Every industry is different, each with its own challenges and unique solutions. The service sector is the same in this regard. In fact, this large section of industry comprises some of the largest sectors in terms of number of employees. According to the U.S. Bureau of Labor Statistics, 10.2 percent of employees in the U.S. worked in the retail sector, with another 9.5 percent holding jobs in hospitality and service as of 2013.
But with the service industry serving as a professional home for so many of the country's workers, it's understandable that businesses may experience some personnel-related difficulties. Recent surveys have revealed that many service-related companies struggle with turnover, filling positions, finding qualified applicants and similar recruiting-centric issues.
The turnover problem
Turnover is undesirable for any company, and yet it's a fact of professional life that employees will come and go. However, retail, hospitality and service industries appear to be particularly susceptible to this phenomenon. The BLS reported that the retail, hospitality, education and food service sectors had the highest turnover rates in the country during the first half of 2015, with between 4 and 7 percent of employees in these industries turning over each month of the year.
To put it another way, the Society for Human Resource Management reported that a survey found the service-industry employers reported an average annual turnover rate of 49 percent. Considering that replacing an employee can cost an average of $4,969, this is an expensive and worrying statistic.
Where are employees coming from?
Part of the issue these employers are facing may have to do with the channels through which applicants come to them. Some 90 percent of businesses reported having difficulty finding qualified applicants.
The recruiting channels used by these companies are interesting in their variety. Employee referrals accounted for 71 percent of new hires, while new media channels like social media composed 34 percent of new applicants' origins. Interestingly, internal referrals were cited as the biggest point of contention for employers in terms of the quality of candidates, with 72 percent of survey respondents indicating dissatisfaction with the channel as a means of recruiting.
The service industry may have a turnover problem, but small-business owners who work with PEO companies can give their companies an advantage. By using expert HR services, it's possible to refine recruiting strategies to be more compatible with the current job market, which may have an overall positive effect on turnover rates companies are dealing with.