for the hospitality and tourism industry could be considerable.

A new report from People 1st tries to do just that. It reveals that 993,000 new staff are needed by 2022, with the vast majority (870,000) needed to replace existing employees. Furthermore, over two-thirds of restaurants and hotels (68%) currently report that they don't have a full complement of staff. We have found that this staff ‘revolving door' is creating skills gaps within the industry, which in turn is leading to a fall in productivity.

In productivity terms, the UK's hospitality and tourism workforce contributes just £21,600 per employee to the industry. Putting this into perspective, comparable sectors are outpacing hospitality by a distance; for example, the average employee in retail contributes £46,000. Why does this matter? It has a huge financial impact, with the high levels of labour turnover costing £274m a year. There is also a huge opportunity in tackling this issue; an improvement in productivity of just 1% would generate an extra £1.43b for the industry.

Some of the feedback coming from our initial research and consultation suggests there are several ways employers in our sector can begin to boost productivity.

Simon Tarr is managing director of People 1st

Productivity points

Management skills.

Technology, and how we can better combine it with employee skills. Technology and innovation are playing an important role in raising productivity. In a 2012 survey, 11% of sector employers identified new and emerging technology as a key driver for growth. Technology can be used to add value, but staff may need enhanced skills to maximise its use and integration within a business

Three ways to improve productivity

1. The first is to offer clearer progression routes and the development opportunities to achieve these. The industry will need 164,000 replacement managers by 2020, so we need to do more to retain the staff we attract and demonstrate that there are opportunities available. It's also important to consider how engaged your employees are; when employees feel motivated, valued and connected to your business, it shows on your bottom line.

2. The second way is to recruit more maternity returners and older workers into the sector - two key groups that often need flexible jobs - as opposed to relying too heavily on seasonally available employees.

These groups are an untapped talent resource for the industry, and organisations should consider the right recruitment strategies to target them. Flexible working and job shares would be hugely appealing to this demographic and, given the nature of the industry, something which could be widely embraced to help attract more sustainable labour pools, reducing costs and retaining skills within the business.

Last year, the European Commission highlighted the likely impact of demographic changes across 27 EU member states. They concluded that by 2020 the EU working age population will have shrunk by 13 million. More recently, a report from the government's Business Champion for Older Workers reported that by 2022 there will be 700,000 fewer 16-19 year olds, but 3.7 million more people aged between 50 and the state pension age.

3. The third way we are urging employers to improve their staff retention is through employing apprentices, which are proven to provide a return on investment to employers. Apprenticeships are a fantastic way to develop skilled and committed staff that remain within the business, and there's evidence that hospitality apprentices improve the bottom line by an impressive £5,200 each. In all, 80% of organisations who employ apprentices agree they make the workplace more productive and 92% believe that apprentices lead to more satisfied team members and an increase in staff retention.

Share your experience

People 1st is continuing its research into this issue and would love to hear from businesses that have implemented solutions to help tackle their staff turnover and productivity challenges, so that it can share tried and tested solutions with the whole sector.

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