Managing a Contingent Workforce in the Hotel Sector

Although 2007 was a good year for the hotel industry achieving growth on 6.9%, 2008 may prove to be far more stretching with higher fuel costs and food prices set to raise the cost of living in the first half of the year. The squeeze on real incomes will also continue to bite in 2008. The impact on industry will vary. In uncertain markets companies will strive to reduce costs and maximise profitability by improving their supply chain.

It is therefore not surprising that a recent survey of some 3,500 procurement, supply chain and finance professionals worldwide revealed that 95% of firms want to use procurement outsourcing to improve their sourcing strategy. One critical business function in particular which is progressively being outsourced is the management of temporary labour - a key element of hotel operations.

The temporary/contract sector spends in excess of 23.4 million a year in the UK through more than 17,000 recruitment agencies, making the temporary agency labour market a highly fragmented industry.

With the resource frequently sourced at point of use and the difficulties associated with implementing centrally controlled purchasing systems, it is easy to see why the 25 billion contingent workforce spend is often poorly leveraged and badly managed.

However, temporary labour is an extremely useful business resource within the hotel and catering industry in terms of offering employers reduced wage and benefit costs, increased workforce flexibility, accommodating seasonal trading patterns, providing assistance with special projects and staff replacement.

The advantages of using a contingent workforce however come at a high price. Employers need to seek legal advice to ensure that they are 100% compliant with the law and in doing so they can protect their company from a host of legal issues, including whether the temporary worker is considered to be an employee and as such can qualify for any company benefits.

In recent years we have seen the appearance of niche consultancies that specialise in the management of the temporary workforces. The logistics and retail sectors have been quick to follow this trend and currently are reaping the benefits of significant savings. One independent consultancy who appears to be accelerating in this field is de Poel Consulting. By engaging with over 750 recruitment agencies on a weekly basis they have become one of the UKís top purchasers of temporary labour with impressive negotiating power. Clients include Sainsburyís, Somerfield, TNT, Ryder and Royal Mail to name but a few.

Jim Glover, Director of Human Resources at Palmer Harvey, the UK's number one delivered wholesaler for both the independent and multiple retail trade explains:

ìTemporary agency labour is essential in enabling us to accommodate our seasonal trading patterns and we identified the opportunity to reduce the costs of this resource by rationalising and improving our temporary agency labour procurement processes. We chose to work with de Poel due to their experience and knowledge of the market in addition to the speed with which they could deliver a fully implemented solutionî.

de Poelís strategy is simple, Managing Director, John Simmonds explains the service the company provides:

ìWe conduct a thorough analysis of sites, invoice charges and pay rates and overtime calculations. As part of the analysis we spend time with operational staff to understand the nature of local agreements and existing relationships. Our objective is to create a level playing field of agency supply where business allocation depends on staff quality and service levels.î

As part of the process, de Poel provides a Service Level Agreement which helps provide mutual protection and security for both employers and agencies, as Simmonds explains:

ìThe agreement is designed to provide comprehensive legal protection for our clients, in addition to ensuring agency service levels. Supplier performance will then be measured continually using key performance indicators.î

Their expertise and knowledge of the industry is backed up with a web-based invoicing and timesheet processing system. David Baker, Operations Development Manager for TNT Post, another of de Poelís clients explains:

ìThe consolidation of our companyís invoices from over 1,000 a year into a combined and accurate weekly invoice has delivered significant cost savings across the business.

de Poelís e-tipsô system has provided TNT Post with a full range of management information which has already proved invaluable when forecasting the cost of temporary labour and providing a clear picture of agency usage. Not only was the system easily incorporated into our own financial system but de Poel provided both our staff and our agencyís staff with full training and continued support via their dedicated e-tipsô helpdesk .î

Importantly, this type of outsourcing does not cost any money. de Poelís solutions require no capital expenditure and fees are based on a percentage of the direct savings achieved.

de Poel is playing an integral part in ìraising the barî in terms of service quality within the recruitment industry, as well as helping to grow and modernise the industry as a whole.

In the last few months de Poelís unique solutions and services have come to the attention of the hotel and catering industry, who like every other industry this year will be looking at improving the efficiency of their supply chain.