Why you should invest more in your frontline employees

I was recently presenting to a small group of CEOs in the hospitality world and, inevitably, the issue of staff retention came up. One leader confided his company had staff turnover of 110%. Imagine that – replacing your entire workforce in one year.?

Hospitality sectors have long had high turnover compared to others (retail is the only other to come close). I could cite plenty of research but let’s take just one. Only 54% of employees in quick service restaurants (those with fast service, a casual atmosphere, limited seating and a focused menu) reached 90 days of working before quitting in 2022, according to a US HourWork survey.

There is a plethora of reasons for this: a reliance on temporary staff – especially students, long hours and dealing with difficult customers are just some that come to mind. But is there something more fundamental here? Is it just that these are basically not good jobs? That they just don’t pay enough?

Now, before I get accused of being unfair here by the many great HR folk working to put people first in hospitality businesses (and, having written for a hospitality publication in the past this is a sector I have much love for), here’s the argument. Low pay hurts your workers much more than you think. If your people are constantly stressing about whether they can pay their rent, are taking on other jobs to make ends meet, or are having sleepless nights, then they are not able to perform. And everything else you do – those great recognition strategies, that award-winning belonging programme – is just a sticking plaster.?

That’s all very well, I hear you say. But you operate on such tight margins that you can’t afford to pay more. And don’t your engagement survey results show how much people love working with you? (The cynic in me may well say that, given the high turnover, they may well like some of the things you do for the short time they are with you. Or perhaps only the ones that do stay a bit longer fill them out). But here’s the rub.??Pay, says Zeynep Ton, professor of the practice in the operations management group at MIT Sloan School of Management, is one of biggest drivers of turnover in frontline settings. And turnover is the number one reason companies have poor productivity.?

Zeynep argues that?organisations operating in frontline settings are stuck in a vicious cycle, driven by turnover. “Turnover goes hand in hand with attendance problems, with understaffing, and impacts operational issues such as poor service and goods not on shelves. This means lost sales and lost profits. Then labour budgets shrink and the vicious cycle continues.”

This vicious cycle is expensive in its own right in terms of impact on financials, but when companies operate in this cycle of poor performance and high turnover their frontline managers are constantly fighting fires. So there is no time to hire, to train their reports, mistakes are made and companies are then worried about empowering the frontline to make decisions. Which is then unproductive, as leaders can’t make all the decisions at the top – nor should they. As Zeynep says, this is a “vulnerable system, an uncompetitive system and an inhumane system.“

Zeynep puts a compelling case forward for the urgent need for organisations to invest in their frontline people in a new book?The Case For Good Jobs: How Great Companies Bring Dignity, Pay and Meaning to Everyone’s Work. I believe this book is required reading for anyone who operates in a frontline setting, be it retail, logistics, hospitality, health provision, call centres or factories.?

I haven’t got room to highlight the great examples she uses here (check out my story on The People Space for this). But the key to her good job system is not just paying people more. It’s about winning with customers and investors. And to do that you have to have a strong team and you have to set it up for success.?

Zeynep suggests five key strategies for doing this:

1. Invest in frontline employees: Companies should provide competitive wages, beneficial schedules, strong benefits and clear career paths to encourage workers' commitment and reduce turnover
2. Focus and simplify: The operations that frontline workers are responsible for should be streamlined and made more efficient
3. Standardise and empower: Frontline workers should be allowed to make decisions and contribute ideas to improve the company's operations
4. Cross-train employees: Employees should be trained to perform a range of tasks, which maximises productivity and allows the company to adapt to changes in customer traffic
5. Operate with slack: Companies should hire more employees than the workload dictates to ensure customer service levels remain high even during peak times.

Zeynep’s overall message is that any company aiming to satisfy its customers should focus on supporting its frontline employees. Those that fail to do this will likely face increasing labour costs without seeing improvements in turnover or productivity.

What do you think of the good jobs system? Do you have any experience with it? Please do let me know in the comments below.

#HR #FutureofWork #EmployeeRetention #Retail #Hospitality