Along with shutting down the world for a couple of years, Covid-19 exposed a fault line in the workplace, particularly in hospitality. In 2021, some 700,000 U.S. workers per month in the sector said, “Take this job and shove it”—some because of family demands or health concerns, others when economic stimulus payments made it possible to survive jobless, at least for a time.
There were deeper reasons, too, as people reconsidered their priorities and their willingness to stay in unsatisfying jobs.
Casinos, hotels and restaurants are still recovering, and also figuring out what they did right and wrong during the crisis. “Gaming companies that laid everyone off at the beginning of the pandemic and did so with some compassion had no problems getting their people back,” says Arte Nathan, president and COO at HR firm Strategic Development Worldwide.
“Those that treated this as another method of trimming staff have difficulty attracting the best talent. People want to be treated fairly and with respect, in all instances of work life. When they’re not, word spreads and recruitment becomes more difficult.”
The shutdowns of the past few years forced businesses to reevaluate their staffing needs and streamline as necessary—and fair enough. “But those that used that pause to try to get employees to do more with less will not only have difficulty recruiting but also retaining” qualified staff, says Nathan. Workers “used that same pause to reevaluate their thinking and goals. And many are no longer willing to put up with the BS they used to accept.”
Many hospitality workers “were viewed as a number, a mere cog in the wheel (who) were often let go with what felt like ease,” according to a 2021 Forbes article. “Well, they have spoken. They walked away.”
According to a November 2022 report from the U.S. Bureau of Labor Statistics (BLS), Covid sparked a “record-breaking departure from jobs in a shockingly small window of time.” As the country reopened, competition for skilled workers led to higher wages and hefty sign-on bonuses, but even so, in January, nearly 1.7 million jobs went unfilled in the sector.
“It’s not just gaming, it’s all the service industries,” says Ann Simmons Nicholson, founder of the Simmons Group, a recruitment firm in Las Vegas. “When I opened the Stratosphere in 1996, we had lines of people, thousands of people applying for these jobs. Last fall, when we opened a property in Northern California, they were struggling to get people to apply.”
Her firm urges clients to “identify employees with the highest potential and highest productivity, because it’s much less expensive to keep a team member than to replace one.” It can cost between $10,000 and $15,000 to replace an entry-level hire, and six to nine months’ salary to replace salaried employees (that’s $30,000 to $45,000 in recruiting and training for a person making $60,000 a year).
Interestingly, as the BLS notes, hires, job openings and quits all hit record highs in 2018, before Covid. It seems the roots of the so-called “Great Resignation” preceded the pandemic. But why? And how can employers address the shortfall now and in the future?
As noted, some businesses have learned to get by with less staff. New technologies (remote check-in, self-service restaurants, robot bartenders) have made part of the workforce redundant, maybe forever.
Due to staffing issues, “maybe some of our favorite restaurants won’t be open every night, or they won’t be open for lunch or dinner because of staffing issues,” says Nicholson. Some hotels are increasingly opting out of daily changeovers, unless guests ask for them. “Technology is going to be a part of the solution, but it’s out of necessity more than out of not wanting to hire people.”
Right-sizing or downsizing can only go so far in a high-touch, personal business like hospitality. For example, last year Hard Rock International announced it would invest more than $100 million in raises for some 10,000 non-tipped workers, hiking the minimum starting salary from $18 to $21 an hour. Foxwoods did the same in 2020, raising its hourly minimum wage from $10.50 to $14.50 (Connecticut will increase the state minimum wage to $15 this summer).
In any case, workforce cuts can’t come at the cost of quality service, customer satisfaction—or just as importantly, employee morale. When layoffs are in the air, productivity drops, and those who survive the cuts may look to get out before they, too, are fired. It’s no fun to be considered and actually labeled “non-essential.” A 2022 article in the Harvard Business Review stated that “the short-term cost savings provided by a layoff are overshadowed by bad publicity, loss of (institutional) knowledge, weakened engagement, higher voluntary turnover and lower innovation—all of which hurt profits in the long run.”
For example, Houston billionaire and casino owner Tilman Fertitta laid off 45,000 people at the start of the pandemic. “You’re doing the people a favor if you get them furloughed first, because you have them first to (the) unemployment line after the severance that you give them,” Fertitta said at the time. “It’s a trick that I learned many years ago.”
Nathan disagrees. “Don’t underestimate the damage done by mass layoffs,” he says. During Covid-19, “that experience shattered everyone’s sense of security, and it’s difficult to get back.”
Google found that “psychological safety” and trust in the employer enable teams to achieve top performance and buy into innovations and even cost-cutting measures that help everyone prosper in the end. Of course, earlier this year, Google laid off about 12,000 people, or 6 percent of its global workforce. Microsoft, Amazon, Apple and Meta also made big job cuts.
A Deeper Dive
Retention and engagement “can be the best long-term investment, resulting in business optimization and cost containment,” says Jasmine Takeshita, director of talent acquisition for the San Manuel Band of Mission Indians, which operates the Yaamava’ Resort & Casino in Southern California. The resort, which recently completed a $760 million expansion, pays a minimum $15 per hour for maintenance positions all the way up to $86,000 per year for managers. Thanks in part to a strong benefits package, workers give the employer a 4.1 out of 5 rating on Glassdoor.
“No longer are people lining up to ‘convince’ employers to choose them for a job,” says Takeshita. “In fact, the expectation is that companies should be convincing the community why they are the employer of choice.”
When demand for labor is high, those who are unhappy no longer need to stick around—they can shop for a higher rate, a better schedule or flex time, which may be especially important to working parents.
While the popular narrative holds that younger workers aren’t going to rise through the ranks at one company, Takeshita contends that most job-seekers “are willing to follow a traditional employment track. The difference now is that it’s taking longer for the new job-seeking community to identify their desired track or the company they want to build with. This is where employers can do a better job in showing them opportunities for growth and development and help them find that opportunity within their organization.”
In response, a number of Nicholson’s clients have established leadership development programs, “a commitment of 18 months to two years where fresh college graduates start at a certain rate and are introduced to almost the entire company” over that period (she recommends regular pay raises, every six months or so).
By the time the candidates finish, “they’re more well-rounded. Usually by that time, there’s a position they can go to that might get them that $80,000 to $90,000 a year. It’s sort of a long-term job interview, but it’s good for both parties.”
It’s true that Gen-Z workers are “less interested in loyalty and tenure in general,” says Nathan, “and this poses a real challenge to traditional managers and supervisors. This group, like many in other generations, is simply demanding a more democratic management style.”
Some employers are more open to “non-traditional hiring pools,” says Nicholson. The latter can include retirees, who are usually more flexible with scheduling and don’t require a full benefits package; the recently incarcerated (“a group that’s often overlooked” but may be eligible for certain positions); and the disabled.
Nathan observes that regional casinos have “quickly adopted older and other non-traditional workers,” but Las Vegas is still “style-conscious, and trying to stick to traditional appearance practices.
“That’s not to say most gaming companies aren’t doing everything they can to fill open positions, with whatever qualified talent there is. The problem is still that prospective employees are voting with their feet—staying away from work and companies for a variety of reasons. One issue may still be the lack of flexible options available to gaming companies. Their staffing plans still don’t include the kinds of flexibility constructs that McDonald’s and Walmart have successfully pioneered.”
Full-time equivalent (FTE) arrangements, or job-sharing, can work for some who don’t need a 40-hour-plus job. But work-from-home (WFH) options are less abundant in gaming, and there’s something to be said for onsite working as a team-builder. Most hospitality jobs simply can’t be phoned in, Nicholson observes. And remote workers “end up missing out on what (the late Zappos CEO) Tony Hsieh called the ‘collisions at work’”—the water cooler chat, the Monday-morning get-togethers, the face-to-face collaborations that are “the building blocks of culture.”
According to a 2022 report in Wired, for all the perceived benefits of remote work, “social connection remains a pain point.
“There are plenty of advantages to remote work—and, after two years of doing it, some people refuse to go back to the office. At the same time, employees who don’t know their coworkers, don’t interact with people beyond their team, or don’t have strong ties are far less likely to stay in a job.”
Remote options are still popular in positions that can accommodate that practice, says Nathan. “The limiting factor is management acceptance of WFH and the difficulty many managers have supervising that phenomenon effectively. Most gaming companies would opt for more return to work if they could get employees to accept it. Workplace culture is something that WFH is still affecting.”
Who’s the Boss?
There are reasons to believe that workers are now in the catbird seat, able to pick and choose their jobs and dictate the terms. That’s probably overstating it, but businesses that survived Covid may have a greater appreciation of the rank-and-file employees who drive the enterprise.
“Social media has promoted an environment where one has 15 seconds to show a person WIFM (what’s-in-it-for-me),” says Takeshita. “With an increase of people using social media as a job-seeking platform, companies that recognize the importance of paying attention to and highlighting what’s important to their team members will attract and retain better talent. A thoughtful and comprehensive benefit package, rewards and recognition, work-life balance and incentives that resonate with team members are not just nice perks—they’re essential to attract talent.”
Meanwhile, says Nicholson, unemployment is at an all-time low because of demographics.
In the early 1990s, “we had a ‘drop off a cliff’ in birth rate,” she says. “Twenty years ago, October 18, 2021 was identified as the date that 12,000 to 13,000 boomers would be eligible for retirement, and only 8,000 to 9,000 from younger generations would be joining the workforce. On top of that, add the global pandemic, early retirements and people able to work from home. So it’s a perfect storm. There are fewer and fewer people entering into the service industry.”
All the more reason to find a strong core of employees and give them reasons to stick around.