The Chancellor lobbed a grenade into the lap of the hospitality industry when he introduced the National Living Wage (NLW) in his Emergency Budget in July. Predictably, it raised squeals of anguish from some employers and from the British Hospitality Association.
What does this policy really mean for the industry? How can operators absorb the additional wage costs and maintain a healthy, profitable business? We look at the implications and solutions.
The increase from the current National Minimum Wage (NMW) of £6.50 to the Chancellor’s £7.20 “Living Wage” (and £9 by 2020) will cost the industry though it applies only to those aged over 25; also, many, in London in particular, are already paying at or above the new level because of chronic staff shortages. Indeed, throughout the country, the shortage of staff – any staff - has reached such epidemic levels that you would have thought that wages would have already been forced up to the NLW level, anyway.
Not so. Most hospitality employers are still paying the NMW – and still complaining. But complaining is useless. The Living Wage will be enacted. Unfortunately some in the hospitality industry may be missing the point. Surely, it would be better if employers grasped the nettle sooner; if they are seen to be paying a better wage than the retail trade, for example, they would have a better chance of recruiting the right kind of people that they so desperately need.
To help cover the cost, businesses should take advantage of all the Chancellor’s grants and allowances. Even more important, they should aim to raise productivity which is dreadfully low in the hospitality industry. If more training was undertaken and better people were employed at a higher wage, then fewer people might be needed and the industry would be more efficient.
We mentioned the importance of staff and training before on this blog in, The further education issue and how to upskill your hospitality staff. Your employees are absolutely crucial to your business. They create the customer experience by crafting dishes in the kitchen or, via customer service at the front of house. In that sense the success of your business will rest on the quality of staff you employ and how well you develop their knowledge and skillsets.
After all it is down to your employees to help you grow sales and improve margins. That requires training to implement initiatives such as re-engineering menus and informing customers in their choices. For you as the employer, this means investing to attract (via competitive salaries) and then retain (through training) the best staff. The businesses that succeed in this industry tend to have a low turnover of people, meaning customers see the same staff and faces at the hotel or restaurant they’re visiting.
Your staff will appreciate the competitive salary you pay them and will also realise that by investing in upskilling them, these are the actions of a good employer that they're unlikely to see elsewhere in the industry. They’re then less likely to move on.
If you help someone, improve and reward them, then they will appreciate that and are likely to be more loyal to your business. It changes the whole dynamic between employer and employee. Ultimately, the more enlightened proprietors who recognise this, will be the winners long term.
The content of this post is up to date and relevant as at 08/09/2015.
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