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June 19, 2023

Labor | Management

Jeffrey S Parker

How Gig-Economy technology is impacting hospitality as we course correct.

Hotels emerging from the downturn, like many businesses, are seeing a dramatic change in not only the availability of team members, but also in what they are looking for from their employer.

According to The Bureau of Labor Statistics in Q1 2023 unemployment in the Leisure and Hospitality sector hovered around 5.4% and that is decreasing. However, even with low unemployment, hospitality continues to see large gaps in the number of positions filled versus the available ones. How can hotels attract and more importantly retain team members? Technology Solutions that are popular with GIG Economy jobs are starting to permeate traditional hospitality roles.

GIG-COMPANIES ATTRACT WORKERS WITH STRATEGIES THAT CATER TO FLEXIBILITY.

DoorDash allows drivers to put money in their bank accounts as soon as the delivery is made. They don’t wait for weeks to see the proceeds of their work. This is referred to as Earned Wage Access (EWA) where team-members can have access to their pay, often as soon as the same day. For employees living paycheck to paycheck, the ability to have access to money when the rent is due, or car insurance, there are options that break the need to wait two weeks or longer for payment. There are several payroll providers that can support this, to a bank account or a pay card; and there are also stand alone solutions that can ‘bolt’ into your current payroll technology.

BENEFITS ---------------

Faster access to funds for team members to stay current with bills.

Missing payments can incur late fees, costing our team money when they are already short. This can spiral for wage earners living with limited cash flow. When they can make payments on time, they can avoid these fees, and keep more of the money earned. Don’t underestimate the impact of this benefit.

Reinforce value of team member.

The ability to get an instant reward when working is an incentive for many of the employees we are looking to attract.

Flexibility.

Team members can elect to receive funds right away, or wait on scheduled payroll runs, or a combination of both.

CHALLENGES ---------------

Retaining appropriate hold backs for taxes and benefits.

Strong payroll solutions will have tools that allow for keeping funds to cover charges that are deducted from payroll.

Who Pays For It?

There is a cost to this, and while to some a $2.00-$3.00 fee seems nominal, for our team that is working at or near minimum wage, or on a tipped wage scale, a couple bucks a day can be a lot. In some cases, companies shoulder this costs, and in some cases the systems being used are ‘free’ to the business because this fee is passed to the team-member.
Your company needs to review how covering or passing along this fee meets with the goals of your program and your culture. My opinion is that: if we are looking to attract and retain, the perception of ‘nickel and diming’ our crew is counterproductive.

Short-Timers -----

One big concern I see from hospitality leaders when discussing EWA is that employees will either only work the hours in a day that are needed to reach goal and be unreliable, or that turn-over will increase. EWA is not a ‘silver- bullet’; it is just one part of an attract and retain strategy, your operation needs to have a comprehensive plan for this.

Labor Unions ------

Please be sure to check with local unions to make sure an EWA program fits in with your union contracts.

Uber attracts drivers by offering flexibility of schedule, some only work a few hours a day or a few days a week. To incentivize drivers in peak need times or location, they use Surge Pricing, where drivers picking up after the Taylor Swift concert or Colorado Avalanche game are seeing trip charges of two or three times normal, I have even seen as much as FIVE times normal. This works for Uber, cars are lined up to get the higher fee, and as most tip a percentage, the total made is much higher to the driver.

This is not a new strategy for hospitality, we have been doing this for years. Overnight shifts pay higher, as do weekend and holiday shifts in some markets.

There are some great labor management tools out there that allow for shifts to be posted to be picked up by our teams, much like Uber posts how much a trip earns to many drivers at once until someone picks it up. If you are short on a Sunday when there is a big check out, let housekeepers pick up a shift at a higher rate. Can’t get banquet servers for a gala, offer a platform that lets them pick up shifts at higher rates.

BENEFITS -------------------

You have people who want to work in the shifts you need.
With the right strategy your operation should be able to have the right team in place to surprise and delight your guests.
Team members feel more in control of when they work and for how much.
Cross training benefits the hotel and allows employees to pick up more shifts.

CHALLENGES -----------------------

Run-away payroll costs. Switching to a program of flexible wages needs to be thought out, paying higher wages for some shifts could put your budget out of whack. If your team makes at or near minimum wage, there is not a lot of room to flex wages down for popular shifts.
Gaps in shifts that don’t surge. Team members will look for higher compensated shifts, and might not want shifts that don’t pay a premium.
Inconsistent hours impact on benefits. Benefit plans often are tied to a minimum number of hours worked to be full time or part time. A dynamic strategy can impact access to benefits, including PTO for our teams.
Over-Time. This is very tricky. Your team needs to understand the impact of overtime on total wages and picked up shifts. In most cases we will want solutions that prevent team members from ‘Doubling-Down’ on Surge Wages and Overtime.
Labor Unions. Please be sure to check with local Unions to make sure a flexible wage program fits in with your union contracts.

These are just a few of examples, but the Gig Worker requirements are impacting hospitality, in our people and in technology. We need to look to leverage this creativity because the work force is demanding it, because quality talented team members are requiring it. Many technology partners are ready to help us, we need to be open to their suggestions.

For over three decades Jeffrey Stephen Parker has been a leader in hotel and restaurant hospitality, with the last twenty-five focused on hospitality technology. He specializes in the technologies that guests interact with directly and the ones that enable hotel teams to better enhance guest experiences.