Employers Struggle to Hire Hourly Workers as Turnover Rises

By Roy Maurer July 31, 2015

Seventy percent of service industry employers are finding it difficult to hire for hourly positions as turnover rates—and costs—are rising.

A survey of 974 service industry professionals by PeopleMatter, a workforce management platform, found that finding enough high-quality candidates is their biggest challenge as hiring needs have increased. Two-thirds of respondents said they need more applicants than they receive and 60 percent are unsatisfied with applicant quality.

The survey also showed that turnover is one of the industry’s biggest workforce problems. Respondents reported the annual turnover rate for their hourly employees to be 49 percent, with an average cost of $4,969 per employee. Respondents also reported year-over-year turnover increases of 39 percent for hourly workers and a staggering 314 percent increase in turnover for managers.

With hiring picking up, finding high-quality candidates is a priority, but 90 percent of respondents said that they don’t find it easy to recruit enough qualified applicants.

Respondents reported that most service industry workers are recruited through employee referrals (71 percent), followed by the company website (59 percent), job boards (59 percent), walk-ins (48 percent), social media (34 percent) and local advertising (34 percent).

Notably, outside recruiters are the top recruitment channel by volume, whereas the top source by quality is social media. Quality social-media-sourced applicants rose 28 percent this year against walk-ins and 15 percent against employee referrals, according to the survey. The recruitment channels that respondents are the most dissatisfied with regarding the volume of applicants received are internal candidates (72 percent), local advertisements (71 percent) and walk-ins (71 percent).

HR Too Optimistic?

One of the more interesting trends the survey uncovered was a large disconnect between managers and HR professionals. General and store managers reported critical hiring functions as significantly bigger problems than their HR colleagues did.

Managers were 109 percent more likely to say finding enough qualified candidates is very difficult compared with HR, and 90 percent more likely to strongly agree they need more applicants per opening to find the right person for the job.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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