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Let's put productivity first

12 September 2014
Let's put productivity first

In the rush to create more jobs, little mention is made of productivity levels, says Institute of Hospitality chief executive Peter Ducker

One of our industry's most publicised aims is to create 300,000 new jobs by 2020. That's some 43,000 new jobs, every year for the next seven years. How feasible is this? Even in the heady period of economic growth between 2000 and 2008 the UK accommodation and foodservice workforce only increased by an average of 22,200 per year. Could this period of expansion be repeated and even doubled in the next seven years? It seems unlikely.

In the past few years of high unemployment (disproportionately among the young), it is easy to understand the reasons behind stating such goals. But would such growth even be desirable? Labour is the greatest cost item in every hospitality business and it is again on the rise, particularly in light of new auto-enrolment pension obligations. No employer is going to create a new job simply for the sake of it.

Successful businesses are therefore continually striving to achieve higher levels of productivity. It is the golden thread that separates success from failure.

Statistics, however, show that productivity varies massively in our industry. Research highlighted in Hospitality Digest 2014, a new publication by the Institute of Hospitality, shows that in the UK hotel sector sales revenue varies between £2.14 and £18.44 for every £1 spent on labour.

So what is it that the more successful and highly productive businesses do and, more importantly, what can other employers learn from them? Writing in Hospitality Digest 2014, David Battersby says there are five drivers that power productivity and, ultimately, profitability:

• Increasing customer spend.
• Building customer volume.
• Controlling material costs.
• Improving the way work is organised.
• Reducing labour costs.

Research concluded that about 37% of working time is wasted and three-quarters of that wasted time is down to poor planning, a lack of organisation and inadequate supervision. Improving labour productivity is not so much about doing things right, says Battersby, but rather about doing the right things; it's about working smarter, not harder.

Battersby identifies the 10 top drivers of labour productivity:

• Tightly define customer needs.
• Rethink work organisation and job design.
• Simplify all work processes.
• Invest in technology.
• Forecast the daily demand for services.
• Improve the accuracy of work scheduling and rostering.
• Employ, motivate and supervise a multiskilled workforce.
• Encourage creativity, flexible staffing arrangements and flexitime working.
• Outsource non-core activities.
• Link pay to performance.

If the existing workforce is working at only 80% capacity or less, as estimated by People 1st, recruiting more and more workers will not make the industry more efficient, which must be the ultimate aim if profitability is to be maintained.

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