Leisure and Tourism Operation Management - Literature review Example

Supervisor: Leisure and Tourism Operation Management Student's Last Name 2 Due to high turnover rates, the hospitality industry has a negative image. Those who are in leisure and tourism operation management cannot ignore the consequences of high turnover. Whether the consequences of high turnover such as "impermanence by managers and the lack of job security for employees, unpleasant working conditions, limited opportunities for advancement in developing countries, lack of respect from the public, etc." (D'Announzio-Green, Maxwell, Watson, 2002, pp. 4-8) are assumptions or reality, this study aimed to examine high turnover rates' impact on guest satisfaction within the hospitality industry (with the focus on hotels), prove the writer's hypothesis that high turnover is detrimental resulting in negative consequences, and that a culture of high turnover does exist and is accepted in the industry. Another aim was to prove that the hypothesis of acceptance of this culture leads to devastating consequences and that high turnover must be prevented, minimized, and managed. In order to meet the aims of the study, it was necessary to examine the causes and nature of turnover, whether it is considered to be bad or if it is considered to be good and necessary in the operation of companies. Existing arguments were examined as some believe that high turnover is desired in the hospitality industry yet some do not believe it to be a positive thing. Another argument included turnover as a culture for the industry. Interviews from hotels/resorts owners and managers were used to provide which proved the writer's hypotheses and aims. Turnover is when employees stay only for a short time before moving on or becoming dismissed for one reason or another. (D'Announzio-Green, Maxwell, & Watson 2002, quote Barron and Maxwell, 1993, p. 5). "Turnover is the result of both quits and layoffs. Thus, some turnover is a result of jobs in one firm being destroyed and jobs in another firm being created- and hence due to the reallocation of jobs across the economy in response to changes Student's Last Name 3 in product demand. A majority of job changes, however, are because workers reshuffle across the same set of jobs, and this worker reallocation occurs over and above job reallocation," as written by Lane (2000). Some hospitality industry sources report that turnover rate is between 100 and 150 percent each year. This causes poor attitude amongst staff and affects the quality of service and care that is given to the customers. (Crabtree, 2005.) It is usually considered to be a bad thing; however, research has shown that a little turnover is essential to the well being of an organization. Scholtz (n.d.) reports that there are companies who have a turnover rate of ten percent or more and think it is a good thing because "they are replacing the bottom performers with new people will improve organizational performance." A certain amount of turnover may be desired by businesses. Some examples include high-pressured jobs with lots of customer contact such as working the counter at a fast food outlet or a high-volume cafeteria. (Mullins, 1998, p. 176.) At some time, pressure, difficult customers and repetitive tasks will affect performance. Therefore, some turnover is good. However, its negative consequences far outweigh the positive and turnover can snowball and get out of control if not managed properly. There are many other consequences including lack of respect from the public, first experience on the job, harassment by customers, less than par working conditions, low wages, terrible work schedules, etc. A culture of high turnover in the company may consist of victimization at work. Whether it is by customers, other staff members, or management, this is extremely detriment to all. Victimized employees can experience a high level of stress, low tolerance of stress, tiredness, and headaches. Group symptoms of victimization at work can be diminished efficiency, personnel Student's Last Name 4 turnover that is high, not being able to cooperate, uncertainty, high absenteeism, and poorer through-put by students. (Benson ,2002.) A high turnover also leads to a bad reputation for the company. The high rate and its many devastating consequences has become a perception in which many believe. The nature of this industry, such as being seasonal with limited career structures, staff/work ratios, and lack of formal management training contributes to a culture of high turnover. (Boella,2002, p. 13.) Many in the hotel/resort industry have accepted this nature, or in other words, this culture and expect this in regards to the hospitality industry. However, it is NOT desirable for companies to have such a culture and in order to control the level of turnover. As the culture is accepted which leads people to have a perception of the hotel/resort industry, this can influence reality. The perception of the hospitality industry's high turnover rate not only affects customers but employees also. According to the The American Heritage Dictionary of the English Language, Fourth Edition, perception is, "Insight, intuition, or knowledge gained by perceiving, or to become aware of directly through any of the senses, especially sight or hearing." Miller and Madsen (n.d.) quote Ghiselli, La Lopa, & Bai (2001), "A possible phenomenon hindering the success of the hospitality industry is the negative perception many service employees have of their jobs." These front-line jobs seem to cause workers to feel embarrassed, humiliated, and not respected. It is crucial that the causes of turnover are discovered and examined in order to assist in the management of turnover. Some of these causes, or precursors, include external labor and markets, lack of training, morale problems, lack of job satisfaction, new employees being trained by staff who themselves are not prepared to train, low wages, under-staffing, odd work hours, little regard paid, etc. Recruiting and training replacement costs are enormous. Add to these the other costs that Student's Last Name 5 hotels/resorts have to pay such as direct costs, the cost of unfilled positions, customers who must deal with new employees in training, cost of former employees going to work for competitors, etc. and the price is outrageous. The hospitality industry due to its nature comprises of young workers and literature and studies have shown that most job transfers/changes occur with this group. This industry employs many young people and this is the age group that makes the moves in order to seek "better" jobs. They are still climbing the ladder. Those who have been in the work force longer, or those who are considered to be older, will not be as readily mobile. Many women are employed in the hospitality industry. "Somehospitality professionals advise companies that want to profit from keeping top women managers to modify their cultures to better accommodate women with families. A lack of adequate child care and family-related incentives may make restaurant/hospitality-industry careers less attractive to women. It is generally accepted that 'conventional' tourism industry (hotels and resorts are located near the coast, on beaches, in the sun, etc.) employs a high proportion of unskilled and often itinerant workforce with low wage rates." Having stated this, this study confirms the negative view of the hospitality industry which leads to high turnover. The findings from a study by Stojannidou (n.d.). include: Women represent 66% of the total employees; they hold unskilled and seasonal 'women's' jobs in room service, the laundry, the scullery, and as waitresses. Men hold jobs which call for vocational training, such as managers, maintenance workers, cooks, computer operators, and Student's Last Name 6 accounting clerks. Occasionally, however, women are found in positions that require more qualifications, such as in the reservations or accounting departments. In general, women in our sample had a lower level of general school education than men, but seem to have had more vocational training; it is mainly among the women that we found employees with tertiary-level tourism studies. Thirty-five percent of those employed have only a primary school education, and only 19% have had tourism or hospitality studies - mainly those who work in reception, cooks and pastry-chefs - and 26% have attended continued vocational training seminars - most of these work in reception, reservations, computer services, or accounting departments. Chambermaids, waitresses and waiters are least likely to have participated in continued vocational training programs. Waitresses, waiters and cooks had the highest turn over rate, while the greatest degree of stability was found to be among bookkeepers, maintenance workers, reception clerks and chambermaids. Seventeen percent of those employed are over 45 years of age; 51% are between 30 and 45 years of age; and 32% are between the ages of 15 and 29. We see, therefore, that hotels provide an important option for those entering the job market for the first time and for the young in general. Student's Last Name 7 Experts agree that high turnover destroys morale. Causes of staff turnover can be due to management turnover. Lack of trust by managers, which leads to micromanaging, is the lowest, most negative form of human motivation since trust is the highest form. (Solerno, 2006, speaks of Covey's, 1990, comments on trust.) A company that trusts its managers will contribute to a working environment that encourages staff to stick around. Regarding jobs and careers, people want the most benefits and satisfaction. Lesuire and tourism operation management should know that jobs can be extrinsic and intrinsic. Staff look for not only extrinsic values but also intrinsic values in a job. Extrinsic factors include pay, bonuses, and reduced or free meals, facility use, etc. Some intrinsic factors include opportunities for advancement, recognition of accomplishments, and input (credibility for input). Some strategies that can help include managers recognizing the impact they can have, providing training on personal productivity, establishing and/or changing Human Resource policies, and implementing programs on effective work/life. Website discounting of hotel rates tend to encourage high turnover as they cannot generate the higher profits that they used to in order to keep up with the discounts that are offered online. Costs must be decreased some how and somewhere to make up for the discounts and it is usually accomplished by asking staff to do more with less. Getting bookings via discounted website rates will produce faster bookings in the short run but can cause detrimental effects in turnover in the long run. Not only is the culture important in regards to turnover but the physical environment of the company is crucial in retaining staff. The hospitality industry workers consist of front-line staff who work odd hours, receive lower pay, and may work in areas that are not so desirable. Physical safety Student's Last Name 8 of workers should be considered. The building and environment should provide security. Alarm systems, adequate lighting, safes, safety procedures, security, crime prevention strategies, etc. are amongst some of the measure that can be taken. Although there are companies that are aware of the need to implement strategies to keep turnover rates from increasing, studies have shown that there are still many businesses that do not plan ahead and are surprised when they are faced with the consequences of high turnover. "Too many businesses in the hospitality industry fail to plan for and anticipate the future. They are shocked and outraged by the departure of key workers and then complain about the lack of skilled candidates for such jobs. As stated earlier, unhappy customers will go elsewhere. Manley (1996, p. 10) as quoted by D'Announzio-Green, Maxwell, & Watson (2002) states that as turnover is high, "guests (follow) favourite staff to another organization." Although many companies make attempts, consistently or inconsistently, to do performance appraisals, many do not gather the findings over an extended amount of time in order to predict and develop ways to manage their staff. There is wealth of information regarding performance trends which will reveal top performers and those who are at risk of leaving. Once these are discovered, then actions can be taken to prevent and minimize turnover rate. (Sturman and Trevor, n.d.) It has been known for quite some time that businesses should put customers first. Now it is apparent that in order to make customers a top priority, staff must be valued as top priorities also especially those who are in the hospitality industry as they are the people who deal directly with customers. In regards to the hotel industry, Kelley (n.d.) quotes Hodge (n.d.), "People in the Student's Last Name 9 hospitality business know that, after the property, the single thing that will set them apart from their competitors is how their staff deals with guestsIn their hearts, I think many even believe it's just as important as anything else they have to offer." Companies are adopting the concept of organization-specific human capital. Human capital refers to the investment in education and training; investment that is spent on the staff member. General training are transferralbe and can be used in different companies and businesses. Training that is organization-specific can only be used in a specific company. The latter skills tend to be those best learned on the job. Many businesses have taken steps to invest in their people resource in order to keep staff from leaving and to provide a better working atmosphere for all. One such improvement includes filling vacancies internally by promoting from within instead of looking to fill the spots externally. Some companies use a system that measures the attitude of staff members. Then the findings are used to set goals and to create a culture that encourages company loyalty, training, teamwork, empowerment, personal responsibility, retention, etc. As the possible phenomenon of staff's negative perception may hinder the hospitality industry's success, some companies focus on creating job esteem. Due to the knowledge of the value of people, personnel management typically did not even exist. Usually, personnel management only existed for the purposes of recruitment and training. Currently, larger companies now have human resource specialists, or personnel specialists, and personnel management. These are essential to the functioning and success of all larger companies. (Boella and Goss-Turner, 2006, p.1). However, not enough importance is placed on Student's Last Name 10 personnel management and many new employees are being trained by managers who are also in training and the expense is at the sake of the new employees. But at the senior level and in larger hotels and resorts, the assets and personnel roles are not glossed over and they are more important. Peters (1997) as cited by Mullins (1998, p.1), "Since the late 1980s all industries, including the hospitality industry, have been paying increasing levels of attention to the management philosophy and style known as empowerment. Empowering the workforce has become a well-quoted management slogan, even utilized in worldwide advertising media by the USA hotel group, Marriott Corporation. It has been seen to be an attractive and appropriate approach in many service businesses, increasing as it does the level of individual responsibility and flexibility, reducing the number of layers of management and enabling the organization to be more responsive and competitive in the contemporary and fast-changing business environment," cited Mullins (1998). Baby boomers are traveling more often and this brings on an increase in the hospitality industry. This has propelled all areas of the industry including travel, lodging, restaurants, entertainment, casinos, etc. This has brought on an increase in jobs and according to Hawthorne's (2000-2006) report on the welcoming of disabled workers to the hospitality industry, "Given the typically high turnover rate in the industry and disabled workers' record of longevity and loyalty once they obtain jobs, your chances of promotion in the hospitality field might be some of the highest of any industry...the smart job seeker will get the training to be a highly qualified and desirable competitor for open positions and to have the potential for advancement most non-disabled co-workers will simply ignore." Student's Last Name 11 It is sad to say that the hotel/resort industry has accepted the culture of high turnover. There are steps being taken to make sure that standards and guidelines are set in order to assist in keeping turnover rate low. Some hotel and resorts have created and employed the strategies for improving management, staff and management training, etc. in the attempt to reduce high turnover in the industry. However, as the culture of high turnover does exist for the hotel/resort industry, people's perception of the industry can be low and can hold the negatives that have been listed in this study. Although some hotels and resorts have made changes and efforts (some have even succeeded and are still doing quite well), the standards and guidelines that are set and the organizations that design them are a very small few in amongst the high rates and consequences of high turnover that the worldwide hospitality faces. Also, any program or policy must be introduced and implemented. Management and staff must all be trained and should understand the value of implementing such standards in order to create a culture that encourages staff retention. There is much to created, do, and management. Let us not forget the costs (financial, mental, and all other costs that have been previously listed) of it all. Despite all of this, if a hotel or resort is determined to learn about high turnover rate and what steps it needs to take in order to prevent, minimize, and manage then the results can be quite good. Investing in its staff, its customers, and itself is well worth it. There are many in the industry that are winning the battle against high turnover rate as they incorporate the strategies that have been listed. These hotels and resorts set the standard for all as they focus on their number one resource and that is the resource of human capital. References Benson, B. (2002). Victimization at work. Uppsala Universitet. Retrieved December 11, 2006, from http://www.arbmilj.uadm.uu.se/consequences.html Boella, M.J. (2002). Human Resource Management in the Hospiality Industry. (p. 13). T,J. International Ltd:Cornwall. Crabtree, R. (2005). UniFocus Enhances its System for Measuring and Improving Hospitality Employee Satisfaction. UniFocus, L.P. Retrieved December 9, 2006, from http://72.14.203.104/searchq=cache:O90zsfGiTQIJ:www.unifocus.com/pdfs/staffscope pdf+how+hospitality+industry+is+improving+turnover+rate&hl=es&gl=mx&ct=clnk&cd=1. D'Announzio-Green, N., Maxwell, G. & Watson, S. (2002). Human resource management: international perspectives in hospitality and tourism. (pp. 4-8). UK: Thomson Learning. Barron and Maxwell (1993, p.5). Mahcsh (1993, p. 7). Pizam and Ellis (1999, p.7). Worcester, (1999, p.8). Mauley (1999). Manley (1996, p. 10). Kelley (n.d.). Refresher Course. Human Resource Executive magazine. Retrieved December 12, 2006, from http://www.workindex.com/editorial/train/trn0110-01.asp. Hawthorne, N. (2000-2006.) Hospitality Industry Says "Welcome In!" to Disabled Workers. eSight Careers Network. Retrieved December 12, 2006, from http://www.esight.org/View.cfmx=262. Lane, J. (2000). The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency The Role of Job Turnover in the Low-Wage Labor Market. Retrieved December 8, 2006, from http://aspe.hhs.gov/HSP/lwlm99/lane.htm. Miller, D. and Madsen, S. (n.d.). Addressing the Negative Perception of Jobs in the Hospitality Industry. Retrieved December 11, 2006, from http://72.14.203.104/searchq=cache:oo2DBoTxBV0J:www.hicbusiness.org/biz2003proce edings/Douglas%2520G.%2520Miller.pdf+hospitality+industry+improves+turnover&hl=e s&gl=mx&ct=clnk&cd=9. Mullins, L. (1998). Managing People in the Hospitality Industry. (p. 1-51, 176). England; Longman. Peters (1997, p. 1). Scholtz, Ryan (n.d.). Employee Turnover - Good or Bad Retrieved December 10, 2006, From http://72.14.203.104/searchq=cache:Kd6SyEC7pDAJ:www.lead-strat- assoc.com/EmployeeTurnover.pdf+how+can+turnover+be+good&hl=es&gl=mx&ct=cln k&cd=5. Solerno, N. (2006). Why Are Some Hotel Companies Plagued By Management Turnover (April 3, 2006). 4Hoteliers Hospitality Travel & News. Retrieved December 11, 2006, from http://www.4hoteliers.com/4hots_fshw.phpmwi=1257. Sturman, M. and Trevor, C. (n.d.). The Implications of Linking the Dynamic Performance and Turnover Literatures. Journal of Applied Psychology. Retrieved December 12, 2006, from http://www.hotelschool.cornell.edu/chr/research/inbrief/dynamicturnover.html. Stojannidou, M. (n.d., pp. 635-640). What Kind of Jobs Does Tourism Create Sustainability and Tourism Labor Market in the North Aegean. Retrieved December 13, 2006, from http://72.14.203.104/searchq=cache:Yx6Jxa2cvSUJ:www.fundp.ac.be/sciences/scphilosoc/prelude/manifestations/rhodes/actes/stojannidou.pdf+turnover+rate+in+Greek+hospitality+market&hl=es&gl=mx&ct=clnk&cd=49. The American Heritage Dictionary of the English Language, Fourth Edition. Copyright 2000 by Houghton Mifflin Company. Retrieved December 11, 2006, from http://dictionary.reference.com/searchq=perceive. Read More