7 Crucial Employee Retention Strategies in the Hospitality Industry

The turnover rate for the hospitality industry is astronomically high, and the repercussions that threaten the industry are enormous.  

According to Beekeeper’s Frontline Workforce Pulse Report 2024, “disengaged frontliners are leaving in droves.” Of course, there are frontliners in many industries including manufacturing, logistics, construction, healthcare, retail, and hospitality. However, this report shows that the situation in the hospitality frontline sector is particularly severe. 

Despite pay increases, frontline workers are leaving their jobs at an average rate of 35-50%. But the attrition rate for those in hospitality is more than 50%. Beekeeper found that the percentage of hospitality frontliners working in restaurants and bars who changed jobs “in the past 12 months” is 57%, with 53% of those working in hotels, resorts, and casinos leaving. 

While many frontline workers say they left their jobs to get better paid, this isn’t the highest motivator in the hospitality industry. Most say they want a better work-life balance. 

The Qualtrics 2024 Employee Experience Trends Report shows that frontline workers are “the most unhappy, poorly supported, and least trusting” of all employees. The report reveals that frontline workers believe they are paid less, trust their leadership less, and are less satisfied with work processes compared to their non-frontline colleagues. 

“Those caring for your customers? They’re crying out for help. And if they’re struggling, so is your organization.”

Qualtrics 2024 Trends Report

In light of emerging trends in the hospitality industry and the ever-changing economic landscape, we’ve set out to shed light on the paramount role frontline employees play in this sector. We’re going to explore how inflation affects these crucial team members and delve into strategies aimed at mitigating employee turnover in the hospitality sector. 

We aim to provide you with valuable insights and will share seven proven employee retention strategies in hospitality industry sectors to help you. 

The Importance of Frontline Employees in Hospitality

Frontline employees are the backbone of the hospitality industry. They are the first point of contact for guests, embodying the brand’s values and significantly influencing customer satisfaction and loyalty. 

Positive interaction with a frontline employee can lead to what’s often referred to as a Kimpton moment. The term, based on the long-time mission of Kimpton hotels and restaurants, is an experience that leaves a lasting impression on guests and encourages repeat business. This direct interaction shapes the overall guest experience, making employees not merely staff but the face of the hospitality brand itself.

There is no doubt that the role of frontline employees goes way beyond customer interaction. They play a crucial part in identifying and solving problems, often before they escalate. This frontline feedback is invaluable for improving operations and guest satisfaction. 

Way back in 2017, Empowering the Firstline Workforce, a report produced by Forbes Insights in association with Microsoft, stated that organizations that empower their firstline (or frontline) workers reap the benefits. They said they were three times more likely to be high-growth companies. Furthermore, they were likely to experience 83% higher levels of customer satisfaction, 82% job satisfaction among employees, and 64% lower turnover rates. 

Clearly, some organizations have taken this information to heart. For example, a Gartner article, 9 Future of Work Trends for 2023, shows that 58% of organizations that employ frontline workers invested in improving their employee experience (EX) for those who work for them.

Try it – it works.  

Employee Turnover in Hospitality

It’s not just what’s happening now. The hospitality industry is notorious for its high employee turnover rate that significantly impacts operational efficiency and the all-important guest experience. 

A high employee turnover rate incurs direct costs related to recruiting and training new staff. It also results in a loss of experienced personnel who embody the establishment’s culture and have developed rapport with repeat guests. This disrupts the consistency of service quality and can hurt the reputation of the brand.

Several factors contribute to high turnover in hospitality, including the perceived lack of career development opportunities and inadequate compensation. The transient nature of some hospitality roles also factors in, with many viewing their positions as temporary or regarding them as stepping stones to other opportunities.

The Qualtrics report shows emphatically that frontline employees aren’t getting their basic needs met by their organizations. This, even as Matthew Evans, head of Qualtrics EX products science states “are often challenging, on-your-feet-all-day jobs.”  

“We’re seeing the biggest gaps here in recognition, low satisfaction with financial rewards, and a lack of growth and development opportunities offered by the organization. Frontline workers simply do not feel appreciated.”

Matthew Evans

Employees’ decisions to leave or stay are influenced by multiple factors. But, by employing strategic human resource practices, hospitality companies can significantly lower their turnover rates. 

7 Employee Retention Strategies in the Hospitality Industry

Retention strategies are crucial for minimizing employee turnover in the hospitality industry. Some of the biggest challenges in the industry include:

• Low wages and benefits that lead to demotivation and employees searching for better opportunities.
• A demanding work environment with long hours, irregular schedules, and demanding schedules that commonly contribute to stress and burnout.
• Limited career advancement opportunities with jobs that are seen as dead-end roles lacking upward mobility and development paths.
• Lack of recognition and appreciation that results in employees feeling unrecognized and undervalued. 

Here are seven strategies you can use to overcome the challenges. 

Strategy 1: Transparent Communication and Feedback Channels

In the hospitality industry, the value of clear and open communication cannot be overstated. Establishing transparent communication and feedback channels encourages employee retention by making staff feel valued and heard. This can include regular performance management meetings, where employees have the opportunity to voice concerns and receive constructive feedback. High employee turnover rates in hospitality can often be attributed to miscommunications or lack of feedback. Thus, implementing an effective communication strategy is key to retention.

Examples of transparent communication include monthly team meetings, suggestion boxes, and using HR management systems for ease of access to information. This approach aligns with social exchange theory, where employees feel a reciprocal relationship with their employer, further encouraging their loyalty and reducing turnover rates.

Strategy 2: Competitive Compensation and Benefits Packages

Compensation and benefits packages are critical elements in the arsenal of employee retention strategies in the hospitality industry. Offering competitive wages, paid time off, health insurance and other benefits can make hospitality jobs more attractive. It’s widely recognized that employee benefits play a significant role in both attracting and retaining talent. Among these benefits, retirement plans and healthcare options stand out as particularly crucial, alongside compensation. So, make sure you utilize benefits to encourage sustained employment. 

If you’re uncertain, a study by Gallup found that competitive salaries, health care, and retirement benefits are top factors in an employee’s decision to stay with a company. This is similar to the findings made by Beekeeper. So, there’s no doubt that hospitality companies must ensure their packages are in line with or above industry standards to attract and retain top talent.

These packages should not just meet basic needs but also present sustainable growth opportunities for employees. For example, offering educational benefits like scholarships or career development opportunities can significantly enhance long-term talent retention. 

Strategy 3: Flexible Work Schedules and Shift Management

The hospitality industry often demands long and unpredictable hours, which can lead to high employee turnover rates and burnout. Implementing flexible work schedules and effective shift management can significantly enhance employee satisfaction and retention. These practices acknowledge the personal lives and responsibilities of employees outside work, thereby promoting a work-life balance.

Flexible scheduling options might include allowing employees to swap shifts without penalty, providing part-time opportunities, or offering remote work for roles that can afford it. Offering childcare support, and encouraging employees to take breaks and vacations can also help.

These practices show employees they are valued beyond their labor, fitting within what the social exchange theory suggests about reciprocity and relationship quality affecting retention rates.

Strategy 4: Career Development and Advancement Opportunities

Hospitality employees want opportunities for professional development and career progression. Offering these opportunities encourages employee retention by making staff feel their career goals are achievable within the company. These can range from educational workshops to leadership training programs.

In 2022, McKinsey, in collaboration with Cara Plus, did large-scale research to find out more about frontline employees and managers of frontline employees across the country. Findings showed that 79% of respondents wanted job growth opportunities, followed by 78% looking for higher pay. 

Investing in employees’ career development not only increases retention but also improves service quality via a more skilled workforce. Companies can establish mentorship programs, provide access to industry conferences, or offer tuition reimbursement for related courses. These initiatives demonstrate a commitment to employee growth and the value the company places on its staff, in this way enhancing retention.

Strategy 5: Recognition and Rewards Programs

Recognition for hard work and achievements is another critical component of an effective employee retention strategy. Hospitality companies can implement employee of the month awards, performance bonuses, or even simple acts of acknowledgment such as a “thank you” note for going the extra mile. These actions will surely boost morale and encourage a culture of appreciation within the workplace.

Technology can play a role here, too, with platforms enabling HR professionals to track and recognize employee achievements seamlessly. Ultimately, employee recognition fosters a positive work environment and improves employee engagement, significantly impacting the overall retention rate within the hospitality sector.

Strategy 6: Creation of a Positive Work Environment

A positive work environment is essential for employee retention. This involves creating a space where employees feel safe, respected, and part of a valued team. HR management practices such as regular team-building activities, ensuring a harassment-free workplace, and promoting diversity and inclusion can create a culture where employees want to stay.

Environmental fit, or how well an employee’s values align with their company, plays a crucial role. Providing a setting where hospitality employees can thrive, such as clean and safe workspaces, as well as a supportive management team, are key components. Environment fit and green HRM practices can also contribute to a positive work environment by aligning personal and organizational values for sustainability and social responsibility.

Strategy 7: Employee Appreciation Events and Perks

Employee appreciation events and perks can significantly enhance the employee experience, serving as a powerful retention tool. Events like annual parties, milestone celebrations, or team outings help build community and company culture, reinforcing the feeling of being valued within the company.

Perks could range from free meals during shifts or at restaurants after work, and discounts at company properties where they can access wellness programs. These gestures, large and small, contribute to a feeling of belonging and appreciation. All of these are pivotal when it comes to retaining talent in the high-turnover hospitality industry.

Integrating these employee retention strategies, from effective communication to appreciation events and perks, creates a robust approach to minimizing turnover and fostering a loyal and motivated workforce in the hospitality sector. These strategies, when implemented thoughtfully, can significantly reduce employee turnover rates and ensure the sustainable growth and success of hospitality businesses.

How Cerkl Fosters Retention without Increasing Costs

In the current landscape of the hospitality industry, retaining top talent remains a formidable challenge, especially with the ongoing issues of high employee turnover and increasing operational costs. Cerkl has innovated to tackle this problem head-on, emphasizing strategies that go far beyond merely raising salaries or enhancing traditional benefits like health care and retirement benefits. 

Firstly, Cerkl Broadcast implements a dynamic operating system that caters to the specific needs of its employees. Importantly, it acknowledges that a one-size-fits-all solution is not viable in today’s diverse work environment. So, this system facilitates the tailoring of development opportunities and performance management meetings, ensuring a personalized employee experience.

Furthermore, through leveraging talent intelligence and green HRM practices, Cerkl has successfully created a workplace where sustainability and growth opportunities are not just buzzwords but are embedded in the company’s culture. This not only attracts talent but can significantly reduce the employee turnover rate by providing what employees genuinely seek in their job roles.

Combining these frontline employee communications strategies, Cerkl not only addresses the immediate challenges of turnover and cost but lays a sustainable foundation for long-term employee retention and satisfaction.

What’s Next?

Cerkl recognizes the importance of tailoring strategies to your specific company culture and employee needs. By investing in your employees and creating a rewarding work experience, you can significantly reduce employee turnover and build a strong, thriving team in the hospitality industry.

But where should you start?

We can help you assess the effectiveness of your existing internal communications plan. All you have to do is complete our strategic internal communications audit. It’s quick, easy, and free. Then, we can make suggestions and help you improve your employee retention strategies using Cerkl Broadcast. 

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