Conquering the Service Industry’s Turnover Problem
Across the service industry, businesses have become revolving doors for their hourly, shift-based employees. Due to unpredictable schedules, poor staff engagement and limited advancement opportunities, retail stores, restaurants and other hospitality companies serve as pit stops for the hourly workforce rather than places to build long-term careers.
Over the last few years, this has become an expensive, ongoing problem for businesses.
Our recent study found that 34 percent of service companies have a quarterly turnover rate of at least 26 percent for hourly staff. One-third of managers feel this rate has increased over the last two years – a damaging trend given the high price of employee attrition. Replacing one hourly worker can cost around $4,000 on average, in addition to more than 60 hours of training and two months for them to reach full productivity.
The service industry’s turnover problem, however, extends beyond short-term expenses. It’s part of a vicious cycle that contributes to disengaged staff, subpar customer service and (ultimately) lower revenues. Contrary to what many business leaders believe, fixing this issue doesn’t require adding new expenditures to the balance sheet. Instead, by rethinking traditional processes around scheduling and shift management, employers can retain valuable talent without sacrificing efficiency.
The power of schedule stability
One of the primary factors that drives hourly workers to seek greener pastures is the schedule instability that pervades service company culture. More than half of hourly employees receive their schedules a week or less in advance, and 29 percent rarely receive consistent shifts. This issue is magnified among millennial workers, 35 percent of whom left their last hourly job due to receiving inconsistent schedules.
Receiving shift assignments on such short notice is an obvious inconvenience, but one that becomes exacerbated when the hours you get fluctuate from week to week. Not only does this prevent employees from planning or committing to personal and social engagements, it can clash with other fixed responsibilities such as school or other part-time jobs. This unpredictability forces employees into impossible tradeoffs, eroding their work-life balance and incenting them to look for jobs that align better with their needs.
Prioritizing hourly staff engagement and collaboration
In order for service companies to fix their flawed scheduling practices and empower staff, scheduling must evolve from a siloed effort into a collaborative one. More than two-thirds of employers are using paper charts and spreadsheets to create hourly workers’ schedules; neither method supports two-way communication between staff and their managers.
Rather than stick with these manual, restrictive processes, businesses need to start considering integrated solutions that give employees more control over the shifts they receive. This could manifest in a number of ways, from simplifying the way employees share their availability and shift preferences to providing a more direct way for employees to trade shifts with each other.
Promoting career longevity
Aside from rethinking hourly employee scheduling, service companies and their staff can benefit from a better approach to training. Due to limited funding and resources, too many businesses have scaled back their training and development programs. As a result, hourly employees must often cram weeks’ worth of information into abbreviated sessions – or dive into day-to-day operations with little formal instruction at all.
Companies that don’t devote time or energy to training staff send a message that they’re unwilling to help employees advance in the long term. Given the expense of traditional training methods like one-to-one workshops and printed materials, employers need to consider more efficient, digital alternatives. By moving training materials online or into mobile apps, for example, employers can provide interactive learning experiences that employees can engage with on their schedules.
Inadequate shift management, low employee engagement, and limited opportunity for development are three distinct drivers of hourly worker turnover. By revamping their scheduling and training practices, however, service industry employers can address both. With more autonomy over the hours they receive and regularity in the shifts they work, employees can be confident that their employers are invested in supporting them for the long term.