They’re coming in droves. We knew they would eventually — it had to happen, but the numbers have caught us by surprise. It’s like someone flicked a group awareness switch and the world reacted en masse.
What am I talking about? Training course bookings and recruitment jobs, that’s what. We’ve been slammed for the first time in about four years. Right down the east coast of Australia, independent of each other, hospitality operators have reached the same conclusion at the same time and reacted the same way, as if some sort of universal consciousness is at work.
It’s great for us, but my good fortune belies a very bad situation for the majority of the industry. It seems that optimism has returned — at least in part — and with it a return to expansionist thinking rather than the ‘batten down the hatches’ mentality that has driven the industry since the GST was introduced. This is the good bit.
The bad bit is that everybody seems to have found that they can’t find good staff on the open job market, and that a dawning realisation has precipitated the sudden flurry of business we are experiencing. They’re either finding that recruiting themselves is not producing the goods, or they’ve taken the decision to train their own staff.
It is only going to get worse as our economy recovers, and I can’t see an end to it in the foreseeable future. Perhaps it’s worth stepping back and looking at the big picture to gain an understanding of why this is occurring. This might help you formulate your business plans.
If we go back fifteen years to the end of the eighties, we had a boom time, followed by a three year recession which lasted until about 1992. During this recession about one third of the hospitality businesses in Australia failed due to a sudden reduction in disposable income in the general community. The remaining hospitality businesses went into survival mode and pulled their prices back and lifted their food and service standards. Profit margins shrank considerably.
As the recession eased there were a flood of new entrants into the industry. These were often people who were retrenched from other businesses or the public service, and who had lumps of money and the naive belief that a restaurant, café, small motel, or bed and breakfast was a) easy, and b) highly profitable. They came in to the industry during a post-recession, sluggish economy and created the situation where there were too many businesses for the available number of customers. This held prices down.
Meanwhile, costs increased steadily — wages, food and beverage supplies, rent, overheads, the lot. Margins were further squeezed. Most businesses went into ‘don’t spend anything that is not absolutely necessary’ mode. This, unfortunately for us, meant training. We saw a steady erosion in the skills base of the industry at the same time as the industry needed a higher level of skill to match decreasing profits.
We started to see the farsighted companies attempt to deal with this situation at the end of the 90’s. If we look at the graphs of our training revenue it steadily climbed during 1998 and 1999 as more and more people were sent for training. All that came to a sudden end with the introduction of the GST. Everyone ducked for cover and money became tight again. Then along came 9/11, tech wreck on the stock market, the Ansett collapse, SARS, and the Bali bombing — all in a line. Our training revenue took a 70% hit. Fortunately we have other revenue streams (I wonder if you could survive a 70% revenue hit?), and we concentrated on those.
The industry shed staff, pulled back prices and the bankruptcy rate soared. Everyone adopted a survival mentality for the second time in ten years. It seemed like the dark age of the industry, at least in my lifetime.
But I’m feeling positive now; all the signs are right for a period of sustained growth and prosperity — unless, of course, some cretin with an axe to grind and a shoulder mounted rocket launcher commits another atrocity on our doorstep. Call me an optimist if you like, but I have a good feeling. The only thing between the industry and a boom time is that now we have gone for nearly ten years without investing properly in our workforce, where are we going to get the people we need to take advantage of the opportunities?
We’ve been seeing the problem in certain job categories like Chefs and Restaurant Managers for some time, but lately it’s become evident that the problem of finding skilled staff has now reached down to the ordinary staff level. Most of my clients are complaining bitterly; it seems that in every conversation we have this is one of the hot topics — no matter what market level you operate at.
I know I’m running the risk of sounding self serving, but the truth is that my company doesn’t have an unlimited capacity to train people and any contribution we might make is simply a drop in the ocean. The reason I write about this is that I am in one of those unusual specialist occupations where I get to see the inner workings of lots of different businesses, and I am concerned at the trend I am seeing because it will hurt a lot of my friends.
It’s time to think ahead and take action now. If you own a business or manage one, it’s time to stop working in your business and work on it. You might give some thought to setting up your own internal training systems, at least for ordinary staff, or you’re going to get caught out.