Introduction
Turnover is one of the biggest issues in the hospitality industry. The majority of hotels experience around 80% turnover rate on a yearly basis (Immaneni et al., 2021). This results in additional expenditures for finding and training additional staff, reduced efficiency, and quality of labor, and decreased customer experience. An emerging body of literature on the subject indicates that the retention of employees would bring more benefits to companies and clients in the long-term perspective (Immaneni et al., 2021).
The case study of Mandarin Oriental Hotel demonstrates how different non-material aspects of rewarding and appreciating employees would result in better morale and retention rates (Marshall et al., 2015). Their experience is relevant and important for studying business and the hospitality industry in particular, as it demonstrates the effectiveness and attitudes towards different methods of solving the problem of retention.
Identifying and Diagnosing the Problem
The problem described in the case study relates to the state of labor and employee relations with companies. The hospitality industry in Bangkok is described as greedy, providing its workers with low compensation, inadequate benefits, poor working conditions, and a lack of care about morale and attitudes (Marshall et al., 2015). This is both an intrinsic and extrinsic problem. The issues described are intrinsic to every individual hotel, restaurant, and catering facility because each of these businesses makes a conscious choice to treat their employees in such a way. At the same time, the extrinsic aspect of the problem is the uniformity of employee maltreatment across the industry, likely to make the workforce rotate between major players without seeing any improvement before finally leaving the industry.
The root cause of the problem lies in ignorance about the consequences of turnover coupled with flawed industry standards and the need to compete with others. Maltreatment and poor compensation of employees help save money on incentive initiatives in the short term (Immaneni et al., 2021). Increased salaries, longer breaks, comfy restrooms, and various other appreciation programs present additional ongoing costs to businesses. In addition, due to all other competitors trying to save costs on employees, there is external pressure to do the same (Immaneni et al., 2021). Therefore, the root causes of the problem are both intrinsic and extrinsic in the ways described above.
Possible Alternatives
Mandarin Oriental defied the expectations set by the industry when they provided their employees with a series of benefits and incentives to improve their motivational hygiene. These included a Wall of Fame, facilities for grooming and clothing maintenance, zones for reading, leisure, and relaxation, and facilities that sold food and items to employees at a discount (Marshall et al., 2015). Some of these facilities were very popular among workers, with discount stores being universally adored. Others, like the Dream Zone and Fashion Zone, were less popular. However, the overall approval rate for each solution was above 50% (Marshall et al., 2015). Alternative options offered to employees could be increased paychecks (Immaneni et al., 2021). As it stands, the balance of salaries in Bangkok is relatively stable, so an employer with a higher payer margin is likely to attract better talent.
Conclusion
Higher salaries can be achieved by saving money from elsewhere. As it stands, the number of programs is excessive, with some of the functions redundant and not appreciated by almost every second employee. The dream room and relaxation room could be united into one; the same goes for grooming and clothing maintenance. In addition, the company could afford a small cut to their profit margins in the short term to achieve better performance. Though Mandarin Oriental’s plan was successful, this additional solution would improve retention even more.
References
Immaneni, K. M., Sailaja, D., & Naga, V. (2021). A review of hr practices and employee retention in the hospitality industry. European Journal of Molecular & Clinical Medicine, 7(7), 6698-6704.
Marshall, T., Mottier, E. M., & Lewis, R. A. (2015). Motivational factors and the hospitality industry: A case study examining the effects of changes in the working environment. Journal of Business Case Studies (JBCS), 11(3), 123-132.