Staff in the Hospitality Industry Globally - Research Paper Example

 Abstract To study the reasons of the high labour turnover in the hospitality industry a qualitative study through available literature was conducted. Since abundance of literature is available on the subject, no fresh primary data was collected. In this study literature has been drawn from various sources covering several issues, several nations and studies conducted on different firm sizes. The objectives were laid and studied in detail. The study revealed that high labour turnover in the hospitality industry is a global problem. The reasons too are the same which include low wages, long working hours, unsociable working hours, lack of motivation and training, no career progression and work stress. Apart from these, there is lack of coordination between the industry and the educators due to which both the students that enter the work field and the industry, experience a gap. Conclusions have been drawn extensive study. Table of Contents Chapter I Introduction 1.1 Background 1 1.2 Scope of research 1 1.3 Aims and objectives 2 Chapter II Literature Review 3 2.1 Turnover in the hospitality industry 3 2.2 Motivation in the hospitality sector 3 2.3 Recruitment and training within small hospitality firms 4 2.4 Lack of cultural sensitivity in managing people 6 2.5 Part-time employment in the hospitality industry 7 2.6 Work stress results in high labour turnover 8 2.7 Gap in hospitality education 9 2.8 Turnover at the managerial level 10 2.9 Lack of HRM Practices lead to high turnover 11 Chapter III Methodology 13 Chapter IV Discussion 14 Chapter V Conclusion 18 References 19 Chapter I Introduction 1.1 Background The business environment today is turbulent and challenging. The hotel industry is characterized by low job security, low pay, shift duties and limited opportunities for promotion (Wong, Siu & Tsang, 1999), no breaks, fluctuating demand, simultaneous production and consumption (Birdir, 2002). The sector offers a range of contradictions on a daily basis (Baum & Nickson, 1998). Human capital is considered the greatest asset in meeting these challenges and gaining competitive edge. However, attracting, managing and retaining talent in the hospitality industry is the biggest challenge. Competitive advantage relies on service quality and delivery of service quality itself has become challenging due to high staff turnover in the industry. The industry does realize that high turnover of staff ultimately results in high recruitment and training costs but despite all efforts they have not been able to bring about changes in the situation. High turnover indicates that staff is not sufficiently motivated to work for the organization. This in turn implies lack of commitment and loyalty from the employees. Since this is an issue that concerns the smaller as well as the larger firms in the industry, this requires an in-depth study. 1.2 Scope of research Various studies have been conducted in the past but most studies have focused on one particular issue or one particular region. This study proposes to be an umbrella study where all the various factors that cause high turnover will be looked into. High labour turnover is not a country-specific problem but is a global problem. This study would provide greater insight than is possible in one study because it would consider the various investigations already conducted by others in different countries and regions across the world. 1.3 Aims and objectives With the aim to understand the causes of high turnover of staff in the hospitality industry globally the following objectives are being set: 1. To review relevant literature to study the causes and consequences of high staff turnover. 2. To review the trends in both small and large firms. 3. To understand whether the problem of staff retention is common in all countries and at all levels of employees. Chapter II Literature Review Literature review helps to segregate what has been done from what needs to be done. Literature from different sources and pertaining to different nations has been reviewed. The benefits and pitfalls of employee turnover have been discussed followed by the different theories on motivation. Thereafter the causes of high labour turnover in the hospitality sector have been discussed. 2.1 Turnover in the hospitality industry Turnover in the hospitality industry is viewed as both positive and negative. It is considered problematic as it impacts the quality of service, results in high recruitment and training costs and the regular guests expect to recognize people and are likely to follow the favorite staff to another organization (Carbery, Garavan, O’Brien & McDonnell, 2003). It also affects the employee morale. Those who support employee turnover base their arguments on the notion of employability and the individual level of analysis. Because of turnover, the staff may be motivated to acquire skills and turnover is also stimulated by the presence of external labour and products markets. Lack of internal labour market forces may also urge the employees to seek employment elsewhere for instance lack of training initiatives. 2.2 Motivation in the hospitality sector Recruitment and retention of staff is about matching job characteristics with people’s motivation and satisfaction. There are several motivational theories that researchers rely upon but the two most prominent theories are Maslow’s hierarchy of needs theory and Herzberg’s dual-factor motivational theory (Martin, Mactaggart & Bowden, 2006). These have again been categorized as intrinsic or extrinsic motivators of hygienic factors and motivators. The basic needs like the salary, work conditions and job security have to be in order before people look for intrinsic motivators that include recognition, growth, responsibility or empowerment. The Scottish Tourism industry faces these challenges as the image and the perceived status of the industry is low. There is lack of professional career development and growth. However, these motivators are the same principally even in other segments of the hospitality including the hotels sector. Hong Kong has been restructured and is now more service-oriented. A study of Hong Kong hotel employees was conducted to determine their choice of job-related motivators (Wong, Siu & Tsang, 1999). This study was based on the ten job-related motivational factors developed by Kovach. The study found that top three motivators identified by these Hong Kong hotel employees were: opportunities for advancement/development, loyalty to employees and good wages. The emphasis on good wages can be attributed to the high standards of living in Hong Kong and the weak social welfare system. They expect respect and trust from the employers because of the guanxi in the Chinese culture but these appear to be specific to this region. They need to feel involved in the organization which not only works as a motivator but can increase employee loyalty and commitment. 2.3 Recruitment and training within small hospitality firms Small tourism and hospitality firms operate within the secondary labour market that is characterized by small firms with low capital to labour ratio, low productivity and small scale production (Jameson, 2000). The tourism and hospitality firms employ “informal and unsystematic recruitment methods” and the smaller firms in general rely on informal methods. The larger firms in the industry rely on formal methods and bureaucratic procedures by specialist personnel departments. However, Lockyer and Scholarios (2004), in their study of luxury country hotels and the city chain hotels, found that informal methods of recruitment are adopted by hotels of all sizes and there is no connection with candidate qualities. They did not find any systematic attempt in selection of front-line staff as no personality tests were conducted. The sources of recruitment as revealed by a survey conducted by Centre for the Study of Small Tourism and Hospitality Firms, Leeds are as follows: Source: Jameson (2000). While about 63% of the employers have a training plan very have allotted budgets and still fewer have a follow-up plan to check the effectiveness of training. This is much lower than the training programs of other industries. While on-the-job training was the most common method, external training was also provided but was through private parties and unsophisticated in nature. Hence the small firms in the hospitality sector have a very informal approach towards both recruitment and training. 2.4 Lack of cultural sensitivity in managing people Managing and understanding ethnically diverse workforce requires an understanding of their national cultures and this has been emphasized by Hofstede (Lee-Ross, 2005). Lack of cultural sensitivity and ethnocentricity has cost the American multinationals about $2 billion per year. These have been basically due to negotiation and communications failures. The hospitality firms do not incorporate cross-cultural training in their management programs. The Ritz Carlton group wanted to introduce a western-style total quality management system in their Hong Kong unit but failed miserably and experienced difficulties as they did not take into account the Chinese cultural values known as ‘guanxi’. Management styles in the hospitality sector are autocratic and unsupportive of workers. The demand for culturally sensitive managers is increasing because of international developments in the hospitality industry. Motivation at workplace affects productivity an output and hence motivation was used as the basis of this study. Lee-Ross conducted a study to compare the attitudes and work motivation between hotel workers in Australia and Mauritius. With the help of Hackman and Oldham’s Job Diagnostic Survey, the author studied two hotels of Mauritius and one from Australia, all being 200+ bedroom, 5-star resort hotels. This quantitative study explored the participative style of management. The study revealed that the two cultures are widely diverse and responses to motivation and empowerment would differ across the two countries. The study confirms that it is not possible to have one management approach and perspective for all eventualities. At the same time, all the workers in a particular location cannot be grouped together because individual differences, aspirations and requirements also have to be taken into account. Because of the heterogeneity of workers in hospitality locations, managers have to stretch beyond the theories and techniques to reduce high turnover, absenteeism and ‘burnout’. 2.5 Part-time employment in the hospitality industry Both leisure industry and retailing sector are service-industry firms and recruit a lot of part-time employees. This study was primarily undertaken to gain insights into the demand for Sunday opening and understand the trends for Sunday work force (Smith, 1995). Both retail and leisure sectors were compared to obtain information and plan. The personnel or the HR managers in each case were interviewed. The interviews covered issues like recruitment, selection procedures, terms of employment, employment structure, employee organization, labour turnover, labour pool, training provision, attitudes towards Sunday working and competition for labour. The study found that because of flexibility, lower cost and easy substitution of labour, part-time labour was encouraged. Part-time labour is preferred as it allows for greater flexibility to suit the changing demands of the customers. Part-time work is very popular in both the sectors under study. Women make up for about 87% of the part-time workforce. In the fast food sector casual workers with low pay is the cause for high labour turnover. Other reasons for high turnover include unsociable hours, long hours, lack of prospects, lack of job security, poor working conditions and no formal training. Sunday-only workers in both the sectors have the lowest premium pay and hence the highest turnover. Costa (1995) found seasonality and high labour turnover rates lead to acute shortage of service staff in the hospitality industry. “A better career structure, higher skill levels through improved training and the development of a better image” could to some extent help to over come the problem. Hotel profitability is affected by increasingly high labour markets for hotel staff and a consequent upward pressure on labour costs. The labour force picture has changed and there is continued job growth. Rising job numbers will reflect more jobs for fewer hours rather than a real increase in full-time employment. Hence for maximization of labour employers have to think in terms of flexible labour which implies that they should increase the number of part-time jobs so as to manage the high and low demand depending upon the season. A survey of 7 hotels in the Bahamas revealed that high wage was the greatest motivational factor but at the same time differences in age, organizational level and number of years in the same job position also influenced workers’ motivational preferences (Teare, 1995). Hence the managers need to be creative, offer monetary incentives and adopt differential motivational strategies for different groups of people. 2.6 Work stress results in high labour turnover High labour turnover in the hospitality industry has been attributed to work stress and the major stressors are “constant demands for pleasant and courteous service as well as poor management practices, particularly in the areas of communication, motivation and feedback” (Ross, 1995). The personality constructs of 133 employees from the hospitality industry from Cairns (North Queensland). were measured for their mood states, work stress responses, work locus of control scale, job competence and job aspiration scale. Age and sex were not associated with major mood states. High levels of cheerfulness were associated with high levels of perceived job satisfaction and low levels of miserableness. Such individuals scored high on job competence and job aspiration thus leading to low turnover. With the lack of motivation they tend to lose self-direction in the work operations and hence lose all enthusiasm to work. Lower levels of job competence lead to feelings of low state and thereby reduced aspirations and motivation to work. 2.7 Gap in hospitality education Hing (1997) studied various literatures on the hospitality industry and found that knowledge has to be constantly upgraded as the circumstances keep changing. Currently there is lack of acknowledgement shown for social, cultural, biological and physical landscapes in which tourism operates. High turnover results because there is a gap between the industry and student expectations of hospitality/tourism education, which has also been confirmed by Baum and Nickson who found students complaining after they returned from their internships or from a first job after graduation with the complaint that “it was nothing like you told us to expect”. Hing found that “training is the transition between formal education and the needs of occupation and employment”. Practical education is required to help students to equip students for employment and help them cope in the world (Baum & Nickson, 1998). Another perspective related to the graduate trainees in hospitality education is that career progression is never explored once the education is completed and they enter the work field (O’Leary & Deegan, 2005). The hospitality students have a very poor image of the sector and this may pose an even greater challenge in the future. There is a dissonance between education, students and the industry which is keeping students from pursuing a career in thief field thereby causing high labour turnover. In the UK most hotels have less than 40 rooms and hence the situation and events have to be dealt on a case-to-case basis (Baum & Nickson, 1998). Those that enter the hospitality industry for employment face practical dilemmas. No generalizations or standards approaches work here. This calls for individualized training after recruitment but the employers are skeptical of investing in training because the “staff are going to leave anyway”. Besides, the employers contend that enhancing their skills makes them more attractive to other employers. However, what the employers fail to realize is that training serves as a great motivator and can contribute to reducing the attrition rates. The front line staff are the poorest remunerated members of the workforce operating hours and conditions that would be unacceptable in other sectors. The employers justify that they have low skills and this results in low pay, high turnover and consequently recruitment problems. Empowering the front staff can help increase motivation but the staff who are to be empowered are the least equipped to take the responsibility. Hence this becomes a vicious circle in the hospitality industry. Another problem arises because in developed nations like Australia, Europe and North America, there is a high degree of immigrant labour. They come from cultures where operating independently and accepting authority is a new experience for them. They do not get the right remuneration which can work as an incentive to take risks. 2.8 Turnover at the managerial level While most studies have been conducted to study the causes of the high labour turnover of the staff at the junior level, Birdir (2002) conducted a study to investigate the turnover of General Managers at hotels and the root cause behind it. All the GMs that participated in the study had over 21 years of work experience and were in the age group of 42 plus. Manager-owner conflict was the major cause why GMs changed property. The owners tried to intervene in the working of the GMs which was not liked by the GMs. The other causes include moving to a better property or sale of the property to another investor. Hotels employed a new GM every 2.5 years. Such high turnover of GMs can have a negative impact on the hotel’s performance and profitability. Training and development of the managers as well as the owners is important apart from encouraging a more professional work environment. This study focused on the GMs from five-star hotels in Turkey. Carbery, Garavan, O’Brien and McDonnell (2003) however found that managerial, turnover is much less than line staff and attribute this to more dedication on the part of the managers. Besides, the managers have more education, experience and training before starting their careers. However, pay, gender, marital status, hotel size, and hotel quality do influence managerial turnover. Managers are more concerned with their career issues and wish to advance their professional status within the industry. 2.9 Lack of HRM Practices lead to high turnover The HRM practices in the hospitality industry are different from what is generally observed, found Lucas (2002). This study was a comparison of the HRM practices in the hospitality sector and other sectors in Great Britain. Even though the management prefers to consult directly with the employees, the employees’ participation and involvement is not found. Team working is also not practiced. At meetings, employees are not given time to ask questions or express their views. Recruitment methods are informal and personal recommendations are given importance. Personality and attitude tests were not employed by the employers. Pay was found to be management driven and the sector employees were paid far less than that in other sectors. Nevertheless, the study found that employees display an overall impression of job satisfaction in comparison to other sectors. They feel more secure in their job, have enough time to complete the job and are satisfied with the amount of influence they have over their job. The management approach is highly individualized and controlling giving them little space to unionize. Another study to compare the HRM practices in Barbados hotel industry and the UK revealed that HR practices were more prevalent in Barbados than in the UK (Alleyne, Doherty & Greenidge, 2006). HR practices comprise of functions like selective hiring, extensive training, and employment security, diffusion of information, team working, reduction of status differences, and performance related and incentive pay. The ‘best practice’ approach stresses the importance of building employee ability through the right recruitment an selection process but that works fine in an individualistic society like the US and cannot be applicable in all cultures. The survey of hotels in developing and developed economies revealed that Barbados scores higher than UK in recruitment, selection, training, job design, communication and consultation. The HR specialists in the Barbados hotels are more qualified and more supportive of the staff. However the data of UK was ten years old at the time of the study and the situation could be different if both countries were studied during the same period. Chapter III Methodology Any research is based on facts and data collection and hence reliability and validity become important. The choice of research method depends upon the purpose and subject of research. Both qualitative and quantitative methods of research have their own advantages and disadvantages. Qualitative research process provides in-depth understanding of any subject under study relies on the direct experience of human beings as meaning making agents in every day lives (UTAH, 2009). This process uses multiple methods like case studies, qualitative interviews etc for primary data collection. Secondary data research forms a part of qualitative study. Literature review is data collection through secondary research process and permits to collect data quickly and easily (Obenzinger, 2005). It helps to understand the strengths and weaknesses of the existing study. It allows the researcher to gain in-depth knowledge of the subject from different perspectives which may not be possible or feasible for a single study or through primary data collection. Since ample literature is available it is not considered necessary to collect fresh data. Secondary research is sufficient to help understand the causes of high turnover in the industry. There is a vast amount of literature available on the subject under study and hence only the most significant texts have been selected. This selection of literature itself implies a process of evaluation and prioritization. This has been considered sufficient because several aspects have been considered and as per Feurer and Chaharbaghi (1995) data from secondary sources generate new ideas through reflection or knowledge integration. Chapter IV Discussion Studies conducted in different countries have been looked into and the literature suggests that high turnover in the hospitality industry is not country specific. It is a worldwide phenomenon. Literature from different sources and pertaining to different countries has been reviewed. Contrary to the normal belief, there are some that feel employee mobility is good for the sector. While the disadvantages of high labour turnover are common knowledge, the advantages that have been highlighted are that both the employee and the organization would be alert and keen to enhance skills. However, others challenge this phenomenon as it is a vicious circle. Employers are not keen to invest in training knowing that employees will leave soon and the employees leave because they are not provided the necessary training. As per Maslow’s hierarchy of needs the basic needs have to be fulfilled before an individual demands the higher needs fulfillment. These basic needs comprise of high wages, work conditions and job security and unless these are fulfilled the other needs like growth and development, rewards and recognition or empowerment are not sought for. This study which has taken into account hotels and tourism firms from nations like Hong King, Turkey, Barbados, Australia, and UK, finds that the reason for high rate of attrition in the industry is the same everywhere. The pay scales are generally low compared to other sectors. The first and most important function which needs attention is the process of recruitment – whether in the small firms or the larger hotels. The recruitment process is informal and unsystematic; the personality tests are mostly not carried out and even if they, they are insufficient. The prime source of recruitment is WOM which implies that friends or associates of those in employment. Training has already been discussed above – firms are not keen to invest in training as they fear employees will leave soon. This is because studies have demonstrated that on an average, employees were not more than a year with that unit when the study was conducted. Lack of cultural sensitivity by the managers has also been a major reason. This is especially important because due to globalization many hotel chains have overseas units and workforce diversity. Knowing the local culture and its nuances are very important for the managers who need to be trained in cross-cultural management. At the same time, the individual differences have to be kept in mind because even from the same cultural group, people may not respond in the same way because of individual differences. The hospitality industry is highly seasonal due to which many hotels employ part-time labour. Labour flexibility and part-time labour while beneficial to the unit, the pay scale is very poor which again encourages labour to switch jobs for a small increase elsewhere. High age can attract labour to this labour market which ultimately benefits the employer. The hospitality industry is very labour intensive with long working hours and unsociable hours of working. This is the nature of the industry and is unavoidable. This leads to work stress while work stress also arises due to low levels of motivation, low levels of job competence and job aspiration. Service has to be provided round the clock and hence the nature of the industry cannot be changed. If the firms have to remain sustainable and competitive, they have to provide service. So the alternative is to ensure that employees do not experience work-related stress. To remove the work stress motivators are required and these motivators the intrinsic motivators after the fulfillment of the basic needs. Stress reduction programs may turn out to be the right response to high level of absenteeism, reduced productivity and high turnover. Addressing the real job motivators is important as it could help employers to understand, motivate and retain employees better. Hospitality firms have to seek newer means of keeping the staff motivated like enhancing training programs, instituting rewards, recognition, empowerment and responsibility. The employees need to feel that they are needed. They want their opinions to be heard and their queries answered. These are a part of the HR practices that have to be developed in the hospitality firms. Another vital area that needs consideration as it is a major reason for high employee turnover is the education of the people that enter the field. Most graduates are disappointed with what they encounter and this gap between their expectation and the reality makes them use this field as a stop-gap measure. This calls for more comprehensive and hands-on training during the education stage and follow up measures after the training which would help the educators to change the course curriculum from time to time. Charting career progression may allow the educators to evaluate the course and include practical lessons. Employers need to work in close association with the Universities and educators. In fact there has to be a balance between the needs of the students and the employers. Turnover at the managerial level has also been studied and it has been found at this level also the turnover is high but less than at the staff level. The reasons differ at this level – while the wages remain as the main motive, other reasons include differences with the management or owners. Overall, the study suggests that the HR functions are not being strictly carried out at the hotels. They do have plans in place but these are not implemented. The industry has failed to attract the right talent because of the low pay scales, the long working hours and unsociable working hours apart from lack of motivation and training. The trend is the same in all countries and all level of employees and in all sizes of the firm. Chapter V Conclusion This was a qualitative study to understand the reason for high labour turnover in the hospitality industry. The objectives that were laid out in the first chapter have all been met. The first objective was to undertake literature review of the causes of high turnover. This has covered literature from several countries that has given rise to a global perspective on the issue. The second objective was to find out of firms of all sizes have similar problems. The third objective was to understand whether the problem of staff retention was common to all countries. This too has been determined that the problems and the functioning are no different in any country. There is no method that can be called unique and each method has its own positive and negative aspects. However, efforts have been made to make this study as comprehensive as possible Te limitation of the study are that most of the literature that has been collected nave studies that were conducted in the industry more than a decade ago. More recent literature might give a better idea of the current situation although it is expected that the same problems persist even today. The findings and discussion chapter has not been segregated to avoid repetition. . References Alleyne, P., Doherty, L., & Greenidge, D. (2006). "Approaches to HRM in the Barbados hotel industry", International Journal of Contemporary Hospitality Management, Vol. 18, No. 2, pp. 94-109 Baum, T. & Nickson, D. (1998). "Teaching human resource management in hospitality and tourism: a critique", International Journal of Contemporary Hospitality Management, Vol. 10, No. 2, pp. 75-79. Birdir, K. (2002). "General Manager turnover and root causes", International Journal of Contemporary Hospitality Management, Vol. 14, No. 1, pp. 43-47. Carbery, R., Garavan, T., O’Brien, F., & McDonnell, J. (2003). "Predicting hotel managers’ turnover cognitions", Journal of Managerial Psychology, Vol. 18, No. 7, 2003 pp. 649-679 Costa, J. (1995), "International perspectives on travel and tourism development", International Journal of Contemporary Hospitality Management, Vol. 7, No. 7, pp. 10-19 Feurer, R., & Chaharbaghi, K. (1995). Researching strategy formulation and implementation in dynamic environments, Benchmarking for Quality Management & Technology, Vol. 2 No. 4, pp. 15-26. Hing, N. (1997). "A review of hospitality research in the Asia Pacific region 1989-1996: a thematic perspective", International Journal of Contemporary Hospitality Management, Vol. 9, No. 7, pp. 241-253. Jameson, S. M. (2000), "Recruitment and training in small firms", Journal of European Industrial Training, Vol. 24, No. 1, pp. 43-49. Lee-Ross, D. (2005), "Perceived job characteristics and internal work motivation", Journal of Management Development, Vol. 24, No. 3, pp. 253-266 Lockyer, C. & Scholarios, D. (2004). "Selecting hotel staff: why best practice does not always work", International Journal of Contemporary Hospitality Management, Vol. 16, No. 2, pp. 125-135. Lucas, R. (2002), "Fragments of HRM in hospitality? Evidence from the 1988 workplace employee relations survey", International Journal of Contemporary Hospitality Management, Vol. 14, No. 5, pp. 207-212. Martin, A., Mactaggart, D., & Bowden, J. (2006). "The barriers to the recruitment and retention of supervisors/ managers in the Scottish tourism industry", International Journal of Contemporary Hospitality Management, Vol. 18, No. 5, pp. 380-397 Obenzinger, H. (2005) What can a literature review do for me? Retrieved online 11 May 2009, from http://www.stanford.edu/dept/undergrad/urp/PDFLibrary/writing/LiteratureReviewHandout.pdf O’Leary, S., & Deegan, J. (2005). "Career progression of Irish tourism and hospitality management graduates", International Journal of Contemporary Hospitality Management, Vol. 17, No. 5, pp. 421-432 Ross, G. F. (1995). "Work stress and personality measures among hospitality industry employees". International Journal of Contemporary Hospitality Management, Vol. 7, No. 6, pp. 9-13. Smith, D. (1995). "Sunday trading: an analysis of employment structures in leisure and retailing", International Journal of Contemporary Hospitality Management, Vol. 7, No. 2/3, pp. 57-63 Teare, R. (1995). "The international hospitality business: a thematic perspective", International Journal of Contemporary Hospitality Management Vol. 7, No. 7, pp. 55-73 Wong, S., Siu, V., & Tsang, N. (1999). "The impact of demographic factors on Hong Kong hotel employees' choice of job-related motivators", International Journal of Contemporary Hospitality Management, vol. 11. No. 5, pp. 230-241 Read More