Hospitality operators are under intense pressure to raise the level of wages paid to their employees, at least up to $10 an hour from $7.25. In the past year or so we have seen “pop-up” protests by Retail employees throughout the US in major cities, clamoring for wage increases and representation. Thus far, the fast food restaurant employees have made the loudest racket, but they are not yet a total cohesive voice. Various labor unions and proponents are trying to direct that energy and volume. Taking a step back, where one looks at the compensation within these large corporate Hospitality entities and their senior officers, who make millions of dollars annually, you just have to stop and wonder. Here is some context – the President of the United States is paid $400,000 annually.
We know how Executive compensation is established and flows. Organizations, both for profit and non, have governing boards. These boards have various committees to address the business and the mission. Often, there are compensation committees to address the overall financial package for senior officers. What gets lost in the picture is that almost all positions on a Board of Directors are made up of other Senior Executives from various outside lines of business and interests. They are paid for their time of service (attending meetings). These Board members are assisted by compensations specialists and consultants, who create benchmarks and comparables from the marketplace. These advisors are highly paid. What a racket and a beneficial dynamic to continually up the ante in the boardroom. Very few executives, serving on a board, will contest the numbers, for at some point in time their own compensation will be debated by fellow directors in their own companies. “You scratch my back, I’ll scratch yours”. Nice deal! I am available to serve.
Ah, the gulf, the haves and have nots, the 1%, those who need some “scratch” - with Hospitality right smack in the middle of the debate. We have nothing to be proud about. We pay our employees – those who make us shine in a very competitive marketplace – typically not much more that minimum wage. We are talking about your housekeepers, your restaurant workers, your ticket takers and even retail clerks. As the Boston Sunday Globe on February 16, 2014 pointed out in an editorial, “These low wages do not represent an efficient, market-driven distribution of labor. Because waiters making poverty wages turn to public aid, American taxpayers effectively subsidize the restaurant industry to the tune of $7 billion per year.” That is a big chunk of change – in one door (or pocket) and out the other.
We should champion operators who are successful in an environment with slim profit margins and intense competition. But, is that success based upon stepping upon the back of the folks who make you successful? (No scratchin’ here, rather breakin”).
Full time shifts are rare. Working conditions can be less than desirable. Benefits, if any, are bare-boned. So, we start with a disenfranchised, hardly inspired workforce. Will moving the minimum wage to over $10 kill your business? I think not. It is easier to do the right thing, rather than have the Consumer, the press and the unions dictate your action. We have little excuse! It would be very nice to see some humility and accountability in our Boardrooms, too. You know the change is coming, probably from the state level. So much better for our Brand(s) to lead the way, rather than be dragged, screaming and scratching.
John Hendrie is the author of the LRA blog 'A Guy Walks In'. LRA is a leading research and consulting company in the emerging discipline of Customer Experience Management (CEM). We work with our clients to help them design and deliver consistently exceptional customer experiences in order to drive customer satisfaction, loyalty and advocacy, and company growth and profitability. We have built a range of quality assurance, mystery shopping, research, training and consulting solutions to help them do so.
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