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Changing The Playbook: How labor management technology can transform hospitality's outdated labor structures

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The widespread staffing shortages plaguing hospitality enterprises are not solely due to the Covid-19 pandemic. Sure, the pandemic has intensified them, but the shortages are more so a direct byproduct of ineffective labor structures that fail to align with the needs of a new generation of workers. From low wages, restrictive shift duration limits and outdated overtime rules to a lack of flexible scheduling and work-life balance, the fundamental components of hospitality’s labor structure have a negative impact on the

The widespread staffing shortages plaguing hospitality enterprises are not solely due to the Covid-19 pandemic. Sure, the pandemic has intensified them, but the shortages are more so a direct byproduct of ineffective labor structures that fail to align with the needs of a new generation of workers. From low wages, restrictive shift duration limits and outdated overtime rules to a lack of flexible scheduling and work-life balance, the fundamental components of hospitality’s labor structure have a negative impact on the overall work environment.

Take the restaurant sector, for example. A whopping 75% of all restaurant employees in 2020 were classified as Gen Z or millennials - two generations with far different work expectations and priorities than those before them. Now, fast forward to April 2021, when a record-high 5.6% of restaurant employees quit their jobs despite demand returning.

Coincidence? I think not.

There are currently more than 1.4 million restaurant job openings across the United States, with the 350,000 openings added since March representing the sharpest rise of any industry. It’s a microcosm of a larger problem that expands across the entire hospitality landscape. Rather than resisting change, organizations need to embrace it with an increased focus on policy changes and digitized labor structures that appeal to today’s workers.

The Need For Flexibility
The traditional five-day, eight-hour workweek should be in the rear-view mirror. Employees desire the flexibility to work different days and times that fit around their personal lives. Some may work multiple jobs, while others may have family obligations that prohibit them from maintaining a set weekly schedule. In turn, they need the freedom to fluctuate shift time durations and still maximize their hours over five days. For example:

  • Week 1: Three 12-hour shifts and two four-hour shifts.
  • Week 2: Four 10-hour shifts and one eight-hour shift.
  • Week 3: Two 12-hour shifts and three 8-hour shifts.

However, federal and state overtime laws, as well as union contractual rules, created decades ago, restrict this flexibility. On the federal level, full-time employees are prohibited from working more than 40 hours per week, and for any time that exceeds the 40-hour cap, their employers are required to pay them 1.5x their hourly wage (time and a half). At many state and local levels, the overtime rule turns to eight hours per day. While most workers would welcome overtime, considering it gives them the opportunity to earn additional income, employers tend to avoid it due to cost constraints.

Additionally, certain states like California require businesses to apply for an authorization waiver in order to schedule shift durations that are longer than eight hours. The cumbersome legal process disincentivizes the employer from incorporating flexible scheduling - especially during periods of volatile demand - to essentially penalize employees instead of protecting them. These types of policies need to be changed to support severely understaffed restaurants and hotels that are struggling to survive and recover from the pandemic.

The Role Of Digital Transformation
With more than 30 years of labor management experience, particularly in hospitality, I’ve witnessed a paradigm shift in the service workplace environment as the demands and expectations of the common employee have changed from one decade to the next. Gen Z and millennial employees are extremely tech-centered. After all, they were the first generations to grow up in the smartphone era. From social media and FaceTime to online shopping and food delivery apps, they’ve grown accustomed to the convenience factor of mobile technology and expect the same from their employer.

The acceleration of advancements in AI-driven labor management solutions can help transform hospitality’s ineffective labor approach into a system that aligns with those generations. This new dynamic enables organizations to tailor their schedules to the needs of the individual employee while still aligning staffing levels with demand. They also automate mid-shift wage adjustments so managers can cross-utilize staffers at different hourly rates, which helps employees maximize their income per pay period.

Labor management solutions with multiplatform functionality allow tech-savvy workers to clock in/clock out, adjust schedules, communicate with managers and complete training programs all from their mobile devices. In addition, managers can use mobile technology to distribute digital employee surveys that collect feedback on staff morale and workplace to address - creating staff-wide transparency that helps maintain high levels of employee engagement.

The change in the relationship between employers and employees must be addressed. A greater balance between the two positions, coupled with advanced scheduling technology that allows for shift selections and greater shifting flexibility unique to each staff member, would overcome the fear of management taking advantage of its staff if regulations and rules are adjusted. For those organizations that try to move back to one-sided relationships, employees will leave to work for better workplace environments. It will also restrict their ability to attract and hire new employees.

It’s time for hospitality leaders, federal and state lawmakers and even union contracts to accept the fact that the playing field for labor has changed. Now more than ever, restaurants and hotels are in need of a more modernized approach to labor management and workforce optimization. The adoption of innovative labor management technology that leverages artificial intelligence, machine learning and advanced analytics can empower them to align with the times for sustained success.

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