Study finds four ways vacancies hurt firms
A study report this month from Cornell University’s Center for Hospitality Research says that lost productivity is the most expensive cost associated with employee turnover.
Conducted by Cornell professors J. Bruce Tracey and Timothy R. Hinkin, the study concluded that on average, the loss in work associated with turnover accounts for 52 percent of the total expense of employment changes, ahead of recruiting, selection, orientation and training.
The loss of productivity comes in four forms, Tracey and Hinkin wrote: diminished productivity from a departing employee; the learning curve for the person filling the position; the disruption caused by the new employee, when peers and supervisors must aid the new hire; and the revenue or sales lost because the position was vacant.
J. Rudi Heater, director of hotel operations for Carpionato Properties, said the costs of turnover are very real and affect the hotel industry severely. Although the five days of training given to a new worker at Carpianato’s Crowne Plaza at the Crossings or Holiday Inn Express on Jefferson Boulevard do add to the expense, he said, losing a skilled employee has a much greater impact on the hotels’ business.
“Long-tenured employees add tremendous value,” Heater said. “They are highly confident in their job and know the most efficient way to do their job, therefore increasing productivity.”
Brian Casey, chairman of board of directors of the Rhode Island Hospitality and Tourism Association, agreed that lost productivity has the biggest impact on hospitality businesses.
“Training is a never-ending process,” he said. That goes for the employees on the job, as well as the employers who find they’re constantly having to train new employees.
Of the 22 people who work for him at the Oak Hill Tavern in North Kingstown, Casey said, fewer than half have been with the restaurant for three years or more.
He attributes the constant turnover to a younger generation whose members, he said, are always looking for opportunities before putting in the necessary work.
“They don’t have the work ethic,” Casey said. “They have different goals and aspirations. They always think there’s something better.”
But Paul Crowley, a state representative from Newport and the owner of La Forge Casino in Newport, said turnover in that city’s restaurants has actually decreased.
He attributes the dropoff largely to the post-Sept. 11 economy, which has shown slower, steadier growth than the late 1990s and early 2000s, a period that produced rapid increases in wages. The slower growth has made it less likely that employers will attempt to outbid one another for employees, he said, and that has made the workers more likely to stay put.
Among other factors, Crowley cited the “hardworking, reliable” immigrant laborers he said have “filled the void in … almost every kitchen in the city,” as well as an increase in the respect accorded to workers in the restaurant industry.
Before, he said, restaurant workers used to be more likely to jump ship and take a job in another industry. But now, with the advent of “celebrity chefs” on television, and with schools such as Johnson & Wales University helping to make the hospitality industry into a respected career path, people are more likely to stay in the field.
“The old stigma of working with a greasy spoon and sweating over a hot stove has been somewhat diminished,” Crowley said.
Heater said he also sees a reduction in the amount of turnover in the hospitality industry. Like Crowley, he credits the end of the “wage auction,” in which some employers would offer better pay rates than their competitors, in hopes of luring away skilled employees.
At hotels, Heater said, another factor that has increased work force stability is the offering of better benefit packages and the understanding among workers that at a new employer, they would have to start the process all over again.
If employees accrue a certain amount of vacation time after one year a job, for instance, they are less likely to leave the employer after 10 months and lose that benefit.
“Employees see more value in staying in their job,” Heater said, than in leaving and “starting the timeline to earn those benefits over and over again.”
