Service organizations are hittinga brick wall. Between rising wages, new labor policies and shifting employee and customer expectations, the tactics they relied on in the past aren’t cutting it anymore.
As disruptions shake up the industry, employers are scrambling to find ways to successfully navigate the new labor landscape. But, employers must go beyond changing how they schedule and manage their workforce in order to evolve with this new paradigm.
Employee engagement can play a critical role in solving this crisis, but fostering engagement during a tumultuous period is easier said than done. With disruptions coming in at full force, service industry employers must improve workforce engagement in order to optimize their operations.
Here are four disruptions challenging service industry leaders to rethink how they engage their hourly workforce:
1. Changing attitudes: Millennials are becoming a major part of the global workforce, adding fuel to the labor crisis fire. Compared to Generation X and Baby Boomers, this younger generation craves more flexibility, regular feedback, and access to technology. As a result, millennials are becoming increasingly attracted to the idea of on-demand work, such as with employers like Uber and Lyft. These on-demand services promise workers more control over the structure of their workday, flexibility millennials desire.
Though the gig economy hasn’t made a drastic impact on traditional jobs, it’s causing employers to rethink the way they schedule their workforce. To prevent workers from jumping ship, it’s critical service organizations address the minimal input hourly workers have in the creation of their schedules. Letting workers have more direct control over their schedules helps service organizations foster engagement and better retain their employees.
2. Rising labor costs: Between minimum wage hikes and the Department of Labor’s new overtime rule change, labor costs are becoming sky-high. Washington D.C. is the latest to implement a $15 minimum wage, while state lawmakers in California and New York have already approved this hike to become effective in 2022.
As a $15 minimum wage gains traction across the country (Connecticut, Massachusetts and New Jersey are already weighing similar measures), service organizations are worried about keeping up with the rising costs. On top of this, the White House recently increased the overtime pay threshold to $47,476 — almost double the previous threshold.
As service organizations grapple with increased labor costs, those who previously offered higher wages to lure and maintain workers are concerned about losing their competitive edge. However, having other incentives in place will be key to recruiting and maintaining hourly workers as higher labor costs come to fruition.
By offering employees other perks they value—cross-company communication, comprehensive training, rewards and recognition, and flexibility—service organizations can compensate for not being able to provide pay above the minimum wage.
3. Shifting policy environment: More state governments are starting to implement policies that mitigate unfair hourly labor practices, leaving employees rejoicing and employers scrambling to adapt. With major retailers like Gap and Victoria’s Secret eliminating on-call scheduling, this formerly widespread practice is nearing an end. Legislation is also taking action against clopenings (back-to-back closing and opening shifts), which has created an undeniably challenging environment for service organizations.
To comply with these new policies and keep labor costs at bay, service organizations must adopt new tools and processes. Implementing an integrated platform that allows hourly workers to trade shifts or opt-in to shifts gives employees more of a voice and employers the ability to maintain appropriate staffing levels and better manage labor costs.
4. Higher customer expectations: The customer experience has grown to be more important than ever before. Today, customers expect to be served by employees who are confident and know the ins and outs of their organization and the product or services they sell — and they expect that same level of service across all channels. It only takes one understaffed store or an inadequate employee to wreak havoc on the customer experience and loyalty.
Ongoing training plays a key role in ensuring a smooth customer experience. When organizations devote time and budget to hourly employees’ training and development, that yields superior customer service.
Employers should seek out a robust employee engagement system that not only modernizes training, but also makes it timelier. By staffing the sales floor based on employees who have completed specific training, employers can strategically schedule their workers in order to meet business needs and provide better customer service.