High Staff Turnover - Contemporary Issue in the Hospitality Industry - Case Study Example

CONTEMPORARY ISSUE IN HOSPITALITY INDUSTRY: HIGH STAFF TURNOVER Research Student’s name Instructor’s Name Course Title Date Table of Contents Table of Contents 2 Abstract 3 Purpose of the article 3 Back Ground Information 3 Overview 4 INTERNAL FACTORS 8 Performance of the Organisation 8 The organisational culture 9 Job Characteristic 10 Employee Expectations 12 Employee Demographics 13 Gender 14 EXTERNAL CAUSES OF EMPLOYEE TURNOVER 15 Alternative Opportunities 15 Low Quality of Employees 16 Location of an Organisation 17 CONCLUSION 18 Abstract Purpose of the article Given the high requirements for the employees in the hotel industry, there have been trends of employees leaving their jobs for other service sectors such as the banking sector, aviation industry and other which are deemed to offer better and more fulfilling returns for the employees. The hospitality industry is faced with an enormous challenge of maintaining its employees. The social changes that are taking place in the society today have made the society to move away from the traditional way of looking at employment and going after the pay alone but this has expanded to include things such as job satisfaction which did not matter in the past. All industries have a role to play to ensure that the employees working in the sector are able to enjoy job satisfaction. The purpose of this article is to identify the causes of high employee turnover in the hospitality and to offer practical solutions that can be applied by the human resource departments in the hospitality to help retain their employees. The hospitality industry is plagued with a high employee turnover rate. The situation can however be redeemed by identifying the key motivating factors behind this high turnover rate and applying them in the industry. Back Ground Information Hughes (2008), states that the hospitality industry is classified as one of the most labour intensive sectors of the economy. The cost of labour on the goods and the services produced is usually very high with the labour cost having a 40% input in the final cost of the goods. For this reason, to be able to offer their goods and services at a reasonable price, remain competitive in the industry hotels managers need to have a firm grip on the cost of labour in their organizations and regulate unwarranted employee turnover. The major issue of concern in the management of the businesses in the hospitality sector is that many have developed the tendency of overlooking the cost of employee turnover. This is attributable to the fact that the business documents such as profit and loss accounts does not incorporate the matter of employee turnover and neither are there any invoices submitted to a give a monetary figure to the turnover effects (Gupta, 2001). Notwithstanding though, employee turnover has significant cost of the business which can easily be overlooked. The industry is also faced with an enormous challenge given that the labour market has a deficiency in the number of qualified personnel (Blomme, 2009). This puts the management team between a rock and a hard place when it comes to the replacement once some employees leave the organization. Determining the causes of the enormous employee turnover rate is of the essence for those who wish to put an end to the menace and to reduce the labour costs it places on the organizations. This will also go along with the need to increase employee satisfaction and ensure retention albeit of the most skilled workers in order to help build brands in the industry. Overview There are various issues that contribute to the high employee turnover in the hospitality. The performance of the organisation is one factor that will determine the working environment and hence determine whether the employees want to stay on their jobs or not. Another factor which is very important is the organisational culture which also has a bearing on the working of the employees. The characteristics of the job determine the uncertainties of the specific jobs and the stress that come with it. The employee’s expectation and employee demographics also have a bearing on how he will perceive the job and whether or not they will continue doing it. Other factors such as other alternative opportunities, the location of the organisation ant the quality of the employee are some of the other factors that determine employee turnover in the hospitality industry. JOURNAL ARTICLE TOPIC: What are the Factors that Lead to High Employee Turnover in the Hospitality Industry? The rate of employee turnover is given by the ratio of the workers that leave an organisation at a given period to that of workers that remain within the organization. These changes in the number of workers are due to discharge, resignation, recruitment and leave. The hospitality sector is classified among the fastest growing economic sectors of the world. The industry still experiences major challenges in attracting and retaining workers who are skilled and dedicated to their jobs. Players in the sector agree that this has crippled attempts to create brands for many businesses and has led to the perception that is not possible for someone to build a career in the hospitality industry. This harms the reputation of the industry which is not a good thing in consideration that the businesses need to keep making profits and remain competitive with other service sectors (Eisenhardt & Graebner). Studies have shown that the industry experiences a high staff turnover of about 50-100% which is double what is regarded as best practice which places employee turnover at 26.5%. At a turnover rate of 50% and above, the business has to replace more than half the staff annually. There is a variation of the employee turnover with some regions having a turnover of more than 100% which means that an organization is bound to change the whole team of its workers in a given year (Aronson, 2007). This is a clear indication that the hospitality industry has the highest turnover as compared to other service industries. The first article that has been used for reference in writing this paper was authored by a group of scholars from The Pennsylvania State University. The team comprises of experts in different areas such as psychology, hospitality management, labour, human development and also family studies. The focus of the research is the impact of family issues in the hospitality industry and how the first time employees and the managers perceive the issue. The perception, the role and effects of spouses in the issue is also evaluated (Galansky, 2001). One of the objectives of the research was to find out the major causes of stress among the players in the hospitality industry. The results pointed to emotional control and the huge working hours as the major cause of stress. The findings also indicated that the existence of coworker support, work schedule flexibility and friendship networks ranked highly as among the important factors in enhancing employee retention (Aronson, 2007). The major expectations of the entrants were that the job would require long working hours and being on call. Even in the situation where employees come in with the real picture of the expectations of the industry, there is still some deficit in the approach of issues so as to ensure that they are able to maintain a balanced life juggling between their job and their social life (Walsh, 2007). This paper forms the basis for my work as it gives a bearing on the issues that lead to high employee turnover in the hospitality. The suggestion that are given in the paper will come in handy in ensuring this work is of value to the hospitality industry and helps to add value to the players in the hospitality industry. Having a paper with applicable suggestions is important as it raises the significance of the paper. The second paper I used in the writing of my work was coauthored by three different experts in the hospitality industry. The focus of the paper is the effect of low remuneration of the employees and the extended working hours on the employee turnover. Many people leave the hospitality industry for other better paying jobs in other industries. Notwithstanding the other industry not only offer better pay but also more require lesser working hours of the employees. The paper will give an important dimension and ensure that the issues of compensation and working hours are well addressed. The paper also offers institutional based policy changes that can be applied to ensure that there is a win-win situation for both the organisation and the employees (Withiam, 2007). Some of the policy changes that are discussed include the application of job enlargement and job enrichment policies. There is also the need to establish a well rounded approach to the issues of employee turnover instead of focusing on the benefits of the organisation. Having a long term measure in place will help to resolve the issue once and for all. Given the recommendations that the paper puts across, the applicability of this paper will be more enhanced as the aim is not only to build an academic body of knowledge that does not ensure betterment of the hospitality industry (Scott, 2008). INTERNAL FACTORS Performance of the Organisation An organisations performance creates the working environment. Employees take pride in the organisation that they work with. Research has shown that an organisation that is in a state of economic difficulty increases the chances of employee layoffs (Iverson, 1997). Due to such circumstances, the workers seek other employment opportunities. There are many ways of rating an organisation’s economic position. For any listed organisation, the price of the shares could be an indicator of the economic position and hence be an indicator of an impending layoff which could spark a high employee turnover (Hughes, 2008). Other methods of evaluating an organisation's performance that is specific to the hospitality industry include the star-rate of a hotel, the flow of guests in a hotel and even reduction in the sales. It is true when we say that employees in the hospitality industry are not oblivious to these issues and hence bound to take necessary precautions if they see any indicators of losing their jobs. For this reason the employees even look for other employment opportunities so that they can be able to secure their living before they are laid off by their current organisation. When trying to address turnover issues that emanate from the economic situation of the organisation, there is a big problem because many economic factors are usually beyond the reach of the organization. This leads to one of the inevitable turnovers that the organisation has to just bear with. However other hard decisions that are meant to cut down the cost of operations are supposed to be reached first before the organisation results to employee layoffs. The organisational culture Some writers describe this as the organisation’s personality. This culture defines the beliefs and values that are shared in the organisation. It is this cuture which guides the behaviour of the employees, determines their attitudes of the organisation employees and also shapes the expectations of the employees. This culture guides the interaction between the employees, the management and other stakeholders (Withiam, 2005). The importance of the organisation culture cannot be overlooked as it is forms the image of the organization, a factor that is vital in the level of employee satisfaction with the job. Other elements of the organisation culture that are important in the context of employee turnover include the existing reward system of the organization, the leadership strength of the management team and the sense of belonging that the organizations elicits in its employees. These play a big role in influencing the decision to quit or not to quit their current jobs. The organisation is charged with the responsibility of developing the organisational culture and ensuring that the culture is well adopted within the organisation (Churchward, 2002). The organisation should develop a culture that is bound to motivate the employees to aspire to keep their jobs so that they can continue to be associated with the organisation. This will help to reduce the employee turnover that emanates from lapses in the organisational culture. It would be advisable for any organisational to adopt non-expensive methods of curbing employee turnover would include adoption of policies such as open door policies. This is a situation where the employees enjoy free interaction with the management team. On its applicability, differs from the usual practice where the management team is housed in different offices which at most times are inaccessible to the employees. Once an open door policy is established there is bound to be enhanced communication between the management and the other employees. This will make the employee feel as part of the organisation that they work for and hence reduce the chances that they may quit their job (Eisenhardt & Graebner, 2007). In addition to this, the employees enjoy the factors such as having their issues listened to and sorted out to their satisfaction, a factor that further enhances the chance of remaining in their jobs. Job Characteristic The situations on the ground in the hospitality industry, the employees are usually confronted with much uncertainty as they carry on their daily roles in the organisation they work with. The level of uncertainty has a huge bearing on the resultant stress from the job. A job may be characterised as being highly controlled, monotonous and routine. One research argues that the responsibility of the employees towards the clients does not change; they are expected to act in a professional manner and project appropriate emotional reaction despite the circumstances they face (Iverson, 1997). This has been described as an emotional labour by some scholars terming it as the need to display the expected emotions during the offering of services. This has a big impact on the psychology of the employees and has a big input in the decisions they make regarding their job. Among the decisions made by the employees include whether to leave their current job for the other. Based on their characteristic, some jobs are deemed to be more attractive when compared to others. The characteristic that determines a job’s attractiveness include the perceived importance, the risks involved, whether it is repetitive and the jobs ability to elicit a feeling of accomplishment in the employee. The status that an employee obtains in the job has a huge bearing on the desire to keep it or not. An organisation that is keen to reduce the employee turnover will do well to invest in taking care of the employee’s psychology. Granted, all jobs take a toll on the employees (Eisenhardt & Graebner, 2007). The way the emanating stress of the job is handled, is bound to raise satisfaction of the employees in the job. Once the stress from the job is well handled, the employee turnover is bound to be greatly reduced. An organisation can redefine the job characteristics by adopting job enlargement policies. This helps to motivate the employees by reducing specialization and repetition of the same duties. The employee’s job is horizontally loaded in an attempt to add more duties for the employee. This ensures that the employee not only overcomes boredoms which emanates from repetitive work but also is able to acquire more skills that can be of use to the organisation at a later point in time. When a job is enlarged, an employee gets more duties added to his work such as supervising a team of fellow workers. This comes with the benefit of an employee getting the feeling of job satisfaction. This is a motivating factor that can help to keep the employees in their current jobs and hence reduce any unwarranted turnover. To be able to achieve this, the human resource professionals working in the hospitality have to be very creative to come up with packages that will enable the employee feel needed as it calls for balance since when overdone the process of job enlargement can leave the employee feeling overwhelmed by the new duties and hence cause them to leave their jobs. Employee Expectations When one is being employed each individual employee gets into the organisation with some level of expectations. The point of entry into the job, the employee’s expectations is usually determined by his or her knowledge of the job opportunity that they are taking. Any lapse in informing the employees about the job creates a loophole for developing unrealistic expectations. These unrealistic expectations are never met once the employee joins the organisation’s since most of them are beyond an organisation’s capability. The major problem here is the fact that an ill-informed employee cannot be able to establish whether these expectations are unrealistic and hence continues to harbor the thought and hope that they will be fulfilled. On realizing that their expectations are not met, whether realistic or not, the employee decides to quit and hence adds to the high turnover ratio. This can however be counteracted by being open at the time of hiring employees. Many organisations tend to be very cosmetic with the description of the organization in the job advertisements hence making the employee develop an unrealistic image of the organization (Eisenhardt & Graebner, 2007). Some research has shown that this can be however prevented by helping the employees to understand the abilities of the organisation that they have joined and the extent that the organisation is willing to go to so as to ensure that the employees are satisfied with their jobs and what factors sets these limits. Once the employees fully understand the organisation that they have joined, they are bound to develop realistic expectations and hence increase their job satisfaction. This goes a long way in ensuring that the employees remain in the jobs that they hold. According to research findings, at the time of employment some entrants were seen to have an idea of what the industry expects of them. The findings further indicated that despite this knowledge the employees still harboured unrealistic methods of approach in dealing with the expectations of the industry. For example some indicated that their jobs would require them to travel a lot a factor that may hamper the raising of a family. Despite this knowledge of the expectations, the solutions that the employees could conjure up were that they would probably postpone the issue of raising a family later. Once they got to the job they later realise that this easier said than done. For this reason some end up quitting their jobs on the basis that they are not able to take care of their families. The best way of reducing employee turnover that emanates from such reasons is to ensure that even those employees who seem to have an idea of the industry’s expectations are well guided in order to ensure that they are well placed to handle the expectations once they get to the jobs (Page, 2009). An organisation can even go further to invest in a sessions of planning to help the employees to deal with the work pressure and at the same time handle their social issues. This will help to reduce the employee turnover. Employee Demographics To be precise, biographical characteristics of the workers have a huge bearing on the employee turnover. Some of the biographical characteristics of the employees include drug use, previous employment history and other lifestyle specific to the employee. There are also what scholars have described as personal factors such as family matters, the desire to get more skills and other personal development issues. These traits have an input on the performance of the employee and his or her productivity along with ethical behaviours such as absenteeism, substance abuse while at work, embezzlement of the organisation’s money and sabotage of duties. These traits and play a role when an employee is faced with the decision whether to quit their job or not. For example, an employee who has a history of absenteeism from work and sabotage is likely to repeat the same behaviour and hence increase the chance of turnover (Sigglekow, 2007). To prevent any employee from quitting their job due to such issues it is important that the employees are screened at the entry point into the organisation. This will help to avoid the employment of such people or even in the event that they are employed, the organisation would be in a position to handle them with the care that they deserve to alleviate the possible consequences. This would in turn help to reduce the employee turnover with a great margin. Gender Studies have shown that women workers tend to leave their jobs than their male counterparts. This is also true for all the industries including the hospitality industry. The factors that contribute to this turnover is the roles that women play at home such as doing house chores and taking care of their children. Women also end up taking some time off their jobs as a maternity leave and the issues is further complicated given that most women have also declined any offers to resume their previous jobs after they have babies. When wage comparisons were done based on the gender of the employees, it was found that most women are usually paid way too little as compared to their male counterparts. The pay discrepancy was evident at all levels of employment from the junior staff to the top management team (Aronson, 2007). The existence of some of these factors coupled with inflexible work schedules requiring employees to work over the weekends or on night shifts, contributes highly to women leaving their jobs hence raising the employee turnover. This can however be rectified by ensuring that there is balanced pay among the employees despite their gender. Blomme (2009) asserts that an organisation would also do well in handling each individual employee based on the circumstances that they face. This will enable flexibility at a personal level and ensure that the female workers in the organisation are able to work and at the same time take care of their duties in the society without feeling pressured. By doing this an organisation will benefit from a reduced turnover which go a long way in enabling it to retain its best staff and hence continue giving quality services for the customers. EXTERNAL CAUSES OF EMPLOYEE TURNOVER Alternative Opportunities The economic state of a given region may favour one organisation over the other. This makes the favoured organization to enjoy better returns and which in most cases translates to better pay for the employees. This also translates to more growth and hence a need to raise the number of the staff working for the organisation. The unfavoured organisation tends to struggle financially and hence they end up having poor remuneration packages for their staff. The hospitality sector does not exist in isolation (Blomme, 2009). There are other service sectors that require employees with much similar qualification to those that are employed in the hospitality sector. The issues of concern here is that despite there existing other service organizations that compete for the same labour force, the conditions of operations vary from one organization to the next. For this reason an employee will leave one organisation which offers better compensation without any regard for whether it is in the hospitality industry or not since the point of focus here is usually the wage that the employee gets (Walsh, 2007). In such a vibrant economy, employees will always find alternative opportunities that are more rewarding as compared to the one that they are holding. In most cases the general feeling among the employees is that they are worth more than what they are paid. This creates a natural disparity between what employees imagine they should be paid and what the organisation actually pays them. When this difference is high and an opportunity occurs, employee turnover will easily follow suit. The pay in this case actually defines the salary or any other form of compensation that an employee gets in exchange for the services that they render. The pay is very important since as viewed by many employees, the pay or compensation is their strongest connection with the organisation that they work with. An organisation hence needs to compensate its employees with the highest possible wage in order to facilitate their stay and hence reduces the percentage of employee turnover. Low Quality of Employees Some researchers argue that tghe quality of employees is usually determined by their academic level and their work experience (Withiam, 2007). This is one of the major factors that influence the employment of different individuals in all sectors of the economy including the hospitality industry. Lack of skilled and well trained employees, means that there are low levels of employment rate. This makes the skilled worker in that region to be highly valued due to their skills and there are many job opportunities for them. This has an end effect of raising the employee turnover wince there are many jobs in the market hence a skilled worker can easily hop from one organisation to the next one and be assured that they will secure a job which in most cases is usually better paying and offers attractive rewards. Studies have shown that in any economy where the unemployment rate is at the level of five percent or lower there exists difficulties when employers seek to fill the vacant positions. The situations further complicated when there exists a low supply of skilled and experienced employees to help fill the vacant positions. An organization can ensure that it does not lose its employees to other organisations on the basis this factor. This can be easily averted by ensuring that an organisation offers the best reward systems in the industry which will help ensure that the skilled employees do not go for other jobs since they are available. An organization can also secure their employees by ensuring that they sign binding contracts to continue working with the organization for a period of time (Hughes, 2008). Once the contract is signed, the employees refrain from unwarranted resignations and hence reduce employee turnover rates. Another way of dealing with the problem of decreased skill level in the industry is the use of good polices in the organization that allows for job enrichment. This is a situation where employees are rewarded by being granted more responsibilities that makes them move up the corporate ladder. This allows for the highly skilled employees to be retained in an organisation. The highly skilled employees help to train the newly employed people and impart in them the skills that are important for one to be able to carry out their duties with diligence in the hospitality industry (Chikwe, 2009). Through such a program an organisation is able to raise the level of skills of their employees and at the same time curb unwarranted employee turnover. Location of an Organisation Even the location of the business has an influence on the living cost of the employees. For example, employees of a hotel located in a town are bound to find living cost relatively cheaper as compared to those who work in a resort destination which is located away from the major towns (Page, 2009). For this reason the cost of food, apartments and the transport of the employees is usually high. The employees working in destination resorts are forced to leave their homes. This makes it difficult for them to even visit their families when they are given time off from their jobs. Many destination resorts are also seasonal and hence operate by hiring seasonal employees especially in the summer periods. For this reason there is a lack of many social benefits of the jobs. When all these factors come into play, there is a tendency of employees quitting their jobs and hence raising the rate of employee turnover. An organisation is hence faced with the challenge of ensuring that the employees’ welfare is well taken care of in order that they are able to improve the living standards of the employees. Some of the measures that can be taken include building cheaper accommodation for the employees. CONCLUSION High employee turnover in the hospitality industry has a multi-factorial causes. The causes can be tackled by establishing good and reliable policies in the organisation. The involvement of employees in the daily running of the organisation can help curb unnecessary employee turnover which stands in the way of building brands in the hospitality industry. The organisation cannot ignore the employee turnover rate as this has financial implications given that the hospitality industry is a labour intense industry (Stephen, 2010). The cost that an organization incurs as a result of employee turnover can only be addressed through measures that are concerned with the employment issues and through the human resources aspects, not any measures such as advertising as many players in the hospitality industry tend to use. REFERENCES Aronson, M. (2007), "Clearly defined niche brands prevent confusion", Hotel & Motel Management, 222 (1), pp. 1414. Blomme, R., van Rheede, A., & Tromp, D. (2009). The hospitality industry: An attractive employer? An exploration of students' and industry workers' perceptions of hospitality as a career field. Journal of Hospitality & Tourism Education, 21(2), 6-14. Chikwe, A. C. (2009). The impact of employee turnover: The case of leisure, tourism and hospitality industry. 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