July 7, 2023
It goes without saying, the COVID-19 pandemic has severely impacted BC’s tourism and hospitality industry. Businesses have had to make tough decisions, including reducing or adjusting hours of operation, service offerings, and staffing levels in order to remain viable. As a result, many industry workers have been displaced from their jobs. While some workers have found alternate positions within the industry, others have left the industry all together in search of more stable hours, higher pay, or a different work environment. This has industry employers concerned as many are struggling once again to recruit or recall workers.
Additionally, the perception of the tourism and hospitality industry’s work environment has been damaged during the pandemic. Job seekers may be hesitant about working in the industry due to concerns about job security, health and safety, career advancement, and competitive wages. Employers are concerned about the lack of skills and qualifications of job applicants, as well as the lack of immigration into Canada during the pandemic—as immigrants make up a large percentage of the tourism and hospitality workforce.
As businesses both within the tourism and hospitality industry and other industries start to ramp up operations, the competition for talent intensifies and the lack of skilled workers remains. Employers will need to work even harder than before the pandemic to retain their high-performing employees. Compensation plays a critical role in employee retention, but employee expectations are changing. While paying well enables employers to attract more qualified talent, wages are only one part of the compensation puzzle. Employees who are paid well and feel valued on an ongoing basis are more likely to stay longer with the organization.
Through thoughtful, strategic compensation planning, employers can set themselves apart from their competitors and encourage their top performing employees to remain with the organization.
Here are a few considerations when it comes to the impact of compensation on employee retention:
Compensation strategies will vary between employers. Some will aim to pay at or above minimum wage ($15.20 per hour), others will strive to pay the BC Living Wage (amount varies depending on the community), while others will focus on paying wages that exceed those of their competitors. There is no one single strategy or structure that will work for all businesses. Employers need to find the right compensation strategy that will help them achieve the goal of attracting and retaining employees, while ensuring that it is sustainable within the financial model of the business as well as fair and equitable for all. With the recent June 1, 2021 increase in the BC minimum wage and elimination of the Liquor Server minimum wage, some employers may be reviewing, reevaluating, and/or adjusting their overall wage structures to reflect the increase and ensure that other wages within their organization remain competitive.
Total compensation is a term that refers to wages or salary, and any other benefits, programs, or opportunities available to employees through their employment. Total compensation works to help employers retain employees, particularly when they offer benefits or opportunities that their employees value (e.g. extended health benefits, mental health supports, learning and development, career advancement, employee discounts, flexible schedules, paid time off, bonus/incentives).
When planning or reviewing your compensation strategy, be sure to consider total compensation. What perks, benefits, or opportunities does your business offer employees, in addition to wages? Why should an employee choose to remain employed with your business? What’s in it for them? Some recent studies suggest that post COVID-19, employees are reevaluating their work/life balance, resulting in an increased desire for more flexible working conditions. If you are not sure what your employees value most, ask them.
While tip-out /gratuit y structures var y throughout the industry, one thing is certain—servers are attracted to positions that offer the greatest potential to earn gratuities. With the recent elimination of the Liquor Server minimum wage, liquor servers now earn the regular minimum wage ($15.20 per hour). This change may have some employers considering reevaluating their tip-out structure to reflect the increased hourly earnings of servers.
If so, employers need to carefully consider the potential impact of making such a change within the currently competitive job market. Gratuity discussions and changes can be a difficult and thorny topic for employers due to the potential impact on employee earnings and retention. Consider including employees in the decision-making process to help determine the most appropriate structure for your team and generate buy-in. And as there never seems to be an “ideal” time to make changes to gratuity structures, consider making smaller incremental changes over time that will be less impactful, or even delaying changes to allow time for teams to get back into their rhythms and business volumes to settle, post pandemic.
Rewards and recognition form part of the overall total compensation package, and now more than ever, employees will choose to stay with organizations where they feel valued and appreciated. Rewards don’t have to be big or expensive. Focus on smaller, more frequent ways to recognize and reward employees. It may sound trite, however, a simple thank you does go a long way. As we move past the pandemic, find ways to recognize and reward loyal employees who have helped the business through these challenging times. Surprise them with an extra paid day off, premium shift choices, or (as COVID-19 restrictions permit) plan in-person lunches, coffee chats, or other celebrations. Send gift cards with handwritten thank you notes and give shout-outs at staff meetings, on internal emails, or social media channels.
As COVID-19 restrictions lift and BC continues to move forward from the pandemic, all businesses will need to adapt and change to fit the new normal. Compensation planning, consideration of total compensation and gratuities, and rewarding employees are just a few ways in which employers can create competitive compensation packages that will help to encourage employee retention. Visit the go2HR website for more information about Understanding Tips and Gratuities, compensation, and retention.
Ginger Brunner, CPHR is Senior HR Specialist at go2HR.
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