17/11/2008 - Sales Promotion Magazine

Employers in the hospitality industry could be missing out on opportunities to improve sales through rewards and incentives, reports Mark Ludmon

According to the British Hospitality Association, 1.6 million people work in the UK hospitality industry. But despite the catch-all term, this encompasses a broad diversity of jobs from pubs, bars and restaurants to hotels and contract catering. This makes it difficult to come up with a one-size- fits-all approach to motivation, says Andrew Johnson, director-general of the VA, which represents vouchers and gift cards. “It’s really difficult when it comes to the type of incentive as you are looking at a whole range of different people from a whole range of different backgrounds,” he says. “Someone working behind the bar of a local pub is very different to an area manager for a huge hotel group.”

However, one factor that is common throughout the industry is the problem of retention, with the BHA reporting that staff turnover levels across the industry were nearly 50 per cent. the National Skills Strategy, published by hospitality skills council People 1st, predicts that labour turnover will cost the industry £6.2 billion by 2012, meaning that it will have recruited and lost 4.1 million people in a five-year period.

Part of the problem is the industry’s poor profile, says Johnson at the VA. He himself has spent most of his career in the hospitality and leisure industries, starting off at the De Vere hotel group and Jersey Conference Bureau before becoming national sales manager at Legoland and sales and marketing director of Virgin Incentives. However, he notes: ‘In the US, the hospitality industry is seen as a good career, but in the UK our society doesn’t value it so much. Generally people see it as just a way to earn money rather than a career.” The extra cost of recruitment and training impacts significantly on the bottom line, so employers in this sector have been investing in strategies to improve retention. “It makes good business sense for companies to retain valued personnel,” says Catherine Forrest, business incentives manager at House of Fraser. “Having to go through the long and arduous process of recruiting new staff can be very time-consuming.

“Given the importance of having knowledgeable staff at functions and busy events, it’s even more vital to retain those people who work hard for a business on behalf of its often-demanding customers. And, of course, retaining loyal staff helps raise morale which in turn can have a positive benefit on customer service levels and sales figures.”

Compass Group has reduced its staff turnover levels through a long-service scheme it has run with Michael C Fina over the past five years, rewarding staff after as little as one year (see panel). Restaurant chain Nando’s, which has been expanding at a rate of about 30 new sites a year, has also started recognising employees after one year’s service, with a £30 Virgin Voucher. “The vouchers are sent out directly from Virgin Vouchers to the local store manager whose job it is to celebrate the occasion,” says Tash Farquhar, Nando’s personnel manager. “We aim to create a bit of theatre around the occasion, which makes individuals feel appreciated and rewarded. Virgin Vouchers are a popular choice among our employees who enjoy taking time-out with friends and family at the many restaurants available or treating themselves at Zavvi,”

Experience-based rewards have proven to be more effective for motivating staff in the hospitality industry than cash incentives, says Peter Clayton, director of corporate sales at Buyagift Corporate. “As wages within the hospitality industry are not always competitive, restaurateurs, hoteliers and landlords must strive to make sure that their staff don’t feel undervalued and seek employment elsewhere. As a way of showing appreciation for employees, experiences work to the favour of those who bestow the reward as the positive feelings tied in with a once-in-a-lifetime experience will forever be associated with the employer.” Luxury holidays remain a common incentive for the larger pub operators, who take top licensees on all-expenses-paid trips that they would normally not even have time for. Managed pub company Barracuda Group sent more than half its managers on exotic holidays last year as a reward for hitting targets. The group, which has 216 venues, awarded more than 100 trips to destinations such as Dubai, Australia and South Africa. Human resources director Jane Biss said: “Recruitment and retention is a continual challenge. The incentives that we run are purposefully designed to be aspirational yet achievable to give managers an additional motivation within their business and to reward them for all their hard work.”

Incentives can support promotional marketing campaigns, offering rewards to staff to maximise the impact of tactical activity. Teams at Yates’s bars were offered the reward of £500 in High Street Gift Vouchers for the most sign-ups to its database through a mobile-based promotion provided by lriterlinked Media. This led to several bars using their own initiative and providing additional marketing including PVC banners and hoardings, extra point-of-sale materials such as flyers and business cards and information in languages such as Polish.

Johnson at the VA believes that, because of the variety of people working across the industry, supermarket vouchers and gift cards are the most suitable incentive as they have “more of an impact for certain people than anything that might be deemed more of a luxury”. However, he believes that, on the whole, it is not an industry that incentivises staff, particularly at the 300,000 businesses that are independently owned and operated, accounting for 90 per cent of the workforce. “Where staff retention and motivation programmes are probably in place are just the big chains,” he says.

Smaller independent operators tend to rely on drinks suppliers for incentivising staff, such as vouchers, holidays and other rewards given to barstaff for increasing sales of the company’s brands. Motivation and Communication Company 81 has highlighted how independent operators can start rewarding staff through its successful Foodservice Rewards programme. This provides caterers with points every time they buy participating products from manufacturers such as Nestlé, Unilever and Procter & Gamble. These points can be redeemed from an online catalogue, with many rewards — such as cinema tickets and experience days — being particularly relevant for inceritivising staff and teams, says Mandeep Khela, head of marketing for the programme. “It presents caterers large and small with a cost-effective, easy way to reward their best- performing employees and celebrate best practice among kitchen staff, chefs, waiting staff and bar staff alike.”

It has been used in this way by hotels and pubs, such as the England’s Gate Inn in Bodenham, Herefordshire. “Collecting the points has allowed us to purchase special items for the kitchen,” says licensee Darren Field. “We also run an employee of the month scheme and Foodservice Rewards is a perfect tool to use to recognise staff achievements instead of cash or vouchers,”

Kheia stresses the importance of recognising employees’ performance because it reinforces the importance of the individual’s role within the business and that they are a valued member of the team. “In addition, rewarding staff leads to peer recognition which can be more motivating than the reward itself. By using the Foodservice Rewards programme to reward employees, caterers can address issues such as increasing employee motivation and reducing staff attrition,”