Employee Turnover in Hong Kong Hospitality Industry - Case Study Example

Chapter 2: Literature Review 2 Chapter introduction The present study is related to the existing of hotel industry. The basic resources for this will be available from organizational handbooks, reports and reviews of the hotel industry in Hong Kong. The data and trends will have to be analyzed and reviewed keeping this in the background and the research studies and journals related to the subject to understand employee turnover phenomenon. Available information from the Internet has also been incorporated in the study after checking its authenticity. This has provided a greater variety of sources to the study which can be examined from various other angles. 2.2 Definition of employee turnover Employee turnover is said to be an increasing phenomenon as with greater availability of jobs, increased ability and ambitions of people, the trend for job hopping has increased (Khatri, 1999). Turnover implies employee leaving the present job voluntarily and taking up other jobs (Jack Black, 2002). Turnover is not resignation which involves end of employment by the employer for reasons such as a fall in profits of the company, bankruptcy or merger. Thus, employee turnover is taken up by the employee rather than the employer. Employee turnover is dependent on the type of business and the economic state of the area in which the company is operating. Thus where there is an economic boom, turnover is said to be much greater than in areas where there is no growth or which are undergoing the economic down turn (Employee What, 2002). The phenomenon of employee turnover is considered as one of the natural outcomes of conduct of business in modern organizations. Thus it is said that achieving zero percent turnover is not practical and should not even be attempted in today's rapidly changing employment environment (Branham, 2000). It is also said that some turn over may be desirable as it would enable a shake out amongst the employees avoiding bunching up of a large number with similar pay scales, salaries and capabilities making a pyramid (Branham, 2000). To retain all such employees will be extremely expensive for the organization. New employees are also said to bring in fresh ideas, approaches, abilities, attitudes and also prevent the organization from remaining stagnant (Branham, 2000). 2.3 Brief introduction of Hong Kong Hong Kong is said to be a very vibrant metropolis which has a life and dynamism of its own making it one of the unique cities in the World. It has a typical Chinese culture which has remained unaffected by British influence over the years (Hong Kong, 2006). It offers a mix of the modern and the ancient, the Oriental and the Western and therein lies its charm. At the same time the employment environment in Hong Kong follows a very flexible tendency. Thus employees in Hong Kong are not inhibited by generally accepted norms of loyalty and life long service which is characterized by some Eastern management cultures such as the Japanese (Hong Kong, 2006). 2.4 Employee turnover in Hong Kong Hong Kong job market has been continuously improving since the middle of 2003. This has been very dynamic and there has been greater availability of jobs in Hong Kong over the past few years (HR Service Providers Directory, 2005). There is a link between job growth and turn over of employees as seen from the data published in the HR Service Providers Directory 2000. The quarterly turn over rate as per the Directory, HK/HRM 2005 First Quarter Survey on Manpower Statistics has continued to rise which is also in conformity with vacancy rates which have also shown an upward trend due to lack of suitable candidates. In the first quarter of 2005, the overall turnover rate was .62 % higher than for the previous quarter at 2.99 %, and almost 1 (.92) % higher than the same period of 2004. Figure 1 at Appendix 1 refers (HR Service Providers Directory 2005). The turnover in the hotel sector was however slightly lower than the overall trend at 2.77 %. Figure 2 at Appendix B refers (HR Service Providers Directory 2005). Since these are quarterly rates, the total annual rates will be quite high touching between 10 to 12 %. This brings out the overall relationship between high rate of growth and turnover. 2.5 The causes of employee turnover The study will divide the reason of employee turnover to two part in order to explain clearly. Above of definition of employee turnover has said that the phenomenon usually take place in boom economic place and begin with employee. Therefore, the status of hotel industry in Hong Kong will be describe in the following. 2.5.1The booming in hospitality industry in Hong Kong Hong Kong has a high growth tourist cum business tourist economy. It acts as a destination liked by both global and Asian visitors going to Main Land China for business as well as those from the Chinese main land visiting other countries or coming to Hong Kong. It has excellent shopping malls and dining plazas which attract a large number of tourists every year (Tourism, 2006). Disney Land Hong Kong is an added attraction which is resulting in a flood of tourists from the Chinese Main Land to Hong Kong (Tourism, 2006). This is reflected in the data on inbound tourism in Hong Kong in 2002 which was a very strong Hong Kong $ 91.8 billion. In 2005 this has expanded even further to more than HK $ 97.8 billion (Tourism, 2006). Hong Kong has thus began to be considered as the most booming hotel market in the World. The tight room situation in the early 2000's is now giving way to greater availability with a building boom overtaking the city (Joseph, 2005). Being a gateway to China and the surge in tourism with the opening of the Walt Disney Company's Hong Kong Disneyland in September 2005 has led to addition of 30 new hotels to the city leading now to a fear that there may be surplus accommodation. That the boom is for real is evident with a large number of established hotel companies such as Four Seasons Hotels Inc, Disney's and Mandarin Oriental International planning to add on facilities in the city in the present boom (Joseph, 2006) With over 20 million tourists from main land China planning to visit Hong Kong every year particularly to visit Disney land, the tourist boom is likely to be sustained. The number of rooms is set to increase by 37 percent by mid 2008 to 56,816 rooms as per the Hong Kong Hotel Association. The total capacity of the city is said to go up to 60,000 hotel rooms. The number of hotels is also likely to increase from 101 to 131 an increase of over 30 percent (Joseph, 2006). Despite the increase in number of rooms and the higher tariffs, the high occupancy rates at 83 percent is indicative of continuance of the hotel boom in Hong Kong. One of the major outcomes of the tourist and hotel boom in Hong Kong is the change happening in the hotel industry with a tremendous turn over of man power in all departments. A large number of staff is also being infused from outside but a majority is seeing a shift within Hong Kong, between the large number of hotels in the city. (Joseph, 2005). This churning is a general outcome of the boom in the hospitality industry and is being considered as a backdrop to the study. As the above factor, the vacancy in hospitality industry has been tensioned. 2.5.2 The action of employee and manager job hopping is not a very complex thing but a rather simplistic urge of people because they get a itch to try novelty or are keen to do something which is different from what they are doing at present (Khatri, 1999). Some people also suffer from the, "hobo syndrome", which is a perpetual itch to try out new and different things which results in the case of jobs to changing them frequently (Ghiselli, 1974). These are the instinctive job hoppers who do not undertake the switch because of any logical thinking but do so merely on inkling, a sudden impulse to shift for reasons which cannot be easily explained logically. (Khatri, 1999). This tendency of impulsive action which causes a turn over is again supported by what is becoming common, the turn over culture which makes job hopping accepted in the society and circle in which we are living. Turn over culture is the shared view by members of an organization that influences their decisions in job movement. Some employees who have not changed their jobs for a long time may feel the need to do so due to the turnover culture. (Khatri, 1999). Management and human resource specialist, (Branham, 2000) has indicated that available research has revealed that money alone may not be the criteria which forces employees to leave their jobs and join other firms. It is said that talented people want to be paid equitably with those who are in similar positions and doing similar work as far as the job they are doing is interesting and meaningful. Good working conditions and management practices are the other factors which help in retention of workers. (Branham, 2000). Managers are said to hold the key to keeping the talent as 50 percent relationship of an employee is based on his association with the manager. Some organizations feel that turnover rate has increased as employees are lacking a direct relationship with the line managers having been frequently assigned to human relations managers for career management and other personnel needs. Thus a requirement to have a link between the employee and the manager is felt essential. To reduce job switch, some organizations are even reflecting the turn over rate of employees in the performance report of managers. (Branham, 2000). The key factor which results in reduction of turn over of employees is said to be the commitment of managers, particularly top echelon executives. (Branham, 2000). All these issues will have to be reviewed in the interview and questionnaire stage of research. Every day treatment of people is also said to be one of the reasons why people seek to leave as people feel that they are not well appreciated for their contributions. Apart from lack of team work, company's uncaring attitudes towards employees is also one of the reasons for low job satisfaction. Small issues as lack of appreciation for a job well done, or equity in giving a pat and bunching together the good and the bad boys also causes a number of people to seek a change of job. Positive reinforcement is thus said to be one of the key issues to prevent employee turnover. 2.6 Comparative Study Hotel Industry. 2.6.1 The hotel industry is said to be one in which the turn over is a traditional factor through out the World and is not just peculiar to Hong Kong. Thus in neighboring Singapore, the turnover is said to have been very high to the tune of 57.6 % in 1997. There were also some exceptional high rates of turn over which even crossed three digits. (National Productivity Board, Singapore, 1988). As has been indicated earlier, the hotel industry invariably suffers a loss in terms of productivity due to high employee turnover. In Singapore this has been over 10 %. (National Productivity Board, Singapore, 1988). 2.6.2 The Ritz Carlton. The hotel industry also suffered on turn over due to high cost of recruitment and poor quality of products and services in turn contributing to lower employee morale. Thus at Ritz Carlton at one time the turn over is said to have been 110 percent and was a common problem with other hotels as well. (Garrett, 1994). This created a major difficulty for the Ritz as it could not induce its managers with the typical Ritz culture. Ritz employed training as a medium for retention. This is said to have increased employee satisfaction and reduced the turnover from 110 percent to below 30 percent. A part of this effort of empowering the employees was authorizing them to spend up to $ 2000 on a guest who is not happy with the hotel and let him leave satisfied. (Garrett, 1994). Employees can also post ideas on cutting costs or improving the service on the bulletin board. A number of money saving ideas came up for which the employees were also suitably compensated with cash bonuses. (Garrett, 1994). 2.6.3. Marriot Hotels. Marriott Hotels had been facing problems of employee turnover to a much lesser degree as per J W Marriott Jr, in a speech given by him during a Foreign Policy Association Dinner. (Marder, 2006). The basic philosophy of the Marriott's has been to take good care of the employees who in turn are expected to take good care of the guests, thereby ensuring a return visit to the hotel. One employee friendly measure by Marriott in Hong Kong had been to work five days a week as against the six days a week practice prevalent in Asia then. (Marder, 2006). This was undertaken against very stiff resistance from the hotel industry in Hong Kong as well as other industries who worked six days a week. However these policies resulted in 50 percent of Marriott's hotels general managers and many senior executives being from those who joined the group at the entry level, reflecting a very high percentage of retention at the higher level in the group. (Marder, 2006). 2.7 Conclusion Literature Review A review of the literature above would reveal that there are a number of factors which determine the response of turnover by employees. Three criteria which have been commonly observed will be considered during the study. These will be satisfaction level, organizational commitment and job hopping. For measuring satisfaction level generally three issues are discussed. These are as follows:- (a) Satisfaction with Pay. Pay has to be considered as one of the prime measures of satisfaction as it provides an employee an accurate assessment of his true worth compared with the type of job he is doing, his peers in the industry and the general job market (Garrett, 1994). (b) Satisfaction with the nature of work also comes as an essential attribute for gauging satisfaction. People derive maximum satisfaction from the type of work they do (Daniels, 2003) (c) Satisfaction with supervision is another prime issue which can generate either happiness or anxiety. Some managers rate this as one of the key issues for preventing job shift (Daniels, 2003) A questionnaire for gauging the satisfaction level will be administered to the selected sample which is being covered in the next chapter. Organizational commitment has been considered as a key factor in the relationship between individuals and organizations ever since the 1970's and the 1980's (Porter. Et Al, 1974). There are two complementary parts of this phenomenon, the affective and the calculative or cognitive dimension (Commeiras. Fournier, 2001). The affective commitment comprises of a strong belief of accepting the organizations goals and values. This also means that the employee is willing to work hard for the firm so that he continues to be part of the company in the days ahead (Commeiras. Fournier, 2001). The calculative dimension means that since the individual has already spent a long time with the company and has also invested his ability there he feels it will not be financially as well as career wise good to leave the job (Commeiras. Fournier, 2001). To validate these issues, an Organizational Commitment Questionnaire or OCQ has been created. This Questionnaire tests both the affective and the calculative facet and has been adapted from Porter's seminal study on the subject (Porter. Et Al, 1974). Some other studies that have followed up Porter's work have also been studied. It is said that the individual's commitment to the company is determined by his intent to stay and not on reducing his intent to leave (Commeiras. Fournier, 2001). Thus three aspects of involvement and belief are included in the OCQ questionnaire, belief in, acceptance of an organization's goals and values, willingness to exert considerable effort on behalf of the organization and a desire to continue employment in the organization. The detailed questionnaire is covered in the next chapter. Job hopping is the final phenomenon which is being studied for which three items scale has been used. The three items in the scale are "To me switching job is kind of fun", "I switch jobs because my colleagues do so" and "I want to change jobs because of no apparent reasons" (Khatri, Et Al, 1999). A response for the same will be sought through a questionnaire. Job hopping is a relatively new trend and hence the study will provide a very effective result of this trend. Read More