With unemployment shrinking to 3.7%, as recently reported by the U.S. Bureau of Labor Statistics, the labor market is the tightest it has been in 50 years.
New job openings continue to exceed the numbers reported as unemployed, which puts finding and retaining talent front and center for the hotel industry as hotels compete for new employees with each other and with other industries such as healthcare, food service and retail.
The forecast by STR, parent company of Hotel News Now, of new hotel openings at or around 2% a year through 2019 means hotel room count will increase by an estimated 150,000 to 200,000 rooms by the end of next year. In terms of housekeepers alone, this equates to another 10,000 to 13,500 new employees just to clean the rooms. Overall, the hotel industry has reached a new employment high every month since the end of the Great Recession and the recovery of the hotel industry beginning in 2010.
The tight labor market also has driven up wages across the country. Salaries for jobs ranging from line positions at front desks and restaurants to GMs have increased well above the general wage increases experienced across the U.S. Average annual wage increases in the hotel industry began to exceed 3% a year in 2014 and in 2018 surpassed 4%, compared to a national average wage increase of 1.9% in 2014 and 2.8% in 2018, according to data from the Bureau of Labor and Statistics and WageWatch.
Even with wage increases in the hotel industry substantially higher than those in the private sector, human resources departments at hotel companies are finding it difficult to obtain and retain new employees. Some of the issues that are repeatedly reported across the country include:
- Difficulty hiring quality candidates who can pass a background check and a drug screening
- New employees have a difficult time adhering to company attendance policies
- High expectations by new employees of accommodations to be made by employers
- A trend of applicants not showing up for job interviews
- New millennial hires seem to be continually looking for their next gig
Looking ahead to 2019, wages in the hotel industry could see increases of 4% to 4.5% across the country, which could have a significant impact on bottom lines.
At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.
Perceptions of compensation vary. It is seen as a measure of equity and justice. Stockholders are focused on executive compensation. Legislators may view average annual pay changes as a guide to adjusting eligibility for social services. Employees see compensation as a reward for their services and a job well done. Managers will view compensation from the perspective of a labor cost, but also from a competitive perspective that enables them to recruit, engage and retain employees. The four basic compensation policy decisions that an employer must consider in managing compensation are: 1) internal consistency, 2) external competitiveness, 3) employee contributions, and 4) administration of the pay system. The balance between the four policies becomes the employer’s compensation strategy.
It is important that compensation is linked to an organization’s overall goals and strategies and aligned with the Human Resource strategy. Not doing so, can lead to serious issues of employee retention, engagement, and productivity that can be laborious and expensive to repair. Compensation for many organizations is the single largest business expense and is visible and important to employees, managers, and stockholders. Therefore it is important to strategically plan and regularly evaluate compensation systems. Working with your company’s executives is critical to ensuring your compensation philosophy is supporting business objectives. Strategic objectives will include significant challenges and priorities now and over the next two to five years. Some examples are business growth plans, key talent and training objectives, market competition, and whether or not you are in a union environment. Some other key considerations for your compensation program are:
- Attracting the appropriate skill sets and types of employees when needed
- Rewarding employees for their efforts, such as increasing workloads, taking on new tasks and projects
- Employee morale and perceived value of the company’s benefits, incentives, and work environment
- A mix of base pay, incentive pay, work environment and benefits that makes the most sense for the organization
- The link between base and incentive pay with performance
- Legal issues such as wage and hour
An example of a compensation strategy that aligns with other Human Resource initiatives is matching pay ranges to the desired outcome. If quality, experience, and a sophisticated skill set are a strategic advantage to an organization, then it will not be successful in hiring employees significantly below the market rate. Determining whether the organization wants to lead, lag, or match the market is a key decision. A ‘mixed market position’ approach has become more common as employers realize that a one-size-fits-all strategy does not fit the entire workforce. For example, location and market competitiveness will impact your pay levels and certain key or hard to fill or retain positions may require pay well above the market, while other positions may be ok with a lag approach.
A successful compensation program will focus on top priorities, guide employees to where their effort can create the most value, create financial and non-financial consequences for success and failure, drive and reward the development of skills and encourage teamwork and collaboration. Many organizations today keep an eye toward aligning workers’ interests with company goals through innovative types of rewards in the workplace, including skill-based pay and goal sharing. The right total rewards system is a blend of monetary and nonmonetary rewards offered to employees and can generate valuable business results. These results range from enhanced individual and organizational performance to improved job satisfaction, employee loyalty, and workforce morale.
Maintaining a competitive advantage and being able to retain key employees is increasingly important. At WageWatch, our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online .