War for talent

The hospitality sector seems to have been taken by surprise by the increasing staff shortage. It is clear that the Covid pandemic has added urgency to the problem.

Last week I was virtually present at the Tourism Summit in Winterswijk. One of the sub-sessions was about the “Challenges in the labor market”. Mainly anecdotal and little analysis. It was also noticed that all kinds of terms were used interchangeably. Human Capital = Labor market = Personnel provision = Employment conditions?

It seems difficult for the sector to arrive at a more strategic perspective. All analyzes at the table were conducted from the sector's perspective. A very brief explanation that the sector may not be able to grow due to the staff shortage. That was the only more strategic perspective. No one could go to a perspective in which the sector problems were seen from a broader perspective.

Competition in the market for products and services is shifting more towards the labor market and the “war for talent”. Everyone is fishing in the same pond. The hospitality sector still has its own specific problems. Individual entrepreneurs hardly get any further than free food, the occasional employee party or annual outings. Somewhere this summer I saw an offer to job applicants to let family eat at a discounted rate. It cannot get any crazier. Employees want real jobs, with enough hours and some security, for a decent wage and some development opportunities.

Organized entrepreneurs fail to arrive at relevant strategic answers. All members, especially the most militant ones, must be kept happy. There is a structural oversupply. Deregulation means that anyone, anywhere, can start an initiative, and that's what happens. The problem is that perhaps 20% to 25% of this supply is of a moderate or insufficient quality and has a marginalized existence. In addition, the operating profit is insufficient or is under constant pressure. However, all these initiatives take guests and thus turnover and profit away from healthy companies and suck up the available labor potential. It is high time for a drastic shake out on the supply side. In fact, a soft clean-up is now taking place as each company reduces its available capacity. Fewer days open, fewer tables, admit fewer visitors, etc. Everything to still perform with the available staff. Viable companies run into structural and unnecessary problems as a result.

Where a boom in bankruptcies was expected by Covid, all kinds of marginal companies have been artificially kept alive by the support measures. Exploding domestic demand over the next 2 years will mask the issue again. If the sector does not quickly mobilize its self-cleaning capacity, the “war for talent” will be lost. The outflow of personnel will continue and possible new influx will find its way into the sector with difficulty or not at all. Then even higher wages, better working hours or parties will no longer help.