Is the UK hospitality industry ready for a war on talent?

by Matt Grimshaw
August 1, 2017

It might not be the White House, but I still don’t think you’d find many people who’d argue that Brexit’s shaping up to be a well managed operation. There are clearly competing agendas within government and it’s a real challenge for businesses who want to plan for 2019 and beyond to predict how things will turn out.

Nevertheless, one of the more likely outcomes seems to be that immigration will fall and in particular, that there will be greater restrictions on people coming to the UK to do ‘unskilled’ jobs.

One of the industries that will be hardest hit will be hospitality. Andrea Wareham, the HR Director of Pret, made the headlines a few weeks ago when she revealed that 65% of their workforce are non-UK, EU nationals. I don’t think Pret are exceptional in this regard. Based on our experience working with clients in this sector I’d expect this sort of mix to be common across the industry. Indeed in London, the percentage of foreign nationals working in hospitality must be much higher.

So if post-Brexit the pool of available labour contracts, then it’s reasonable to assume the price of ’unskilled’ labour will go up. Bearing in mind that some retail and hospitality businesses are already struggling to respond to increases in the minimum wage and the impact of other inflationary pressures – it looks like tough times ahead.

How best to respond? Well here’s three ideas for farsighted HR Directors:

1. More automation.

As the price of labour increases, automation becomes more viable. Most shoppers are now used to the self-checkout machines at supermarkets (notwithstanding how disconcerting it is to be told one has an unexpected item in one’s bagging area) and restaurants and hotels are following suit. I expect automated processing of orders and payments to become the norm in value orientated brands. I also expect companies to automate predictable operational processes — personally, I’d rather pay £2 for a flat white out of the machine at Greggs, than £3.50 for a hand made one at Starbucks.

2. Turn ‘unskilled’ labour into ’skilled’ labour.

The myth of unskilled labour is that workers are essentially interchangeable. Actually when you examine the performance of front line teams in detail, you’d expect to find significant variation. In hospitality businesses the best sales person will likely outperform the rest by 25% or more. The key questions for HR Directors should be: who are your pioneers, what are they doing differently and why, and how can you use this model to improve the performance of the rest of your team?

3. Start fishing in new talent pools.

The message from government is clearly that businesses should be making up for the shortfall in labour by training up unemployed UK workers. I think there’s a real opportunity for  companies to use their Apprenticeship Levy funds to engage groups like ex-offenders and the longterm unemployed. I also expect the market to be swamped with start-ups claiming to be “the new uber for casual labour” as hospitality companies look to run even leaner by using platforms like syft and staff heroes to access ultra-flexible gig workers.

As always, the starting point has to be knowing what you want your brand to stand for and where you intend to have a competitive advantage. What’s most important to you – product quality, service or price? If you can’t decide or if you want to hedge all three, then it’s really difficult to create an effective people management model and this will leave you exposed as the cost of labour increases.

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