As an accountant working closely with hospitality businesses, I've seen first-hand the devastating impact of the current recruitment crisis.
Let's not beat around the bush: the industry is struggling to hire, maintain and attract employees.
This extends right across the sector including restaurants, hotels and bars and can be seen especially in Scottish tourism hotspots like Orkney, Shetland, Edinburgh, Glasgow and the Highlands.
The root causes of this, in my opinion, are clear:
- Pandemic fallout: Many workers fled the industry during the pandemic for more stable employment and haven't looked back.
- Brexit: The departure from the EU has shrunk the pool of available workers, leaving businesses scrambling to fill positions.
- Changing workforce expectations: The younger generation expects more from their employers, and many businesses are finding it tough to meet these evolving demands.
Without a stable workforce, maintaining high service standards becomes nearly impossible, which can lead to unhappy customers, negative reviews, and ultimately, a dip in revenue.
Moreover, high staff turnover means increased recruitment and training costs, putting further strain on financial resources.
To combat these issues, we suggest that businesses create an environment that attracts and retains staff.
Yes, competitive wages are important, but there’s much more to consider.
Financial incentives and support systems are crucial in making employees feel valued and motivated.
Maximising financial incentives for staff retention
Keeping your current staff happy with financial incentives is essential. Here are some effective strategies:
- Tax-efficient employee benefit schemes: Salary sacrifice arrangements for pensions, childcare vouchers, and cycle-to-work schemes not only provide valuable perks but also reduce National Insurance contributions for both employer and employees.
- Performance-based bonus schemes: These can be aligned with business goals and offer tax advantages.
- Tax-free benefits: Mobile phones, uniforms, and staff meals can boost employee satisfaction without breaking the bank.
- Training and development opportunities: These are tax-deductible, improve your team’s skills and demonstrate your commitment to their career development.
Remember, keeping your current staff is always cheaper than onboarding and training new team members and helps keep continuity of service
Helping your staff to grow and being a great employer will help you retain and attract new talent.
Optimising tax strategies for stability
As an aside from the employment advice, we’ve been helping many of our clients with their tax and financial issues recently, including mitigating many of their liabilities.
One key strategy we’ve been talking about is to take full advantage of capital allowances.
This can significantly offset the cost of new equipment, which in turn improves your operational efficiency.
By investing in modern equipment, businesses can often increase efficiency in your team and provide a better workspace.
This might include things like:
- More efficient kitchen equipment
- New coffee machines
- Tills and payment systems
Managing VAT is another critical area we’ve been helping businesses in.
The VAT Flat Rate Scheme, for example, can help you simplify your accounting processes and potentially reduce your VAT liability.
This scheme allows businesses to pay a fixed rate of VAT based on their turnover, rather than calculating VAT on every individual sale and purchase.
Equally, effective cash flow management has become vital for maintaining financial stability, especially in a sector with pronounced seasonality.
Regularly reviewing management accounts during the year and budgeting ahead can help identify your cashflow needs in quieter periods and help you take steps to manage this.
Additionally, you might want to negotiate more favourable payment terms with suppliers as this can improve your cash flow, giving you more flexibility to manage unexpected expenses and invest in recruitment and retention initiatives.
By planning ahead, you can avoid the stress and financial strain of scrambling to meet tax deadlines, allowing you to focus on running your business and addressing the recruitment crisis head-on.
