The End Of Labor As We Know It: Implications For Hotel CEOs
As a double immigrant who worked his way through high school and university, I’m a big believer in the lifelong benefits of working on the front line of a service business, early in life. One of my first jobs was front-line in the retail sector working at one of the biggest sports stores in Toronto. This job taught me how to work with diverse colleagues and adjust to the grueling demands of store managers trying to hit their numbers while handling dissatisfied customers wanting a better deal. After an initial test period, the store manager, a tough but fair French Canadian who loved the sports retail business, allocated his staff according to their talents, moving us around to the departments where we performed best.
He also had an eye for talent, he was particularly interested in quick learners who could conquer a complex department like ski equipment or hockey skates and outsell others. Looking back, he managed an informal talent marketplace, in one of the world’s most diverse cities extremely well. It was an incredibly diverse meritocracy: Jamaican kids rose from selling track shoes to managing winter sports and women moved from apparel to assistant manager roles overseeing budgets and purchasing.
Later, when I worked in large management consulting firms such as Deloitte, I learned that’s not the way most businesses work. In large organizations, people belong to camps or fiefdoms led by barons. The barons control the talent (“their team”) and seldom adopt new clan members. If the leader of your clan is ascending, you move up. If he or she is not, you don’t and at the extreme, could be eliminated. If there is a change in senior management or control, all bets are off: one clan wins and the other is either pushed aside or sent home.
In no business is this more prevalent than hospitality. Hotel and restaurant operators wave their hands and say, “hire this guy,” and their teams and human resources are often relegated to an administrative role. As an outsider, sometimes this can work in your favor, but once you get inside the organization it can be deadly. Having learned this lesson once, I became very careful and only joined the executive ranks of large hotel companies, such as Hilton and Caesars after lengthy periods as a management consultant to their senior teams.
Today, as a venture-backed founder of a leading talent marketplace company in hospitality, I am perplexed by the lack of meritocracy and transparency that exists in most organizations that manage hotels and restaurants. The barons, who are typically the hotel operators, at corporate, regional, and property levels, still call the shots. When it comes to financial performance and customer satisfaction, they can be very data-centric and objective. But when it comes to talent or “labor” as they continue to call it, they usually are more cavalier. After all, they are seldom held accountable for turnover, employee dissatisfaction, and low levels of employee engagement or for that matter, seldom rewarded for developing talent that they lose to another part of the organization. I call this the “labor mindset:” labor is plentiful and can continue to be cycled and recycled. Everyone is replaceable and churn is a fact of hospitality life. Unfortunately, labor as we know it is over. With layoffs of over 100 million people worldwide during the pandemic, the hotel industry put a big dent in the Hospitality Servant Leader Model. The freelance/free agent economy is here – another 5 million people becoming Uber drivers and others seeking hybrid positions where they don’t have to be on the property every day. We are now squarely in the era of elite talent where fewer, higher-quality workers can leverage technology to do more, leaving hotel operators scrambling to reset brand standards that can justify record high rates amidst pent-up demand.
