As the pandemic hit in early 2020, people all over the world were forced to slow down for a while. For some, it was the first time in forever that they got to stop and re-evaluate their lives. And it turns out that many of them had realized just how burnt out, overworked, and undervalued they felt. More importantly, a lot of them work in hospitality and events. Enter the Great Resignation of 2021! Labor shortages in hospitality are at their peak.
The most loyal listeners will know that the Brew Crew has recently touched upon labor shortages in the events industry, but Will thought it’s a topic worthy of its own episode. Nick, Thuy, and Will go over some surprising stats and elaborate on the reasons behind the labor shortage. But that’s not all! As clever and resourceful as they are, they also offer some solutions to this pressing issue. In short, all it takes is a different perspective, empathy, and a pro-active attitude. But we’re getting ahead of ourselves. Pour some tea, press play, and join the conversation!
Labor Shortages In Hospitality: 47% Are On Their Way Out
Will asks Nick to kick off today’s conversation. Referencing McKinsey’s report, Nick reads some shocking stats about labor shortages in hospitality. “47% of hospitality workforce is resigning or will have resigned in the next six months,” he says.
“I feel like all the conversations I’m having with the event professionals now is about the labor shortage in hospitality,” says Thuy. “Is there a breakdown of reasons why?”
“In hospitality, there’s a disproportionate number of people who are willing to quit their job before they have another job lined up,” replies Nick. “Otherwise satisfied employees are tempted to quit just to expand their potential. A lot of it comes down to remote work. Remote work is so attractive that organizations with remote options are gaining all of the jobs that are being lost in these other areas. Hospitality jobs typically don’t offer remote work.”
Nick points out that not all event profs get to enjoy the perks of remote work and fair pay. “If you are a planner or a designer, you can work from home, but you’re a minority in the events industry. One person plans an event, but how many servers were at that event? Similarly, you can’t work from home driving a truck.”
“Sometimes I forget that there are different groupings of event professionals,” says Thuy. “People who listen to this podcast are usually event planners, people who are involved in the industry, supplier partners, venues, et cetera. However, our core staff is the banquet staff. Do they consider themselves a part of the hospitality industry and want to get involved? Are they listening and involved? Because the labor shortage is mostly coming from that group.”
“It’s entry-level positions,” says Will. “But those who aren’t planning on leaving are happy – they get to work remotely, and might enjoy a good PTO policy.”
Nick looks at the other side of the coin. “Amid labor shortages in hospitality and leisure, 53% are staying. There are still plenty of people that are not moving. But the people on the ground floor, the people that have not been compensated fairly, or have had jobs where there isn’t the freedom to be able to live their life the way that they want to live it – they’re the ones that are more likely to leave.”
“One of the big areas in this McKinsey study is about being valued by the company,” says Will. “That’s most important to our employees. If you think about it, a lot of organizations didn’t do a good job this last year in showing that they valued their people in the organization. They were willing to furlough people or fire them. And now that things are back, they’ll bring them back. And then, they’re wondering why people are not willing to stay.”
“Loyalty goes both ways,” agrees Nick.”When business owners say that people aren’t as loyal as they used to be, they have to understand that businesses on a whole are nowhere near as loyal as they used to be years ago. Compensation, benefits, job security; none of those things are like they used to be decades prior. So when you’re saying: ‘I wish things were like back then,’ you just wish for the part where people gave more.”
In Nick’s opinion, people who are calling the labor shortage in hospitality ‘a crisis of employment’ are missing the mark. “It’s a crisis of compensation. People are finding employment. Employment numbers are not going down. What’s happening is that people are migrating to where they’re being taken care of better. The hospitality industry specifically is notorious for not taking care of their people.”
Minimum Wage: A Slap In The Face!
“The majority of hospitality employees aren’t even in events – they’re F&B,” Nick adds. And those people are treated poorly, to say the least. “There is a number that we call minimum wage. When an employer pays you that wage, they say to you: ‘I would pay you less if I could, but the government won’t let me – that’s how little I think of it’. Minimum wage means: ‘I’m legally obligated to give you this much money and not any less. I would if I could’.”
“Servers are actually paid less than the minimum,” he continues. “They’ve historically made the least amount legally possible. And now you’re asking why there’s a labor shortage in the hospitality industry? Your whole business plan completely rowed on the fact that everybody working for you would take the least legally allowed. If there’s ever been a business plan set for disruption, it’s any business that relies completely on minimum wage, especially at a time where there’s been more wealth disparagement than there ever has been in the United States.”
“I thought all this stuff was going to come due to automation. But we found out that it actually just took someone to pause, to reflect on the job that they fell into. And we all know that the events industry disproportionately has a lot of people that fell into their jobs. They weren’t there by their plan. They just needed to work and they’re working and they’re continuing to work. Then, they had time to think about not working and think about their lives. They had enough pause with some government money to not die in the street and actually take a second to evaluate their lives. And what they found is doing almost anything else was probably better for them,” he concludes.
“Including being unemployed, which is proof that that system is broken,” agrees Thuy.
Thuy has an idea she wants to share. “Remember how we were talking about people being more selective about what conferences they go to? Something that event planners can do instead of being so budget-focused is hiring companies and supplier partners who appreciate their employees. Those who have quality service and usually come with a higher price tag because they pay their employees fairly. Let’s start sacrificing some other areas that aren’t as important. Just so everyone’s getting paid fairly.”
The next up to share some advice is Nick. “If you’re an employer griping about labor shortages in hospitality right now, you need to change your perspective. You’re not going to be able to be different than your competitors unless you embrace empathy. Be an active participant in this and understand that this isn’t something that’s happening at you. This is something that you’re a part of. You can navigate this and come out better.”
And finally, here are Will’s words of wisdom. “Those who continually complain about the labor shortage in hospitality and events remind me of those who can’t accept change. They’re like those people who don’t want to use the computer. Those who ask: ‘Can’t I just use a binder for virtual events?’ It’s people who take the outside world and think it controls them.”
“If you can’t hire people, raise the wages, take the risk, and go for it,” Will adds. “If you find that you’re not unprofitable, then you have to make some decisions. Maybe I’ll hire fewer people at a higher rate and maybe they’ll do better. Maybe I need to charge my clients more as Thuy said.”
In Conclusion: Together, We Stand Strong!
After three consecutive mic drops, the Brew Crew agreed that it’s time to take the episode home. But before they do, Nick wants to offer all the employees another perspective. “People that are leaving are the people that are hungry for more. They don’t settle. This is a tremendous opportunity for companies to gain those very same people. The all-stars of your team could be out there right now looking for something else,” he says.
“If you’re a small organization, consider pooling your resources with other small organizations to become bigger. I frequently think about the lessons learned from the pandemic. There are different types of threats coming, but the stronger your house is, the better off you are. And there are lots of ways to have a strong house. We talked about employees, the level of belonging, compensation, et cetera, but one of the other ways is to just pull your resources. That can mean stronger connections with your vendors and actually knowing them rather than just working with them. There’s room for deep connections. One of the ways to get around labor shortages and disruptions is to have a really transparent understanding with both your clients and your partners,” he concludes.
And what a wonderful world that would be, don’t you agree? See you soon for another insightful episode of Event Brew!