Central Labour Pool & Workforce Retention Initiative · PDF fileCentral Labour Pool & Workforce Retention Initiative ... employers use traditional methods to attract new employees

Central Labour Pool & Workforce Retention Initiative

Prepared by: Stacey Joseph,

Tasmanian Hospitality

Association

Workforce Retention Project

Version 1.3, January 2012 Page 1 of 30

Contents

1.0 Summary 2

2.0 Background/context 4

Section A Central Labour Pool

3.0 Labour hire organisations in Tasmania 6

3.1 Tasmanian Hospitality Workforce Overview 6

3.2 Labour hire organisations 7

4.0 Feasibility Study – Central Labour Pool 9

4.1 The Approach 9

4.2 The Central Labour Pool Model 9

4.2.1 The Source 10

4.2.2 Administration 10

4.2.3 Target Market 11

4.2.4 Operational Details 11

4.2.5 Resources 12

4.2.6 Annual Cost 12

4.2.7 Assumptions 13

4.3 Potential Barriers 13

4.4 Current Options 14

4.5 Conclusion and recommendations 14

Section B Workforce Retention Action Plan

5.0 Consultation Summary 17

5.1 Casual Workforce 17

5.2 Key Points 18

5.3 Recruitment and selection issues 20

5.4 Summary 20

6.0 Workforce Retention Action Plan & Recommendations 21

7.0 Next Steps 25

Appendix I Discussion Paper 26



1.0 Executive Summary

The following report is a Labour Government initiative based on an original brief to investigate

the feasibility of establishing a central labour pool in the Hobart region. A central labour pool is a

proposed solution to address identified labour shortages at peak periods in the hospitality

industry. This project has been expanded to incorporate consultation with key stakeholders on

how to attract and retain workers in the hospitality industry more generally. The following report

has been structured into two distinct sections. Section A includes an assessment of the original

Central Labour Pool proposition and Section B incorporates a summary of industry consultation

and the ensuing recommendations regarding workforce retention in the hospitality industry.

An overview of existing Labour Hire providers is included which demonstrates there are only a

handful of companies prepared to, or capable of operating in this field. It can be inferred by this

that there are either narrow margins or a lack of demand in this sector for engaging staff in this

method. Following the overview of existing providers, a model for establishing a central labour

pool in the Hobart region has been proposed highlighting set up and operating costs. The model

demonstrates that there are high hourly rates for on-hire labour given the resources required to

operate a central labour pool.

The outcome of the central labour pool demonstrates that the operating costs of such a service

will result in a high rate for on hire labour services. This would be a significant disincentive for the

target audience to adopt this solution to a shortage of skilled labour. In practice, given the

accessibility of unskilled labour and low barriers to gaining work in the hospitality industry,

operators will tend to recruit from the open market. It is cheaper, even if only in the short term,

to recruit unskilled labour and manage the associated problems, such as lower productivity and

higher turnover.

Some of the underlying issues driving turnover and workforce shortages in the hospitality

industry are informal recruitment practices, insufficient internal training processes and informal

leadership and management skills. These all impact on job satisfaction and productivity of staff,

creating a cycle that encourages high levels of turnover. As such a key strategy to overcome

labour shortages in the hospitality industry would be to identify the underlying issues affecting

both attraction and retention of workers across the industry. Consequently, this report has been

expanded to include a workforce retention action plan.

As part of the Hospitality Futures Project employers were asked what initiatives were used to

improve retention and motivation of employees. Few managers interviewed were able to

articulate any specific initiatives aimed at motivating and retaining employees. Most business

operators accept high staff turnover blaming generational attitudes and external factors for these

issues. However, it is evident that those businesses that integrate human resource functions into

their management practices, experienced significant reduction in labour shortages and turnover.

The Workforce Retention Action Plan is a holistic approach that identifies the range of issues

negatively affecting attraction and retention across the hospitality workforce as a whole. A series



of recommendations have been made aimed at a range of industry stakeholders. The proposal is

that by taking a holistic approach i.e. Industry image, job satisfaction, management capabilities

and career pathways, this will lead to a more sustainable effect on turnover and retention issues.

Industry consultation highlights a range of issues that need to be addressed in order to improve

perceptions of hospitality as a valid career choice, as well as improve workplaces in general. A

significant area that needs to be addressed is the application or integration of human resource

functions into everyday management practices. Often human resources functions are bolted onto

other areas or only performed out of necessity. If industry can better educate managers and

supervisors of the benefits of effective human resource practices, much progress would be made

towards improving job satisfaction and career development pathways for hospitality employees.



2.0 Background/Context

The Central Labour Pool and Workforce Retention Initiatives are in response to a Labour

Government commitment to address workforce shortages during peak periods in the Tasmanian

Hospitality Industry (THI). The feasibility of establishing a Central Labour Pool for the THI has been

investigated as a possible solution to this shortage of skilled labour.

Industry feedback suggests that neither employment agencies nor the industry itself have been

able to meet industry demand or expectations in both the supply and skill levels of workers in the

past. This project seeks to understand the cause of this deficiency and will propose a Workforce

Retention Action Plan with recommendations to address the underlying causes of the workforce

issues faced by the THI.

The Hospitality Futures Final Report (2010) identified that high staff turnover and a lack of

suitable candidates for job roles was an issue throughout the THI. Further investigation revealed

the primary issue was not with a lack of workers, but in many cases, insufficient integration of

human resource functions into management practices which would result in improved job

satisfaction and development opportunities for employees.

The consequence of this is high turnover in individual businesses as well as a high attrition rate of

workers leaving the industry as a whole. In addition to this the industry is also impacted by the

common perception of hospitality being an interim or low status career choice which also affects

the composition of the potential workforce. For this reason, the Central Labour Pool initiative was

expanded to include the development of a Workforce Retention Action Plan in order to address

identified causes of staff shortages across the industry.

The key outcome of this project is to identify and address the underlying issues that prompted

the Central Labour Pool initiative in the first instance. That is, a notable shortage of capable staff

during peak periods. The Workforce Retention Action Plan is the result of industry consultation on

the key issues and factors impacting workforce development and retention of workers across the

THI.



Section A

Central Labour Pool

Labour Hire Organisations in Tasmania

Feasibility Study – Central Labour Pool

Conclusions and Recommendations



3.0 Labour Hire Organisations in Tasmania Overview

The proposed Central Labour Pool initiative is, in effect, an on-hire labour hire proposal. Before

commencing a central labour pool model it is worthwhile considering the current labour hire

environment in Tasmania.

Labour hire organisations offer a mechanism to address a shortfall of skilled workers on a

temporary basis. Whilst the majority of businesses use traditional recruitment methods to fill an

identified labour shortage, there are times where the shortfall is only temporary. In this instance

many employers will simply require existing workers to increase working hours or utilise the

services of a labour hire organisation. To this end it is proposed that the industry investigate the

feasibility of establishing its own Central Labour Pool to assist operators in addressing such

temporary labour shortages.

Whilst 38 labour hire companies were identified in Tasmania in 20081, few of these organisations

provide facilities for the on-hire of hospitality staff. 13 of the labour hire companies identified

were Group Training Organisations. Of the people employed by labour hire organisations 24%

were apprentices or trainees employed by GTO’s.

The key skills required of employees in labour hire organisations are literacy/numeracy,

communication, reliability and relevant qualifications. E.g. Responsible Service of Alcohol (RSA)

for those required to serve alcohol.

Group training schemes are essentially a form of labour hire differentiated by obligations to keep

trainees or apprentices in continuous employment. This could be for one to four years dependent

on the qualification and to manage the training needs and pastoral care of the trainees and

apprentices they employ.

Traditional labour hire organisations do not get involved in training personnel but seek primarily

to recruit those who already possess the necessary skills and experience to perform roles.

3.1 Recruitment in the Tasmanian Hospitality Industry

On average the THI experiences an average turnover of 28.5% across all roles annually (based on

data gathered through the Hospitality Futures Program). It is evident from this figure that there is

a requirement for new employees to be recruited on a regular basis. The vast majority of

employers use traditional methods to attract new employees such as newspaper, online and

word of mouth recruitment. Larger organisations may use the services of employment agencies

and in some cases a labour hire organisation to temporarily fill workforce gaps.

Whilst hospitality employees do not require any formal qualification apart from RSA there is a

requirement for basic customer service and employability skills as is the case in the majority of

industries. Personal presentation, reliability and punctuality are essential along with strong

interpersonal skills. In most cases managers and supervisors will make recruitment decisions

1 Skills Tasmania Labour Hire Company Skills Report 2008



based on attitude and previous experience in the industry. Given they have the most intimate

knowledge of what the business needs this is appropriate. The challenge for the labour hire

organisations is that operators are unable to attract and retain adequate numbers of employees

with these skills and as such are likely to “poach” individuals possessing these skills.

The challenge for organisations operating in the labour hire market is to ensure their personnel

needs are adequately met to prevent attrition. Tasmania is unique from other states in Australia

in the fact that hospitality employees do not work for labour hire organisations as a profession

despite many advantages such as higher pay, flexibility and variety. This lack of professional

“temps” could be attributed to lack of job security and a highly transient hospitality workforce.

Additionally demand for hospitality employees in Tasmania is highly seasonal. As mentioned

previously the issue of hospitality operators poaching labour hire staff could be seen as a barrier

to establishing a strong market for temporary hospitality employees.

In 2008 approximately 5.4% of hospitality workers were employed through labour hire

organisations. The majority of on-hire labour arrangements are to cater for large, one-off events

such as Cricket and Football matches. The demand for on-hire labour from hotels, cafes and

restaurants is significantly lower than this figure demonstrates.

3.2 Labour Hire Organisations

Labour Hire Organisation #1

Organisation #1 is the key player in hospitality focussed labour hire organisations in Tasmania.

Labour Hire Organisation #1 provides formal labour hire solutions for a variety of roles required

by their clients. The primary clientele for this company are larger hospitality operations that

require additional employees for larger functions or to fill workforce gaps where there is a delay

in attracting suitable long term employees e.g. regional locations requiring a Commercial Chef.

The organisation uses a database of temporary employees, with many holding down permanent

positions and “temping” to bolster their incomes. Some individuals on the data base only work for

Organisation #1 and simply work when shifts are available. To prevent “poaching” of staff

agreements with workplaces are implemented, stipulating staff cannot be hired within six months

of working at the establishment. Should an employer wish to hire a labour hire employee

arrangements can be made through the recruitment arm of the organisation.


Organisation #2 offer limited labour hire services to hospitality operators but do not focus too

heavily in hospitality as a result of limited supply of personnel. Supply of personnel is limited as

individuals do not “temp” professionally in Tasmania unlike other states around Australia. It is

recognised that the seasonal nature of hospitality in Tasmania negatively impacts on job security

for labour hire workers.



As employers are short staffed they generally prefer to hire candidates directly when available,

instead of paying a premium for on hiring staff. Organisation #2 operates a recruitment agency

and finds greater demand for this service than on-hired labour.

Organisation #2 also incorporates a Group Training Organisation (GTO) which employs a

significant number of apprentices who are on-hired to hospitality operations across Tasmania.

This is an attractive option for many operators with the responsibility for training and pastoral

care lying with the GTO rather than the business that employs the apprentice.


Whilst this business offers a range of labour hire solutions they do not advertise hospitality labour

hire services in Tasmania.


This organisation operates out of Victoria, New South Wales and Queensland. Whilst Organisation

#4 is able to provide on hire employees, in the vast majority of roles the company has only

provided Chefs to Tasmanian Hospitality operators in the past. Employers are required to cover

travel and accommodation expenses for these personnel additional to the standard hourly rate.

Generally, a minimum time period of two days applies in these circumstances.


Organisation #5 services include a GTO for Apprentice Chefs which is particularly successful in

regional areas as a result of seasonal trade. Apprentices are able to work through peak seasons

and participate in training throughout the off season.



4.0 Feasibility Study – Central Labour Pool

In response to industry feedback the Labour Government acknowledged the workforce issues

faced by hospitality operators during peak periods. The following study seeks to investigate the

feasibility of establishing a central labour pool to service the Tasmanian Hospitality Sector during

the busiest times of the year. The Tasmanian Hospitality sector is highly seasonal which results in

increased demand for labour over particular periods of the year, namely from late September

through until April each year. This seasonality results in a need for increased capacity of the

hospitality workforce which will not be sustainable over the long term. Hence a practical solution

is to look at developing a model to provide skilled labour to operators in order to effectively deal

with fluctuations in demand for casual labour. In theory the shortage of suitably skilled and

experienced labour could be addressed through such a model.

Given employment agencies have not met demand for skilled labour in the past it is appropriate

that industry seeks to develop a solution to this ongoing skills shortage. Whilst employment

agencies have attempted to supply operators with suitable labour solutions, the Hospitality Skill

Development Initiative research indicated that in the majority of cases employers has not been

satisfied with the quality of skills of individuals supplied in the past.

4.1 The Approach

In order to develop a model for a central labour pool a process of industry consultation was

undertaken. A combination of formal and informal feedback gained through the Skill

Development Initiative indicated that some operators were dissatisfied with labour hire options

currently available. The reasons for this dissatisfaction include the expense and unsuitability of

workers provided to the business. However, larger operators who have existing relationships with

labour hire organisations see these services as a valuable solution to temporary labour shortages

across their organisations.

As evident in the previous section research into current labour hire options for the hospitality

sector was undertaken and found only one firm in Tasmania is actually performing this function in

a formal and consistent manner. A Victorian company will provide labour for a minimum of three

days and the employer must cover transport and accommodation expenses in this instance.

In order to address the skills shortage the proposed model has hypothetically drawn labour from

existing workplaces and seeks to utilise under-employed staff members from hospitality

businesses. The Tasmanian Hospitality Association (THA) as the peak body was determined as an

effective body to administer and control such a labour pool as it has established connections with

industry and as such a better knowledge of industry expectations.



4.2 The Central Labour Pool Model

4.2.1 The Source

The central labour pool would utilise hospitality workers that are currently under-

employed at their permanent workplace.

Enterprises would be recruited to participate through a targeted marketing campaign

using direct mail and email. The Liquor and Gaming data base coupled with THA member

details would provide the source of potential venues.

Employers would identify employees and with their permission, provide required details

to the central body (THA). The THA would use the database of individuals to locate the

most appropriate match between experience and business requirements when

undertaking an on-hire labour agreement.

Suitably skilled and qualified individuals that sought a professional temp role in the

hospitality sector would also be included in the labour pool.

4.2.2 Administration

The THA would be responsible for all aspects of the labour pool and would take

responsibility for each individual on-hired to hospitality businesses. Therefore it would be

essential to employ additional staff to manage this project.

The THA would employ a staff member (Central Labour Pool Coordinator) with sole

responsibility for;

- Managing individuals in the labour pool ensuring adequate numbers maintained;

- Ensuring a sufficient mix of individuals to service a range of hospitality businesses;

- Managing enquiries, individual availability and labour hire agreements;

- Payroll;

- Insurance, workers compensation;

- Ensuring due diligence by developing, administering and maintaining checklists to

ensure all workplaces meet standards set by Fair Work Australia and National WHS

guidelines;

- Dealing with complaints and conflicts and

- Performance Management.

In order to undertake effective performance management processes it would be

necessary to establish a performance management system. This system could be

outsourced if it was not practical for the Central Labour Pool Coordinator to undertake

this function.



4.2.3 Target Market

The central labour pool initiative would be targeted at Tasmanian hospitality sector

businesses that experience significant increases in demand over specific periods. The aim

of the labour pool would be to offer operators a business solution to labour market

shortages of skilled, experienced and qualified short term employees.

Businesses requiring the services of an employee would enquire with the THA at which

point the dedicated Central Labour Pool coordinator would seek to find the best match

between the business’ identified requirements and the range of individuals available

through in the labour pool.

4.2.4 Operational Details

Records of individual experience and qualifications would be held to enable individuals to

be matched to business requirements. I.e. A business that offers table service would

ideally be provided with an individual with experience in this service type. This would

reduce the down time in the workplace as the individual would assimilate into the

workplace more rapidly.

Contracts would be used to prevent the employer “poaching” the on-hired individual in

addition to paying above Industry Award rates i.e. an additional $2.50 per hour.

The THA would be the “employer” of labour hire individuals and as such would bear the

responsibility for ensuring a safe workplace, payroll including PAYG, workers

compensation and superannuation.

Minimum requirements for potential labour hire employees would be;

Front of house: Responsible Service of Alcohol

Minimum level of industry experience (different employers or roles)

Ability to work with a variety of service styles

Beverage service and knowledge

Product knowledge

Behavioural analysis through group workshops to determine personality

types and ability to cope under pressure

Supervisory: Responsible Service of Alcohol

Formal qualification in Certificate IV Hospitality or proven experience in a

similar role

Ability to work with a variety of service styles

Beverage service and knowledge

Product knowledge

Behavioural analysis through group workshops to determine personality

types and ability to cope under pressure



Chef: Trade Certificate

Proven experience with several employers

Behavioural analysis to determine personality types and ability to cope

under pressure through group activities/workshops

4.2.5 Resources

In order to operate effectively the following key resources would be required.

Dedicated staff member (Central Labour Pool Coordinator)

Office Space for interviews, meetings and any training activities required as well as an

office for the Central Labour Pool Coordinator

Travel and accommodation expenses

Office equipment e.g. laptop, printer, stationary etc.

Consumables e.g. business cards, paper, toner etc.

Internet access

Marketing and promotion activities

Performance Management System

Additional administration support for Human Resource functions including pay roll

4.2.6 Annual Cost

Item Annual Cost

Central Labour Pool Coordinator Salary $60 000

Superannuation $5400

Workers Compensation (coordinator only) $600

Uniform $1200

Phone $1800

Laptop including software $2000

I pad (working remotely) $1000

Internet Access $360

Transport and accommodation $3500

Administration Support $19 250

Total $95 110

It can be seen that the total annual cost of operating the pool will result in a significant premium

needing to be added to the hourly rate of individuals in the central labour pool. Based on Monday

to Friday rates this may be acceptable but with weekend penalty rates which is when demand is

highest, it is questionable whether operators see a need great enough to justify the expense of

using this service.



4.2.7 Assumptions

In order to calculate a rate for on-hire the following has been assumed.

20 individuals participating in the labour pool

Working an average of 10 hours each per week

Being paid an additional $2.50 per hour (above Award wages) as an incentive to

participate in the labour pool and as a retention strategy

Based on 20 staff working an average of 10 hours per week to cover the

estimated costs above as well as workers compensation at 0.9%, payroll tax

6.65% and superannuation at 9%.

It would be necessary to add an additional $17.00 per hour to the Hospitality

Award hourly rate for on-hire to cover the above expenses and on-costs, pay

individuals a premium as part of a retention strategy and to ensure a small profit

margin.

This figure would reduce proportionately as the labour pool grew in size. A

modest estimate has been used to ensure all costs are covered.

For example, based on Grade III Hospitality;

Position Award Rate Labour Hire Rate

Weekdays Saturday Sunday Weekdays Saturday Sunday

Food & Beverage Attendant $21.43 $25.75 $30.00 $38.43 $42.75 $47.00

Food & Beverage Supervisor $23.99 $28.79 $33.58 $40.99 $45.79 $50.58

Chef $22.58 $27.09 $31.61 $39.58 $44.09 $48.61

N.B. On-hire labour rates have been provided confidentially and these figures have been utilised to

facilitate a cost comparison with the proposed Central Labour Pool model.

4.3 Potential Barriers

Given the high levels of casualisation in the hospitality sector (around 75%), hospitality

employees are essentially their own casual labour pool. The majority of casual employees

are transient and move from enterprise to enterprise based on job satisfaction levels and

available hours. It would be necessary to offer a premium rate of pay to change this

behaviour.

Those businesses participating in the Central Labour Pool would be unlikely to send the

highest calibre employees for two reasons. Firstly, operators will offer the most capable

staff members the most hours resulting in these employees not being under-employed

and as such, unlikely to participate in the labour pool. Secondly, where there are

insufficient hours for highly competent staff, operators are unlikely to allow them to work

for competitors for fear of poaching no matter how many contractual conditions are in

place.

Historically the hospitality industry has not been suited to central labour or on-hire labour

companies. This can be evidenced in the fact that there have not been many agencies in



this space over the past year and there is currently only one major company providing

this service in Tasmania.

Given that Hospitality Sector operators traditionally have a low commitment to training,

relying on in-house training, there tends to be an ongoing shortage of available, skilled

labour which inhibits on-hire labour solutions. This is due to the fact that businesses will

prefer to hire their own staff as opposed to paying a premium for using a central labour

solution.

The expenses incurred in managing the Central Labour Pool combined with having to pay

above industry average wages to retain individuals would result in a high cost to

enterprises seeking on-hire labour solutions. This high cost would act as a strong

deterrent to many operators who would simply advertise positions and recruit new

employees directly to address workforce shortages. It is evident that the wage rates for

the proposed model would be higher than those currently offered to the hospitality

industry.

4.4 Current Options

At present, Labour Hire Organisation #1 is the only entity in Tasmania currently offering

labour hire solutions as a formal business.

Entities such as Labour Hire Organisation #2 have attempted to establish a hospitality

labour hire arm to their business model but found it more effective to offer permanent

employment solutions.

Employment agencies focus on permanent roles and generally charge ten per cent of the

annual salary for this service.

Other employment agencies offering casual labour are affiliated with the government and

receive revenue from successful placements and as such do not charge a fee for their

service to employers. Participating businesses in the Hospitality Futures Project cited

negative experiences with this type of employment agency and despite lucrative

incentives for employing these individuals were reluctant to use these services.

Given the general demographics of individuals registered with employment agencies and

the relative suitability of such individuals to a position in a service industry, the barriers to

providing an ideal employee for the hospitality sector have proved too great in the past.

4.5 Conclusion & Recommendations

In summary, it would have to be argued that the hourly rate for a central labour pool would be

prohibitive to many operators given the availability and access to the open labour market as an

alternative solution to labour shortages. Given the tight margins in the hospitality industry, few

operators would perceive value in this service and have indicated through both formal and

informal channels that their preference is to address workforce shortages through recruitment.

This philosophy can be used, in part, to explain the traditionally high levels of staff turnover

experienced in the hospitality industry.



When reviewing the hourly rates for on-hired labour and taking into consideration the potential

barriers there are question marks regarding the viability of establishing a central labour pool. It is

questionable as to whether industry would utilise this service given the current market that

engage labour hire organisations are not the target of the central labour pool initiative.

Additionally, the lack of skilled and experienced staff across the industry as highlighted in the

Hospitality Futures Final Report is likely to result in the least competent employees being

nominated for the Central Labour Pool. As discussed previously employers are unlikely to have a

surplus of highly skilled and experienced staff members and those that do would be reluctant to

expose these staff to other employers for fear of “poaching”.

Employment agencies could potentially provide an alternative source of labour for the hospitality

sector if engaged by industry and assisted to better understand industry expectations of workers.

Investigating the connections between employment agencies (including Job Services Australia

enterprises) and the hospitality sector could be an effective strategy to close the gaps between

the current situation and employer expectations. Consultation with industry would provide an

indication of whether or not industry would engage in this solution if developed. If this strategy

was successful employment agencies could potentially become an alternative central labour pool

for the hospitality sector.

The key driver behind the Central Labour Pool proposal was the shortage of skilled staff during

peak time. Ultimately, this is part of the wider issue of attracting and retaining skilled and quality

staff in the hospitality industry more generally. The Tasmanian Hospitality Association has been

engaged to proceed with investigating this issue as part of the Central Labour Pool/Workforce

Retention project. The outcome for the Workforce Retention Initiative forms the second part of

this report.

It is also important that the hospitality industry develop strategies to improve workplace culture

and job satisfaction in order to arrest turnover and attrition of hospitality workers to other

industries. These measures combined with a greater focus on assisting employment agencies to

improve the skills and attitudes of potential workers, employers refining induction processes and

improving in house training would provide a more effective long term solution to shortages of

skilled labour.

In considering the above points there is a case for the industry to develop a long term, strategic

approach to resolving workforce issues. The following section of the project will provide a

summary of industry consultation on what is believed to be the drivers of workforce shortages

across the THI. This consultation has been used as the basis for developing a hospitality industry

Workforce Retention Action Plan which outlines a holistic approach for addressing the skills and

labour shortages being experienced throughout the industry at present.



Section B

Workforce Retention

Consultation Summary

Workforce Retention Action Plan

Next Steps



5.0 Consultation Summary

The following summary is in response to the Central Labour Pool Initiative conclusions that such

an initiative would not be feasible as a solution to the THI’s workforce issues. Industry

consultation has been used to determine the key drivers of the shortage of available skilled

labour whilst identifying opportunities for improvement within the hospitality industry. The

summary of consultation will be used to develop a series of recommendations aimed improving

workforce retention and to create a wider pool of skilled people in the industry to assist in

addressing staff shortages across the THI.

The purpose of the consultation was to identify and validate potential goals and actions to

improve retention of workers in the Tasmanian Hospitality Industry. A discussion paper was

prepared to assist in the consultation process, based on the research of Dr Terri Simpkin2

reviewing the range of issues driving turnover within businesses and from the industry in general.

5.1 Casual Workforce

A range of issues were identified through both the discussion paper and the consultation process.

The hospitality industry is suited to those seeking additional employment to bolster existing

incomes, particularly in the current economic climate. A range of people are being encouraged to

return to the workforce and as such are an emerging demographic of potential workers. Flexible

working hours including nights and weekends make the hospitality industry an attractive option

for employment. These individuals are seeking casual work and as such make up a proportion of

the casual workforce in the THI.

A key issue affecting workforce retention relates to the poor perception of hospitality as a long

term career and thus the industry is dominated by casual labour, with a high number of students

making up the workforce. This source of labour is essential for the industry for several reasons;

Students are happy to work limited hours as they often have multiple income streams

(e.g. Youth Allowance)

Students are able to work nights and weekends

Students are generally able to increase hours through peak periods such as Christmas

Casual working arrangements are suited to student employees

Students are demographically suitable in most cases i.e. live locally and are younger and

more energetic.

However, operators warn of the drawbacks to being heavily reliant on student workers as;

This leads to labour shortages during exam times

Students tend to be reluctant to work on New Year’s Eve and other social engagements as

work is not a priority for them

2 Churchill Fellowship 2004

Training Demand Profile 2008



Students and people on disability pensions will only work limited hours due to Youth

Allowance requirements which see reductions in payments once the threshold for work is

exceeded providing a disincentive to work long hours

Students can be unreliable for early morning shifts due to social activities

A business cannot effectively participate in workforce planning when most employees will

be leaving once their studies are completed.

Poor perceptions of working in hospitality have an impact on the quality of the individuals seeking

work in the industry. Hospitality work is perceived as a low status career choice which has seen

those with limited potential filling many roles. The labour market choices for operators are often

made between employing a student who does not seek a career in industry or employing less

than suitable individuals who choose to work in hospitality because they believe they have no

other option.

5.2 Key Points

Other key points raised by industry stakeholders as part of the consultation process include:

1. The industry needs to identify a broader range of professional development options

including tertiary institutions.

2. On the job training limitations need to be addressed e.g. when training occurs on the job

apprentices learning opportunities are limited by the menu and style of cuisine offered at

the establishment in question.

3. Basic skills such as knife sharpening are widely forgotten or taught once with little

opportunity to be perfected.

4. The benefits of working in the industry need to be more actively promoted to improve

perceptions.

5. Many small operators’ biggest challenge in retaining staff is the ability to offer adequate

working hours. Given many restaurants have limited trading hours it is challenging to find

professional staff where total working hours for a week are less than full time.

6. Business owners need to increase knowledge of management skills and functions.

Evidence indicates that developing the workplace and good working conditions pays an

important role in attracting and retaining skilled staff.

7. Industry as a whole needs to get smarter about how the benefits of working in the

industry are promoted e.g. social life, corporate discounts and flexible working

conditions.

8. A major issue impacting on job satisfaction and staff turnover is a lack of self-monitoring

and awareness among supervisors and managers. Inadequate training and development

in this area results in few managers comprehending the impact their behaviour has upon

employee attitudes and behaviours in the workplace.

9. Insufficient investment in management and leadership training for many managers and

supervisors results in a lack of employee engagement at a discretionary level, making

reducing turnover almost impossible. If managers were afforded more development



opportunities, their understanding of what affects performance, what motivates

employees and how to earn their respect, this would result in improved retention rates.

10. Larger organisations are better able to attract and retain staff due to having more

resources and an economy of scale to facilitate management meetings and professional

development.

11. Small businesses which make up a significant proportion of operations in the hospitality

industry tend to be run by owners who rarely have formal business management

qualifications. This often results in poor staff management, limited opportunities for

professional development and poor job satisfaction driving staff turnover.

12. Employers need to develop their understanding of how to use simple activities such as

induction and orientation of new employees to promote professionalism and clearly

outline expectations of the new workers. These are important processes in providing

leadership and confidence in the workplace.

13. Some organisations make use of training and development matrices to clearly illustrate

what the requirements of each role in the business should be. This provides a resource

for employee development strategies as well as clear pathways and requirements for

each role in the organisation regardless of business size.

14. Generation Y employees are often used as a scapegoat for employers with attraction and

retention issues. However, this may be more an issue of limited motivation and retention

initiatives in some hospitality workplaces. By developing management capabilities

employers will be better equipped to manage the range of employees in the workplace.

15. The success of the Vocational Education and Training in Schools (VETiS) Program is reliant

on the relationship between the education provider and the workplace. Many employers

will take on students as staff if there is a good fit between the student and workplace.

Investigating ways to maximise the effectiveness of this relationship would be beneficial

to all parties as a solution to workforce supply issues.

16. Historically there have been differences between employer expectations and VETiS

student skill levels. The industry could potentially benefit from standardised job

descriptions for students and better communication between schools and employers to

clarify each stakeholder’s expectations.

17. Conversely many VETiS students on work placements can be treated poorly and not

always provided a variety in work tasks or buddied with suitable staff to offer a positive

experience. There is no formal requirement for a job description to be provided to VETiS

students before taking on a placement and no requirement to demonstrate adequate

Workplace Health and Safety conditions at present.

18. Formal training in hospitality is driven by RTO’s in many cases using incentives to

convince employers to enrol employees in training. Thus some employers are only

motivated by incentives and hence do not engage in the training process. This can result

in limited on the job training which significantly affects the quality of training outcomes

participants can achieve.

19. Employers perceive the training system to be focussed on filling out paperwork and far

too time consuming to participate in, further fuelling the lack of engagement with the

system.



20. Improvements to the ways in which careers in hospitality are promoted would be

beneficial to improve perceptions of the industry. This is particularly important in regard

to career pathway opportunities.

5.3 Recruitment & Selection Issues

Recruitment decisions play an integral role in staff turnover levels. Throughout the Hospitality

Futures program it was evident that those operators who undertook recruitment processes in a

strategic manner experienced lower staff turnover figures compared to those that took a

“shotgun” approach to recruitment. By adopting a professional approach to recruiting the

industry can begin to change perceptions of working in hospitality in a holistic manner.

Improving perceptions of hospitality by improving recruitment and other human resources

practices within enterprises is an essential component to arresting attrition from hospitality and

changing perceptions of working in hospitality. It was widely agreed that there needed to be a

greater focus on improving the management capabilities of operators to embrace integrating

human resource functions into daily management practices. Encouraging excellence in service

and overall performance and continuously seeking ways to improve every aspect of hospitality

businesses is critical to move toward changing perceptions of the industry.

It is important to promote hospitality as an exciting and dynamic career but it is imperative that

work environments are congruent with the message being sent to job seekers. Currently this is

not the case for many workers in the hospitality industry.

5.4 Summary

The consultation process revealed lower pay rates and working hours were major barriers to

attracting higher quality workers to the hospitality industry. However, when considering recent

significant wage rises and a generous industrial award hospitality employees are relatively highly

paid. This is particularly so given the lack of prerequisites required for those commencing work in

hospitality.

The high levels of casualisation are also not believed to be a major driver of turnover according to

operators. Many employees are students or those working a second job and as such they prefer

casual employment.

Low requirements to entering the industry were cited as an issue affecting the perception of

working in the hospitality industry. This was particularly so in smaller organisations with fewer

human resources to perform mentoring and coaching functions with inexperienced employees.

Currently the only prerequisite to employment is the successful completion of Responsible

Service of Alcohol training and gaming where appropriate. It is the responsibility of the individual

venue to ensure adequate customer service standards are achieved, which are essential for front

of house personnel in a service based industry.



6.0 Workforce Retention Action Plan & Recommendations

The following table of proposed action has been developed as a result of industry consultation and outlines the key actions and initiatives required to promote greater workforce retention in the hospitality industry.

Outcome Strategy Outputs Stakeholders Responsibility

Action By Date

Required Resources

Improved perception of hospitality as a career choice

Work with school groups to promote hospitality careers from year 9 onwards.

Utilise events such as Try’a’Trade to demonstrate attractiveness of jobs in industry.

THA

School Groups

Industry operators e.g. Federal Group

World Skills Australia

THA to coordinate and promote

30/09/12 Hospitality Operators to provide activities and resources

THA employee to coordinate participating organisations

Re-introduce Hospitality CD from 2006 with information and case studies on career pathways in the hospitality industry.

THA

Skills Tasmania

Department of Education

Careers counsellors

THA to coordinate and promote

30/08/12 THA to coordinate stakeholders and update resources

Access to careers counsellors to educate about resources for students

Foster relationships with VETiS providers to assist in ensuring student skills match employer expectations

Utilise networks to source appropriate placements for students.

THA Members

VETiS Providers

Students

THA

THA to coordinate industry component

30/11/12 THA member database by region to source appropriate venues for placements

Collaborate with industry to ensure appropriate

THA

THA Members

VETis Providers

Students

THA to facilitate relationships between VETis Providers and suitable workplaces.

30/11/12 Templates for VET placements setting up expectations of both parties including job



workplaces for students

descriptions for students and minimum Workplace Health and Safety requirements.

Implement VETiS templates to facilitate meaningful placements


THA

VETis Providers

Industry operators

THA to coordinate 01/09/12 THA to collaborate with VETiS providers to develop a best practice guide for educators.

Engage employment agencies and Polytechnic to develop quality training programs for jobseekers.

Clear understanding of industry expectations for new employees translated into a practical pre-employment course producing highly employable graduates.

Employment Agencies

Polytechnic

Industry Operators

THA

Skills Tasmania

THA to coordinate 31/08/12 THA to review current environment and best practice examples

Round table discussions with stakeholders to determine priority skill sets.

Funding to support pilot program to improve employability skills.

Promote industry as a career to those returning to the workforce e.g. parents, semi-retired etc.

Identify appropriate communication channels to reach target audience.

Develop materials to communicate message to audience

THA

Industry operators

Centrelink

DEDTA

Skills Tasmania

THA 30/09/11 Engage specialist to determine strategy and channels.



Address issues driving turnover and attrition at an enterprise level in the Hospitality Industry

Build management capabilities of managers and supervisors working in the hospitality industry

Targeted workshops delivering relevant content to foster support for integrated HRM functions such as motivation and retention initiatives.

THA

DEDTA

Skills Tasmania

Industry operators

Service Skills Australia

THA 31/12/12 Content for workshops to be developed

Venue hire and catering costs

Facilitator costs

Marketing and promotion of workshop expenses

Improved recruitment, selection, induction and orientation processes.

Apply for funding to develop a best practice guide including templates for recruitment, selection, induction and orientation to streamline process and ensure the best person is selected for each role.

THA

Industry Operators

Employment Agencies

THA 30/11/12 Research to collate relevant information.

Professional graphic design company to prepare materials.

Marketing and promotion of guide to ensure maximum take up.

Greater focus on improving job satisfaction, professionalism and career development

Improved promotion of training pathways within the hospitality industry particularly at a tertiary level.

Develop relationships with UTAS to better promote University degrees in Hospitality

THA

DEDTA


Hospitality employees

UTAS


DEDTA

Skills Tasmania

31/01/13 Marketing and promotion materials for potential students.



opportunities for workers

management.

UTAS

Colleges

Skills Tasmania

Greater understanding and more effective use of the training system by current operators.

THA

Hospitality Employees

Hospitality operators

Skills Tasmania

RTO’s

THA

Skills Tasmania

01/06/12 Training system workshops to facilitate better understanding of roles and responsibilities of employers, employees and RTO’s.

Develop Best practice guide for using accredited training models as a professional development tool for employees.

Establish a range of initiatives to engage younger managers within the industry.

Introduce young THA board to engage younger managers and people with a passion for the industry.

Hospitality Supervisors

THA

Venue Operators

THA 30/09/12 Development of a marketing and promotion strategy to reach target audience. Meeting locations and catering.

This Action Plan has been prepared and developed by the THA on behalf of the State Government; as an outcome of the Central Labour Pool/ Workforce Retention Initiative. The above are

regarded as the key initiatives that can be taken to effectively improve the retention of skilled employees in the hospitality industry more generally. Some of these initiatives require funding if

they are to proceed, but have been put forward for consideration of the Tasmanian Government as a means to effectively address workforce shortages in the hospitality industry.



7.0 Next Steps

In conclusion the Workforce Retention Action Plan makes recommendations to address the

range of factors impacting on retention of employees both within individual enterprises but

also the industry as a whole. A summary of current initiatives being undertaken and the next

steps to commence implementation of the remainder of these initiatives is provided below;

Initiatives Commenced…

Continue to foster relationships between Tasmanian Government, key industry

stakeholders and VETiS providers to improve communication channels and

employment outcomes as well as identifying opportunities to promote the industry.

Undertake an industry skills plan through Skills Tasmania to gather critical data to be

used to identify key skills gaps and make recommendations to address these issues.

Identify key management skill sets required to improve attraction and retention of

suitable employees within the industry and develop workshops with accompanying

best practice guides to support development of management capabilities.

Next Steps…

Submit final report to State Government for review and consideration as to how

selected initiatives may be resourced through relevant programs or initiatives.

THA to seek funding in order to implement recommendations for the Tasmanian

Hospitality Industry.



Appendix I

Workforce Retention Initiative

Discussion Paper – September 2011

Purpose:

The purpose of this Discussion Paper is to assist the Tasmanian Hospitality Association (THA)

to consult with key stakeholders in the hospitality industry about issues, impediments and

opportunities relating to workforce retention in this industry.

Introduction

This discussion paper provides an overview of current research into the high turnover rates

of employees within the hospitality industry. The THA has secured a grant from the

Department of Economic Development Tourism & the Arts (DEDTA) to develop a workforce

retention initiative. As key industry stakeholders your feedback on this paper will be a

significant contributor to the overall content of this initiative.

This paper is seeking comments from key industry stakeholders on the points being made as

well as discussion on the impediments to retaining staff in the industry. Suggestions should

also be made on how the industry can begin to promote itself as a dynamic career choice

with a range of opportunities for workers.

Given the inseparability of products and services in the hospitality industry businesses need

to address the levels of staff turnover currently being experienced by many operators at this

time.

Image and profile

A poor perception of the hospitality industry is a key driver of a higher labour turnover as

the industry tends to attract individuals with lower educational and skill levels due to these

negative perceptions. These perceptions are fuelled by a range of factors including;

- Unfavourable working hours

- Poor pay and conditions

- Low level of job security

- Lack of professional development or career advancement opportunities

(both perceived and actual)

- Low requirements to enter the workforce (RSA being the only essential

qualification to work in hospitality)



Whilst a lack of suitably skilled staff is cited as a common issue with hospitality operators

the number of individuals participating in formal training initiatives does not support this

concern. The issue is not just related to a lack of technical skills but the underpinning skills

required to perform in any workplace.

Practical skills are not the issue, it is interpersonal skills such as attitude, reliability, initiative

and work ethic that create the majority of issues for employers.

The loss of hospitality employees to other perceived ‘higher status’ industry’s is also of

ongoing concern to many operators. Due to the portability of hospitality industry employee

skill sets, skilled employees are in demand in a range of other sectors.

The activity of ‘poaching’ or ‘headhunting’ hospitality employees is commonplace,

particularly by call centre, retail and professional services sectors.

These sectors are often able to offer higher pay, better working hours and greater

opportunities for professional development and career advancement.

This only strengthens the argument to look at integrating human resource functions to

include employee motivation and retention strategies to everyday management practices.

The inclusion of non-financial benefits to hospitality employees will improve job satisfaction

levels and employee loyalty helping to reduce turnover rates.

Business Management Skills

In reality there are a number of management functions that are poorly performed in many

businesses. These include;

- Poor recruitment

- Lack of retention strategies

- Inadequate management practices including appropriate leadership and

motivational initiatives

Often Human Resource Management (HRM) and Development (HRD) are performed poorly

and such activities are seen as cumbersome tasks that are performed only due to legislative

requirements. Businesses that are able to integrate HRM and HRD functions into the basic

management tasks are less likely to experience significant issues with regard to employee

turnover.

HRM and HRD done well can result in numerous benefits to business including;

- Increased profitability

- Better cost control

- Better planning, change management and strategic decision making



- Greater sales and productivity

- Improved motivation, decreased turnover, absenteeism and greater staff

loyalty

- Greater levels of customer satisfaction

Whilst integrating the variety of human resource functions into basic management functions

will contribute to alleviating the impact of staff turnover on business operations this is not

the only factor driving high attrition rates in the hospitality industry. As mentioned

previously poor perceptions of hospitality as a career choice have a significant impact on the

individuals choosing to work in the hospitality industry.

Low requirements to enter the workforce

As a result of the low barriers to entry, relatively poor career growth opportunities and low

job security, the industry often attracts employment candidates who lack the skills and

qualities desired by employers.

This limited labour market results in poor recruitment choices, again driving staff turnover

throughout the industry. However, this trend has been bucked by employers who have a

reputation within their local communities for being quality employers with quality

recruitment and selection processes.

These employers have integrated HRM and HRD functions into everyday management

processes. They acknowledge that employees are looking for more than a wage at the end

of the week. A range of processes are in place designed to improve job satisfaction and

provide non-financial employment benefits from staff.

What is the THA doing?

The THA is developing relationships with the Vocational Education and Training in schools

sector (e.g. Guilford Young College and Geilston Bay High School) to support programs that

are providing students with realistic expectations of working in the hospitality industry. It is

hoped in future we can clearly identify the model that results in the best employment

outcomes through appropriate training that is consistent with industry expectations.

The development of an MOU with the Beacon Foundation is another strategy the THA is

pursuing as part of the overall workforce retention strategy. The lack of basic employability

skills can begin to be addressed by working with students and teachers to impart knowledge

of industry expectations and build these skills before students commence employment.

The industry requires a greater understanding of the role it has to play in improving industry

culture from one that supports the image of low paid, low skilled, uncommitted workplaces



to one that values people as well as capital in order to integrate HRD and HRM practices into

daily management functions.

Opportunities

The hospitality industry in Tasmania should be investigating strategies to attract people

from non-traditional labour sources such as the older demographic, parents returning to the

workforce and people from ethnic communities. In order to encourage these groups to work

in our industry we need to offer them more than is currently available.

If industry wants properly skilled, productive, motivated and loyal staff they need to

understand and accept their role as central to driving this change. The industry, with the

support of Government, needs to build management capabilities to develop a greater

understanding from a management perspective on the benefits of an integrated approach

to HRM and HRD functions across the business.

Offering professional development and career advancement opportunities to existing

employees is an important strategy to retain existing workers. Not only does developing

employees keep them in the business, but providing supervisory and management skills to

employees also improves the overall work environment. In the past, individuals that have

reached management roles in hospitality have been strong performers in front of house

roles but have rarely been given the tools required to effectively manage staff. In order to

have happy, productive and loyal staff an organisation must encourage a culture that values

its employees. Having supervisors that embody this philosophy is the first step in developing

such a culture. Consequently offering professional development to employees can

potentially offer employers multiple benefits in the long term.

Consultation

It is intended that the THA will seek input via consultations, workshops, working groups and

one on one meetings with key stakeholders in the hospitality industry. The purpose of the

consultations is to:

- enable active involvement and understanding about challenges and impediments to workforce retention

- identify, address and respond to issues - provide opportunities for comments/feedback - identify opportunities to further improve workforce retention in the Tasmanian

hospitality industry



References

Hospitality Futures – A Hospitality Industry Skill Development Initiative 2011 – THA & Skills

Tasmania

Churchill Fellowship 2004 – Dr T. Simpkin

Training Demand Profile 2008 – Skills Tasmania

Documents

Central Labour Pool & Workforce Retention Initiative · PDF fileCentral Labour Pool & Workforce Retention Initiative ... employers use traditional methods to attract new employees