Workplace financial services can help solve hospitality’s talent crisis

These are the words which spring to mind when I consider the journey of hospitality in recent years.

Nobody could have prepared for the combination of Brexit and Covid-19, but despite lockdowns, a talent exodus and a heavy mental toll, the hospitality sector showed fortitude at every turn, banding together to engage policymakers, keep supply chains moving, deliver great experiences and keep people in jobs.

Many organisations fought to bounce back to profitability, and an influx of entrepreneurial spirit meant that at the beginning of 2022, the UK had 10,000 more hospitality businesses than pre-pandemic. Yet as we now enter the second year of an economic downturn, one challenge remains unchanged: the war on talent.

At Wagestream, we hear from leaders in hospitality that the sector is facing a labour crisis like never before. With 87% of businesses reporting hiring difficulties at the start of 2023, this is an issue permeating every business and every team, and is not something which can be solved overnight.^[1]

The solution doesn’t lie in a linear mindset of ‘find talent, hire talent, retain talent’. It involves listening to the evolving needs of employees and responding to these with holistic, relevant solutions.

A good wellbeing solution supports employees at every stage of life. More than just the emergency referral to the EAP, it covers holistic, continuous efforts to improve the quality of life of employees and empower them to make positive changes during their employment. Key to this, as the cost of living continues to rise, is financial wellbeing support.

In recent research, we found 87% of hospitality workers’ mental health is worsening because of money worries and 42% have missed a bill due to the rising cost of living – 56% more likely than the rest of the workforce. It’s timely then, that hospitality employers have begun embracing the rise of workplace financial services – with 57% having introduced new or improved financial wellbeing initiatives. This does however lag behind the UK sector average of 71%.

For the employers who have taken action, by becoming a fair and ethical new channel for distributing financial services, they have embraced their role as society’s most trusted institution, and they are seeing positive bottom-line impact in the process. The companies doing this are seeing instant  improvements across recruitment, retention and productivity, all key metrics in the business case for financial wellbeing support as the talent war rages on.

Amid these challenges and pressures, there are plenty of opportunities for hospitality employers when it comes to financial wellbeing. Competitive pay is crucial, but we know from our report that there are new dynamics of pay emerging. Pay security, visibility over earnings, savings direct from the paycheque and flexible pay cycles are all in high demand, and these are all accessible solutions which hospitality employers have within their grasp, to make pay more rewarding as part of a sustainable operating model. With a 40% reduction in payroll queries resulting from these solutions, and flexible pay alone delivering a 11% increase in shift uptake, the rewards are by no means limited to the employee experience.

Delivering effective financial wellbeing support requires strong communication and great engagement.  There are signs the hospitality sector is engaging in meaningful dialogue, more so than in other industries. Over a third (40%) of the workforce are having conversations about their financial wellbeing – a 33% uptick on the UK average. In fact, they are 36% more likely to have directly approached their employer for help in response to the cost of living crisis.

When it comes to improving financial wellbeing in the hospitality workforce, there is progress to be made – but there are also reasons for optimism. Even as the sector continues to battle against unsustainable costs, hospitality business owners remain positive. This continued resilience shows that with the right guidance, policy support and inclusive wellbeing solutions to deliver the best possible employee experience, hospitality can tackle the labour crisis head on and set the bar, as a vibrant light in the UK’s labour market and economy.