Justification
The importance of employee retention cannot be ignored. In the hospitality industry, the employee turnover problem is more prevalent compared to other enterprises. For instance, President Palace hotel experiences a turnover rate of 2-5%, which is relatively high considering its human resource costs and its impact on overall organizational performance.
High staff turnover is among the many organizational issues, which managers have to superintend before it gets out of control because it has negative impacts on the bottom line service organizations. Turnover culture presents managerial barriers to consistency and represents a considerable added cost.
Executive Summary
In this report, an evaluation of secondary sources of information regarding the employees of President Palace hotel, which is located in Bangkok, Thailand, is conducted. The report proposes various HRM strategies and policies based on the analysis of the causes of employee turnover in the hospitality industry.
This empirical study yielded many findings including:
- Provision of career development opportunities is essential in employee retention;
- Good communication policy at the hotel involving the management the rest of the staff can reduce staff turnover rate.
- A mentorship program that involves monetary rewards and employee training is essential in employee retention;
- Career advancement opportunities are critical for retention;
- Payment, wages and welfare programs are significant in staff retention, in the hospitality industry.
From these findings, the report recommends that job satisfaction in hotels can be achieved through positive encouragement initiatives. High job satisfaction results to low employee turnover and improved performance.
Introduction
In an era of intense competition in the hospitality industry, the retention of talented employees is of exceptional value to companies involved in the hospitality industry. Employees in the hospitality industry are of immense significance as they contribute to the development of the hotels; their behaviors and attitudes towards their work play a crucial role in enhancing the quality of service offered.
In other words, the competitive advantage of the hotel is largely dependent on the employees. In general, hotel and hospitality industry experiences more frequent flows of human capital relative to other industries. As such, the problem of employee turnover is more prevalent in the hospitality industry than other enterprises.
Currently, the hotels are a powerful economic force in the economic development of Thailand (Tourism contributes about 6% of Thailand’s GDP).
Because of the significance of Thai’s hotel industry, the problem of employee turnover demands close attention. In addition, the overall competitiveness of the hotels, when compared to other larger enterprises, is weaker due to high employee turnover rate, which currently stands at 2-5%. This has resulted to instability in the development of hotels.
In the hospitality industry, service quality is essential compared to other industries such as manufacturing enterprises. In addition, the intensity of the work performed by the technical and management personnel is higher compared to other enterprises. The hotel industry provides employees with a variety of opportunities for career development. Career growth in the hotel industry is indispensable.
If a hotel lacks opportunities for career development and has low remuneration for its employees, outflow of human resource is inevitable. Moreover, because the employees have management experience and vital job skills, the outflow hurts the enterprise; it drives customers away, and the enterprise incurs indirect losses through training and replacement of the human resource.
It also affects that quality and continuity of the work as well as the stability of the serving hotel staff. Thus, the management of hotels should intensify their efforts and increase the incentive to retain skilled employees and avoid wastage of human resource.
The purpose of this report is to evaluate the causes and consequences of employee turnover in the hotel and hospitality industry, with a specified focus on President Palace Hotel located in the heart of Bangkok, Thailand. The study also aims to explore ways of increasing employee retention and reduce turnover in the hotel industry.
In particular, the study focuses on issues such as job content, promotion opportunities, work-family conflict, culture, employee empowerment and effective leadership by managers, role stress and emotional exhaustion. The methodology adopted in this report involves a critical evaluation of secondary sources of current information on employees in President Palace Hotel, in Bangkok, Thailand.
The training programs, the remuneration and the intensity of work are explored as possible causes of job dissatisfaction and high turnover in this hotel. The report relied on data from the hotel in the final analysis and in making the recommendations.
Analysis
Vague Job Content Characteristics and Turnover
Job analysis and developing job descriptions are fundamental aspects of Human Resource Management (HRM). Job analysis involves the categorization and documentation of relevant information concerning a given job for purposes of job evaluation and wage setting (Pavesic, & Brymer 1990, p. 96).
Thus, failure to obtain accurate and complete information about a given job will lead to lack of clarity of responsibilities and inaccurate wage setting.
In addition, knowledge about a specified job is essential to organizations in many ways; it is useful to recruitment and placement of new employees; job design and planning; conflict resolution; on-job training; and job evaluation. Thus, job analysis is central to human resource management (Robbins & Coulter 1996, p. 127).
The various uses of job information require elaborate job descriptions to achieve them. In particular, job evaluation requires adequate job information in order to differentiate between jobs. Information such as work activities and worker traits is vital in job evaluation (Ajzen, & Fishbein 1977, p. 809).
Recruitment and job placement also requires information regarding the employee attributes in order to recruit an individual with the right qualities. Training, on the other hand, requires information on the skills and knowledge of the jobholder in order to identify the appropriate on-job training.
In the hotel industry, given the broad range of services offered, elaborate job description is crucial to avoid overlap of responsibilities and improve service delivery. In President Palace Hotel, the services offered include restaurant and canteen services, accommodation, fitness through the fitness center, internet lounge and conference and meeting facilities.
The hotel has 137 staff grouped in three categories: frontline staff, supervisors, and managers. The job description, hierarchy and responsibilities for the managerial and non-managerial jobs is lacking in President Palace hotel especially among the frontline staff. Lack of clear job roles for the frontline staff (whether male or female) reduces their level of commitment, which ultimately compromises the quality of service delivery.
Cascio (2002, p. 68) uses the Position Analysis Questionnaire (PAQ) to propose a model that outlines the job descriptors into six groups, viz. work activities, employee-oriented activities, job-oriented activities, job performed, job context and personnel requirements. This classification implies that job description is essential in task assignment.
In contrast, Van Dam (2004, p. 29) suggests that, worker characteristics, job content factors and job characteristics should define the human resource requirement of an organization. Similarly, President Palace hotel should consider routinely assigning specified job tasks to certain employees who possess experience and skills to do them.
This will enhance job satisfaction and level of commitment and prevent outflow of employees. Additionally, the development of gender-specific HRM policies would ensure that the male and female employees perform their preferred tasks, as opposed to assigning tasks considered masculine to female staff and vice versa.
Promotion Opportunities and Turnover
Mishra and Spreitzer (1998, p. 575) posit that, in employment, a contract exists at an individual level based on reciprocal agreement between the employer and the employees. Focusing on employees’ perceptions, she defines a psychological contract as “the beliefs and expectations regarding the terms and conditions of the contract agreement involving the employee and the organization” (Pavesic, & Brymer1990, p. 97).
Thus, employees expect promotion opportunities as well as opportunities for growth in any organization. Meyer and Allen (1997) contend that, employees expect “reciprocal and fulfillment of promissory obligations by the organization in a dyadic relationship” (p. 102). This means that organization’s failure to fulfill its obligations breeds job dissatisfaction among employees resulting to employees leaving the organization.
According to Van Vianen et al (2004, p. 254), obligations involve future commitments or intentions that employees believe should be exchanged as part of the contract. If an organization lacks professional development programs, then employees are bound to seek alternative ways of achieving it, which include leaving the organization.
Another noteworthy characteristic is that contracts are inherently subjective (Kirkman, & Rosen 1999, p. 61). As such, behavior and attitudes of employees are markedly influenced by their perceptions of how well the organization is fulfilling its obligations and fairness in the promotion program of an organization.
Employees perceive the lack of fulfillment of aspects, such as limited opportunities for career development, as a violation of the employment contract by the organization, which leads to a change in employee behaviors and attitudes consequently (Kirkman, & Rosen1999, p. 62).
Locke (1969, p. 312) organization’s failure to honor the contract, for example, by failing to provide opportunities for promotion, may elicit strong emotional reactions including resentment, hatred and a sense of injustice. This has a direct impact on job satisfaction and motivation of employees.
With respect to employee behavior, Manz, and Sim (1987, p. 106), conducted a study, which established that violation of the employment contract and failure to provide opportunities for growth may result to high employee turnover. As such, opportunity for growth and career development provides a framework for interpreting employee’s behavior and attitudes as well as their intentions to leave a company.
Research studies conducted in the hospitality industry involving the management staff turnover, often focus on the number of workers leaving a specified organization and joining another within the hotel industry. Mathieu, Gilson, and Ruddy (2006, p. 97) contend that, what motivates these employees to leave such organizations is the violation of the contract and limited career development opportunities.
Mathieu et al. (2006, p. 99) identify various factors that influence intra-organization labor mobility in the hospitality industry. These include salary, performance-related pay, promotion opportunities, job security and development opportunities. Thus, the lack of fair promotions or professional development dims the employees’ growth prospects especially managerial-level staff forcing them to move out of an organization.
In President Palace Hotel, the on-job training programs are narrow; they only impart basic skills to newly hired employees. The training covers language (English and Japanese) conversation training, product knowledge, hospitality and standard service training, and fire training. Advanced on-job training especially for managerial-level staff is lacking. As a result, the employees tend to seek for better opportunities elsewhere.
To prevent this problem of employee turnover, constant promotion that is subject to performance appraisal can motivate employees to stay and develop their career in the organization. On-job training equips them with vital management skills to enhance their performance and service delivery, especially in the hospitality industry.
Elimination of discriminative policies that limit an employee’s career growth such as biased promotions can also motivate employees to remain in an organization. Training and promotion opportunities increases commitment and reduces employee turnover in any industry (Kirkman et al 2004, p. 175). Most organizations fail to train employees arguing that, competitors may lure them to leave the company.
Thus, after training, a strategic approach should be used to ensure employee retention. One such approach involves the development of psychological connections between the organization and the company by aligning employee career goals with organizational goals (Locke 1969, p. 309). This fosters commitment and reduces the costs associated with turnover.
The Interplay between Work-Family Conflict and Turnover Intentions
Previous research studies show that the retention of skilled employees working in the hospitality industry is quite a challenge. According to Van Vugt and Hart (2004, p. 586), a significantly higher percentage of women leave the hospitality industry (61% compared to 47% for men) at the age of between 32 and 44 years.
The high turnover rates erodes an organization’s knowledge base, decreases a company’s competencies and increases the staffing costs and consequently a company’s competitive advantage (George, & Jones 1996, p. 318). Work-family conflict has a significant impact on turnover in the hotel industry (Hechanova, Alampay, & Franco 2006, p. 92). The work-family conflicts influence work outcomes and service delivery.
Work-family conflict that relates to work has been associated with job dissatisfaction increased absenteeism and employee turnover (Keyes, Hysom, & Lupo 2001, p. 143). In particular, exposure to work-related stressors such as jobs with unpredictable work schedules contributes to work-family conflict (Hardy, & Leiba-O’Sullivan 1998, p. 413).
In addition, jobs, which involve nontraditional working hours such as weekends, night shifts or evenings, lead to work-family conflict. These characteristics fit the descriptions of jobs in the hotel industry. Koberg, et al (1999, p.88) contend that, flexibility in the workplace influences the relationship between work-family conflict and the aforementioned work stressors.
Hence, it can be argued that high workplace flexibility reduces the work-family conflict resulting to lower employee turnover and vice versa. Additionally, Mills and Ungson (2003, p. 152) contend that, flexibility in the workplace has a direct negative impact on turnover.
Another predictor of employee turnover is organizational support for career advancement. Kirkman, Tesluk, and Rosen argue that, this predictor is normally the model of work for males: “men usually obey conventional organizational arrangements, rules and assumptions compared to women who have reproductive and familial obligations in the society” (2004, p. 337).
The many hours of service are often the measure of commitment that warrants a promotion. Furthermore, women are less likely to allow work issues to interfere with the family obligations as compared to men. Conversely, women are more likely to allow their familial responsibilities to interfere with their work compared to men (Keller, & Dansereau 1995, p. 127). Thus, career development for women and men is different.
Van Dam (2004, p. 30) uses a gender-specific model to explain the differential career success between men and women; the model shows that women’s career development is sequential interrupted by pregnancy and childbearing. Thus, since women work in organizations that do not recognize these issues, they experience higher family-work conflict than men.
These conflicts encountered by women can be the source of job dissatisfaction that make more women quit highly demanding occupations, for more flexible jobs to get more time to attend to their family obligations. Thus, it is evident that women experience more work-family conflict than men do.
Although most jobs in the hotel industry require feminine behavior, the current systems in this industry favor males and consequently limit occupational achievement for women. Normally, long working hours and shifts are characteristic of male organizational values. One way of looking at employee turnover especially of female employees is from the occupational stress viewpoint.
Occupational stress encompasses the events and stressors that employees encounter which cause burnout or strain on the individuals affecting organizational outcomes (Kirkman, & Rosen1999, p. 58). Burnout is the individual’s physical, psychological and behavioral response to stressful conditions especially when the constraints or occupational demands exceed a person’s capacities.
President Palace Hotel has both male and female employees (137) working as management, supervisory and frontline staff with limited work flexibility. Thus, balancing family life and career especially for the women may be a challenge. To promote staff retention, the President Palace Hotel management should develop flexibility programs that take into consideration the family obligations especially for women employees.
The hotel should also expand the socialization programs to allow family members and children to interact with their parents and offer support services to its staff.
Culture, Job Satisfaction, and Turnover
Job satisfaction/dissatisfaction may stem from a variety of sources including the quality of supervision, the quality of interpersonal relationships and socialization, the level of organizational support and the role of autonomy. The turnover related to job satisfaction is also influenced by personal factors such as the mood or gender.
The job satisfaction/turnover relationship is dependent on specified aspects of the job itself especially in the hotel and hospitality industry. Job satisfaction can minimize employee turnover and absenteeism. It could also lower occupational accidents and increase employee productivity.
On the other hand, work dissatisfaction has many adverse effects including the loss of experience and skilled employees, reduced productivity and lower morale, which, in the long term, translates to reduced profitability of the company (Cascio 2002, p 86).
Kirkman and Rosen (1999, p. 66) established that organizational performance determined turnover intention; however, the relationship was partly influenced by employees’ level of job satisfaction. In contrast, Kirkman et al (2004, p. 184) propose social experiences, personal characteristics, work environment, management practices and socialization practices in an organization as the variables that influence job satisfaction.
Kirkman et al (2004, p. 185) further suggest that these variables reflect work experiences, psychological contracts and role states. Wages are other factors that influence an employ to either stay or leave an organization; evidence shows that dissatisfaction with wages is a key factor that influence turnovers.
In hotels, such as President Palace, turnovers are high as employees move to organizations within the hospitality industry that pay well. Those who remain are often demoralized. The loss of employee morale can be costly to the hotel in terms of intangible costs that include poor morale (Buchanan 1974, p. 534). Employees may also be overworked, which, in turn, reduces their efficiency and the overall productivity of the hotel.
Employee turnover in the hospitality industry has attracted substantial attention from managers and researchers alike. Much of this attention has been directed at understanding its causes. Underlying this approach is an assumption that turnover is influenced by markets; firms; worker attributes, and tasks. As such, by developing policies that tackle these issues managers can reduce turnover in their companies.
Additionally, Kirkman, and Shapiro (2001, p. 597), identified two motives for employee turnover; push and pull motives. In this context, push motives relate to dissatisfaction with an individual’s status, whereas pull motives refer to opportunities that allow one to advance his/her career in the labor market.
Nevertheless, the level of job satisfaction changes across various companies, and such is influenced by other variables such as job content and work conditions.
In recent years, hotels are experiencing the problem of employee turnover at such a high rate. Although the primary dissatisfaction with income is the reason why qualified employees leave an organization, Van Vianen, et al (2004, p. 263) confirmed that, job dissatisfaction related to work content and duration largely influence employee turnover.
In this study, job dissatisfaction in President Palace hotel may arise from work intensity given the lower number of staff (137) and lower pay compared to other hotels in Thai’s hospitality industry. Therefore, to solve the problem of job dissatisfaction in this hotel, the management should begin with monetary rewards in terms of stock so that employees become stockholders of the organization.
The payments/wages and benefits should relate to employees’ skill level and experience, contribution and performance. Facilitating a multicultural work environment is another way President Palace hotel can enhance job satisfaction among its employees. Keller and Dansereau, (1995, p. 127) propose that, mentoring is a decisive factor in reducing employee turnover and promoting organizational support and work commitment.
Nevertheless, the hotel must evaluate the costs of its turnover against these strategies so that, in the long-term, turnover is reduced. In implementing these strategies, President Palace hotel should be fair and consistent especially with regard to benefits and compensation plans. Recruiting employees from diverse cultural backgrounds can enhance diversity and promote job satisfaction levels.
Employee Empowerment, Effective Leadership and Turnover Intentions
In today’s business environment, most organizations have embraced different employee empowerment initiatives for their employees (Jacques 1996, p. 91). To remain competitive in today’s business environment, organizations need ideas, knowledge, and creativity of the workforce including those of front line staff, supervisors, and managers.
To accomplish this, most organizations undertake steps to empower their employees through different initiatives, which enable them to serve the larger interests of the organization by acting like business owners (Jacques 1996, p. 89).
Karasek (1979, p. 285) proposes two forms of employee empowerment, social-structural empowerment and psychological empowerment. Social structural empowerment is derived from the theory of social exchange.
According to Kark, Shamir, and Chen ethnographic study (2003, p. 177), women’s empowerment in the workplace was limited by the lack of “power tools” that include information, resources, support and opportunity.
Under the socio-structural perspective, employees at different levels within the organization can be empowered by promoting access to opportunity, resources, support, and information (Ghiselli, LaLopa, & Bai 2001, p. 33). In the context of President Palace hotel, the frontline staff, the supervisors and the top-level management should have a voice in the system as well as equal access to information resources.
The essence of the social-structural empowerment theory is to foster the idea of power sharing between subordinates and the management especially with regard to decision-making. Lack of employees’ understanding of the goals and mission of the organization, cultural barriers and communication barriers affect employee empowerment.
The psychological empowerment model encompasses the psychological states that enable employees to work independently. This perspective primarily focuses on how employees feel about their work rather than on managerial practices. Under this perspective, the employee beliefs and attitudes towards their work and their role in the organization is the approach for empowerment.
Huselid (1995, p. 625) argues that, empowering employees can only be achieved by promoting their sense of self-efficacy rather than through the managerial practices described under the social-structural perspective. President Palace hotel can empower employees through training, creating a favorable work environment and equipping them with skills to make sound decisions in their various capacities.
Role Stress and Emotional Exhaustion
Emotional exhaustion can have adverse effects on organizations and workers. Research shows that, emotional exhaustion and stress are the leading cause of psychological problems and ailments (Hollander 1958, p. 123).
Moreover, emotional exhaustion also has adverse effects on organizations as exhausted or overworked employees develop poor work attitudes resulting to poor performance, and increases turnover (Huselid, & Becker 1996, p. 403). In particular, work outcomes, job performance, organizational behaviors and turnover intentions are affected by emotional exhaustion. Various models have been developed to explain burnout.
Holdsworth and Cartwrigth (2003, p. 135) recommend the Conservation of Resources (COR) model as the best framework for understanding the relationship between emotional exhaustion and work behavior. According to this model, individuals aim to acquire specified resources, which may be objects, conditions or qualities, for example, work status.
However, environmental demands, which include stressors such as overwork, work-family conflict and injustices, impinge on these attempts. Thus, emotional exhaustion arises when an individual’s resources are overwhelmed by the demands. Exhausted individuals appear withdrawn and unmotivated. Given the broad range of services offered at President Palace Hotel, emotional exhaustion seems investable for the 137 staff.
The President Palace hotel should establish counseling services to enable workers deal with emotional stress; employ more staff, in addition to the 137 workers, to reduce exhaustion and burnout; develop motivational strategies including reward system and recognition of highly performing employees.
Recommendations
The connection between employee turnover and job satisfaction in the hospitality industry is a complex one. This research has considered various strategies of promoting job satisfaction and reducing turnover rates in the hospitality industry with a focus on the President Palace hotel. Based on a critical review of literature, this study makes the following recommendations:
The development of gender-specific HRM policies to help retain talented employees in the organization. Hollander (1958, p. 126) argues that, flexibility in the workplace has a negative effect on turnover.
Since the work-family conflict a significant effect on women compared to men, by developing gender sensitive HRM policies, President Palace Hotel can retain talented female employees. Additionally, this can be achieved through offering flexible work hours to improve the balance between work and family.
Maintaining healthy organizational climate. Good communication channels enable employees to acquire a sense of stability and ownership of the organization, which motivates them to work hard and develop their careers within the organization. President Palace hotel should foster an organizational culture of transparency and communication through regular employee communications from the management.
Use of motivators to promote job satisfaction levels among the hotel employees. The President Palace hotel can develop a mentoring program to help reduce employee turnover. A career chart and an elaborate job analysis can enlighten the employees on career development.
The hotel should also recognize the essential skills and abilities that an employee has obtained since joining the company, and use them to determine his/her eligibility for the next career advancement.
Routinization of tasks such that the frontline staff or supervisors undertake specified responsibilities as per the job description. This would prevent emotional exhaustion and motivate employees to work hard.
Other notable ways that President Palace hotel can use to reduce employee turnover include; doing away with long-unsocial working hours; provide better prospects for hotel employees; improve monetary & spiritual rewards; eliminate discrimination from hotel management; and building a humanitarian environment for employees
Conclusion
Employee turnover is a serious problem in the hospitality industry including the President Palace hotel. This report involved an analysis of previous studies on employee turnover and job satisfaction in the hospitality industry.
The results indicate that turnover intentions are influenced by many factors including occupational stress, lower pay, work family conflict, lack of flexibility poor incentive programs in organizations among others.
In addition, the study found out that organizational support initiatives have a positive influence on employee turnover intentions. Thus, employee turnover can be reduced through a number of initiatives that support employees and increase their job satisfaction.
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