Resumes & Hospitality Don’t Mix. What matters in an industry plagued by high turnover and low labor productivity ____ @R Appiopj —INUMBERS TELL THE STORY According to statistics collected by the Society for Human Resource Management in 2011, the food service and hospitality industry experiences a yearly turnover rate of 35% — a rate more than double the cross-industry average yearly tumover rate of 15% (Figure 1).! True, there are certain particulars of the industry that account for part of this increased tumover, like seasonal hiring. Additionally, the cost to the employer of finding and training a new employee is significantly less in the hospitality industry than it is in many other industries. From a cost-to-employer standpoint, it’s easy to see how restaurant and hotel management could be tempted to see their employees as dispensable. This couldn't be farther from the truth. Hiring front-line hospitality industry professionals like restaurant servers, bartenders, and hotel staff may be of negligible cost, but their interactions with the consumer have a direct effect on customer satisfaction. URE 1 Yearly Turnover Rate (7%) by Industry Food Senices 35% entertainment 297% ose 227% igh tech 127% Govemment 10% Associaton 97% nie 97 BR 81. A www.apploicomThe quality of a customer/employee interaction may determine whether or not @ first-time customer will become a loyal one. [More on this later) High turnover negatively impacts productivity amongst existingstaffmembers. Veteran employees are not only forced to absorb a recently departed colleague’s responsibilities, they must also devote their resources to training the new hire once he or she is found? (Figure 2] The US Bureau of Labor Statistics found that in 2010-201 1 labor productivity in the “food services and drinking places industry.” remained unchanged. Compare this to the wholesale and retail trades, which saw respective 1.9% and 2.2% increases in labor productivity during the same one year period.‘ Retail and wholesale trade had 22% turnover in 2011 - nine percentage points lower than services. It’s a likely hypothesis that hospitality’s outsize turnover may be to blame for stagnating labor productivity. Without making any great mental leaps, it’s clear that companies in the service industry can increase profits by retaining their employees more effectively. IGURE 2. Labor productivity increased in retail and wholesale industries; yet remained unchanged in the food service industry in 2010-2011. Be.) $A www.apploicomQUANTITATIVE VS. QUALITATIVE We have just looked at some meaningful statistics - hard numbers that demonstrate marked inefficiencies in the hospitality sector. The numbers indicate that something is amiss, but the missing piece is qualitative in nature. The most important barometer for the success of a front-line worker in the service industry is his or her interpersonal skilkset [They don’t call it “service,” for nothing!) and last time we checked, there’s no “People Skills” section on a resume. Although collecting data on this claim is nearly impossible, it’s generally accepted wisdom that a customer who is treated poorly by a front-line employee is far less likely to return with their business than one who is treated well. The emergence of customer review websites like Yelp only compound the effects of unsatisfactory service ~ giving thousands of potential customers access to the experiences of a few opinionated patrons. Now more than ever, bad service is bad for your bottom line. LEARNING FROM THE MASTER One hospitality industry entrepreneur who has demonstrated that excellence in service correlates positively with financial success in the service industry is Danny Meyer, founder and CEO of Union Square Hospitality Group (USHG]. USHG is the parent company of 11 Manhattan restaurants including: Eleven Madison Square Park, Gramercy Tavern, and The Modem. Meyer's story doesn’t end at critical acclaim (5 Michelin stars and 25 James Beard Awards) and financial success in fine dining, however. USHG is also leaving their mark on the fast-food industry with Shake Shack, a chain of retro styled burger joints. Meyer applied the nuanced art of hospitality he perfected in Manhattan’s intensely competitive fine dining world to a limited-service burger joint - Shake Shack - and has hit it big. [Figure 3)Shake Shack’s New York City locations are estimated to gross an average of $4 million yearly. Compare that to McDonalds, whose Manhattan locations gross a little over $2 million per years BR 84] ADA www.apploicomMeyer's philosophy focuses on providing patrons with service of the highest caliber. He has developed a term for the qualitative indicators that denote an employee who provides excellent service to their customers ~ the “Hospitality Quotient.” When hiring for all of his restaurants, Meyer seeks out individuals with high Hospitality Quotients. Ajob applicant maylookgoodon paper, buthe orshemaylackcrucialcommunication skills or a pleasant demeanor. Take it fron Danny Meyer: in the service industry work experience is less than half the battle. He prefers to hire people he calls (Figure 4] "51 percenters.” meaning that 51% of their job skills are derived from their emotional intelligence and only 49% from their technical skill.” The reasoning? Technical skills can be taught, but the interpersonal intelligence necessary for exceptional hospitality can't be. This logic also holds true for the resume — technical skills can be accounted for, but a person’s “Hospitality Quotient” simply can’t be. The most valuable, not fo mention unteachable, assets a service industry professional can bring to a business are not addressed in his or her resume. Shake Shack's New York locations gross on average twice as much as McDonald's Manhattan locations. SNL IRE GROSS A LITTLE OVER C——->AYEEAC ES aicecls $2 MILLION PER YEAR $4 MILLION YEARLY BR 81. A www.apploicomEi! Emotional Intelligence VS Technical Skills 51% EMOTIONAL INTELLIGENCE 49% TECHNICAL SKILLS © HE BOTTOM LINE An ineffective hiring tactic has a detrimental effect on the economy of an industry. Hiring the wrong candidates is a likely contributor to both the increased turnover and decreased labor productivity within the service industry. Conversely, hiring the right candidate increases customer satisfaction and the chances of regular patronage. New technologies in web and mobile recruiting offer innovative alternatives to sorting through ineffective paper or PDF resumes. The most effective solutions will provide the recruiter with qualitative, personality-based, information on the applicant that he or she needs fo make a truly informed hiring decision. The future of recruitment for the service industry would do well to leave the resume in the past BR 8.0] ADA www.apploicomENDNOTES 1 Society for Human Resource Management, (201 1) SHRM 2011-2012 Human Capital Benchmarking Report. Alexandria, VA: SHRM. 2 ibid. 8 Jacobs, Elza. [2011] Executive Brief: Differences in Employee Tumover Across Key Industries. Alexandria, VA: SHRM Foundation. 4.US. Bureau of Labor Statistics. (2012) Productivity and Costs by industry: Wholesale Trade, Retail Trade, and Food Services and Drinking Places industries, 2011. hitp:/Avww.bls.gov/news.telease/prin htm The US. Bureau of Labor Statistics defines Labor Productivity as: “The industry labor productivity measures describe the relationship between industry output and the labor time involved in ifs production...\hey reflect the joint effects of many intuences, including changes in technology: capital investment: utiization of capacity, energy, and materials: the use of purchased services inputs, including contract employment services: the organization of production: monagerial ski: and the characterstics and effort of the workforce.” § Kramer, Katie. (2010) “Shake Shack Founder Expands His Empire,” CNBC On the Money. htfp://www.cnbe.com/id/39679233/Shake_shack Founder_Expands_His_ Empire (Figure from 2009) 6 ibid. 7 Cardwell, Diane. (2010) “Spreading his Gospel of Warm and Fuzy,” The New York Times. htfp://www.nytimes.com/2010/04/25/nyregion/25meyer-ready.htmi?pagewanted=allé,_=1& Bee x xS$