Low unemployment, high turnover and a labor shortage are squeezing margins for healthcare foodservice operators and threatening to impact the quality of service they offer customers.
Unemployment in the first quarter of 2018 was the lowest it’s been in 17 years, leading many economists to declare the U.S. at or near full employment. Simply put, all the people who want to work can find a job—considerably complicating your ability to recruit and hire new employees.
That challenge is intensified in the entry-level arena, where rising wages are boosting the competition for unskilled workers. Walmart, the world’s largest private employer, announced in early 2018 that it would raise its starting wage to $11 per hour—well above the federal minimum of $7.25. Other businesses and local governments are adopting minimums ranging from $12 to $15 per hour.
Unless you can match those wages, you’ll have a much smaller pool of potential servers and dishwashers to choose from. And the people you currently employ may leave for greener pastures at the first opportunity. Turnover has long been a significant challenge for healthcare, and it’s becoming even more daunting.
Demographic issues further complicate the labor picture. “Foodservice typically hires younger workers, and that group is getting smaller compared to baby boomers,” says Gordon Food Service Healthcare Segment Manager Dana Fillmore, RD. As older people use a disproportionate share of healthcare, the demand for new workers is exceeding the supply.
Multiple solutions for a multifaceted problem
There are multiple factors at work in this new labor environment, so there is no single solution to improve profitability and maintain service quality. Operators must develop a strategic plan with multiple solutions. The following are necessities of any approach.
Benchmarking. First, benchmark your operation to determine the real financial impact of labor/staffing issues. A program like AHF Benchmarking Express—available to Association for Healthcare Foodservice members—will help you determine how you’re performing against similar operators and guide development of achievable goals to reduce labor costs.
By measuring internal labor processes and performances, and comparing them to other operators, you can identify areas for improvement—and make sure you’re getting the most out of your existing staff. It can also help you justify new hires.
Defining your value for employees. Before you begin the tactical process of hiring, define the “value proposition” you offer employees.
“Think of potential employees the way you think of customers,” advises Lisa McKiernan, Manager of Talent Acquisition for Gordon Food Service. Just as you create a brand that promises customers a unique dining experience, you should build one that promises employees a unique working environment. “Recognize that you are being interviewed by candidates who have options,” she continues. “You need to give them a compelling message that speaks to their needs and expectations.”
Spectrum Health, an integrated health system that spans 13 counties in Michigan, has done this with a new workforce initiative that presents career pathways to new entry-level workers—and positions Spectrum as an employer of choice.
Updating the hiring process. You can’t rely on yesterday’s recruitment and hiring techniques to connect with today’s employees. Emboldened by technology, people are searching for jobs and making employment decisions in a much shorter timeframe. Operators must provide multiple technology touchpoints to reach job candidates.
A well-developed careers website and pre-vetting solutions that identify candidates with desired behaviors and attributes have changed the process for employees and employers alike. These technologies can help you stand out from other employers while reducing the time and cost of employee acquisition.
Understanding generational differences. As older workers stay on and younger people enter the workforce, it’s common to see high schoolers on the same team as Social Security-eligible seniors. “As a leader, you have to understand that different generations want different things,” says Fillmore.
Younger generations, for example, will embrace the hiring technologies mentioned above. Older workers might not, so you may have to vary your recruitment methods. You’ll also have to vary your management approach—for one thing, you can’t expect millennials to accord you the kind of immediate devotion traditionally granted by baby boomers.
“Millennials want engagement and transparency from employers, and they want to influence the organization,” Fillmore continues. If you can offer that to employees, you need to let candidates know it in the interview process—and carry through on the promises you make.
There are a few workplace issues that unite all generations, including a desire for education and flexible schedules. “Flexibility is especially important today, because the labor shortage is forcing people from hospitality to the executive suite to work longer hours,” says Fillmore. “Promoting work-life balance through such means as flexible schedules can help reduce burnout.”
Investing in retention. Retaining employees in this highly competitive environment is challenging, but any investment that can reduce turnover is well worth making.
A Center for American Progress study pegs the cost of losing an hourly employee making less than $30,000 at 16% of that employee’s annual salary. The Hospital & Healthcare Compensation Service projects a turnover rate above 36% for dining services at senior living communities in 2018, so the cost of replacing employees can quickly add up.
Gordon Food Service Customer Effectiveness Manager Ken Wasco contends that most people don’t quit a job, they quit a boss. He encourages operators to apply his I.M.P.A.C.T. leadership strategies to improve retention.
Also worth considering:
- Rewards for performance
- Recognition for tenure
- Creating networking teams to engage in problem solving
Grooming good leaders. None of the strategies outlined here will be successful unless you develop strong leaders—and strong leadership qualities in yourself. Provide both leadership candidates and already-in-place leaders with ongoing training, which must include an understanding of your target employees.
Your leaders’ ability to communicate your brand and vision to your employees will directly affect the employee experience—and in turn, the customer experience.
The key to resolving your staffing issues isn’t in the identification of issues and potential solutions. It’s in the ability to implement solutions through strategies your leadership can deliver against. Make that happen, and you’ll be an employer of choice no matter what the labor market brings.
20.6%*—The average rate of turnover in the healthcare industry (all positions)—second only to the hospitality industry at over 70%**.
*Source: Compdata Surveys, 2017
**Source: National Restaurant Association
The Top Staffing Challenge
48% of respondents to FoodService Director’s 2017 LTC/Senior Living Census identified turnover as a concern—outpacing recruiting (45%), employee morale/motivation (40%) and absenteeism (39%).
Let’s Talk Labor
Talk to your Sales Representative about tools and technologies that can help ease your staffing challenges.