• Todd Eiseman

Can Background Checks Help Prevent High Hospitality Turnover?

Updated: May 2, 2018

The hospitality industry is plagued with disappointing turnover rates that inevitably hike up recruiting budgets and decrease performance. Unfortunately, as the economy continues to improve, those rates increase accordingly, and employers scramble to hold on to their top employees. Understanding the reasons behind this problem is vital to strategizing a solution. Below, we examine this challenge and explore how better background checks may help prevent high hospitality turnover.

Exploring the High Turnover Rates in Hospitality

The average turnover rate for the entire private sector was 46 percent in 2015. For the hospitality industry, that number escalates to 72 percent. This is the fifth consecutive year of increases.

More than any other industry, the relationship between the national economy and average turnover is obvious to see. In 2010, the hospitality turnover rate was just 56.4 percent; that was a significant drop from prerecession rates of 80.7 percent.

This record turnover rate matches up with data from the Bureau of Labor Statistics, which report that hospitality has the lowest employee tenure within the entire private sector, at just 2.2 years (compared to an average of 4.2 years across all industries).

Examining the Root Causes

These numbers may be stunning at first glance, but the main reasons behind them aren’t too surprising. By nature, the hospitality industry requires a constant ebb and flow of seasonal workers. With annual spikes of shoppers and travelers around holiday seasons and summertime, an increased workforce during those times is required to meet the demand. Inevitably, then, turnover increases as those seasons come to an end, when that increased workforce is no longer needed.

The second reason is also self-evident: the hospitality industry naturally attracts many young workers. This includes high school and college students, often working part-time, who are simply trying to earn some extra cash. Hospitality jobs are great opportunities to introduce youth to the workforce, which also creates a cost-effective solution for employers whose hiring budgets are tight. However, these young employees aren’t there to build their careers and will resign according to their school schedules and other opportunities. Thus, this causes a negative impact on the hospitality turnover rate.

There’s another reason for high turnover rates in hospitality that is a little less obvious. Career progression in hospitality looks very different from many other industries, in which internal promotion is more prominent. In hospitality, long-term career opportunities with one company are more limited, and upward mobility is generally achieved by moving to a new employer. This reality also negatively impacts an employee’s perception of their value to the organization, which in turn leads to even higher turnover.

Finally, there’s the challenge that many employers in hospitality fail to conduct background checks. Unfortunately, there’s a vicious cycle in play here, as high turnover rates put pressure on the hiring budget, which leads employers to skip the added expense of background screening. However, the cost of skipping the background check is greater than the cost to run it, especially when considering how much turnover is due to employee theft, workplace violence, and other scenarios that background screening could have helped avoid.

Overcoming the Turnover Challenge

Unfortunately, the challenge of seasonality and young workers isn’t easily overcome. Those types of workers are necessary to keep pace with fluctuating demand. However, the remaining causes can be addressed by hospitality employers in an effort to keep turnover as low as possible.

Companies in hospitality should take some time to re-evaluate their career opportunities for long-term employees. For small businesses, this may not be possible, but managers should be encouraged to listen to their employees’ goals and aspirations, responding with training opportunities, more responsibilities, or mentorship, as appropriate. For larger organizations, this strategy is vital. No business wants to lose their best employees as a result of stagnant growth.

Secondly, despite the revolving door of employees, employers should make a genuine effort to make those individuals feel heard. No one wants to be just another number or a cog in the machine. Though many people in hospitality treat their work as “just another job,” it’s still important to show them that their work matters. Empowered and engaged employees are much more likely to stick around (they’re also more likely to deliver better customer service).

Finally, don’t be tempted to skip the background check. Screening a candidate’s criminal history, employment background, and more are critical activities in ensuring the integrity of your workforce. We work closely with many clients in the hospitality industry, screening their employees to help them build the best teams. For more information about hospitality background checks, don’t hesitate to reach out today.

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