Managing the UK’s forthcoming National Minimum Wage and the introduction of the National Living Wage

Learn how to manage NMW and NLW with Institute resources

There appears to be a storm brewing in the hospitality industry as claims that the increase to the National Minimum Wage (NMW) next month and the introduction of the National Living Wage (NLW) will negatively impact UK hospitality sector. It is projected that the NLW could increase hospitality payrolls by up to 3.5% by 2020. The retail and care sectors will also be impacted.

What hospitality managers need is good guidance to manage the changes to ensure minimal impact to the workplace. The Institute is providing detailed guidance for employers explaining the NMW and NLW changes and how to manage them styp-by-step. The information is provided by the human resources experts at BusinessHR, a resource that also makes up part of every Institute member’s benefits package. Members can click on the NMW and NLW guidance HERE.

For articles about the forthcoming changes, see the following:

• National Living Wage to add 3.4% to hospitality wage bills by 2020 By Liam Garrahan, 16-Sep-2015
• The businesses that will be hardest hit by the living wage by Szu Ping Chan, Telegraph 15-Sep-2015

Although much of the recent reporting has been negative, it’s important to consider the wage changes as a way to benefit loyal and hard working hospitality employees. The industry’s recent productivity problems, highlighted in a 2015 productivity report from People1st, show that retention and training of current staff can be an effective way of building a better and more productive business. Consider the costs of staff turnover, the replacement and training costs for each new staff person and even the interruptions to service inexperienced staff can bring in the workplace. Improved wages could be a great way to build and retain a skilled hospitality workforce.

Our industry’s growing vacancy rates and ultra-competitive hiring landscape mean retention should be one of the most important methods in every business’s HR process. The up-to-date resources and information provided by the Institute to its members means they can successfully navigate any stormy weather ahead.

“Productivity should come first,” says Peter Ducker FIH

The industry’s need to create and fill more jobs means productivity is often overlooked, says Peter Ducker FIH, chief executive of the Institute of Hospitality, in Hotel Owner magazine.

Are your hospitality staff too harried to perform?

The UK hospitality industry aims to create 300,000 new jobs by 2020 – or 43,000 new jobs every year for the next seven years – but how feasible is this? Labour is the greatest cost item in every hotel business and it is again on the rise, particularly in light of new auto-enrolment pension obligations.  Successful businesses are, therefore, continually striving to achieve higher levels of productivity from current staff because it can mean the difference between the business’s success or failure.

Statistics show that productivity varies massively in our industry. Research highlighted in Hospitality Digest 2014, a new publication by the Institute of Hospitality, shows that in the UK hotel sector, sales revenue varies between £2.14 and £18.44 for every £1 spent on labour.

So what is it that the more successful and highly productive businesses do and, more importantly, what can other employers learn from them?  In his recent Digest article, David Battersby FIH says that there are five drivers that power productivity and, ultimately, profitability.

• Increasing customer spend
• Building customer volume
• Controlling material costs
• Improving the way work is organised
• Reducing labour costs

According to the Best Practice Forum, more than a third of employee time (about 37%) is wasted and three-quarters of the wasted time is down to only three key things. Battersby identifies the main ‘time wasters’ for hospitality staff, then explains how to improve labour productivity and discusses the top ten hospitality-specific drivers of productivity. Over 4,000 hotels have closed in the UK since 2004 so employers who fail to recognise and resolve performance problems may be at risk of closure.

Recruiting more and more workers will not make the industry more efficient, which must be the ultimate aim if profitability is to be maintained. Find out how to address productivity issues in David Battersby’s full article in Hospitality Digest 2014: available for download from www.instituteofhospitality.org or tel: 020 8661 4900.