FACTORS INFLUENCING EMPLOYEE TURNOVER IN THE HOTEL INDUSTRY

FACTORS INFLUENCING EMPLOYEE TURNOVER IN THE HOTEL INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The term “turnover” is defined by Price (1977) as, “the ratio of the number of organizational members who have left during the period being considered divided by the average number of people in that organization during that period”. Frequently, managers refer to turnover as the entire process associated with filling a vacancy. Each time a position is vacated, either voluntarily or involuntarily, a new employee must be hired and trained.  Employee turnover has also been defined as the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment Abassi et al, (2000). The hospitality industry is a unique one that exists to serve customers during their recreational time. This time is often spent in the form of lodging and travel, amusement parks, cruises, and more. To best serve customers’ needs, there are a vast variety of employees that staff businesses in the hospitality industry from entertainers, to customer service representatives, to maintenance staff. Unfortunately, these employees tend to have a high turnover rate that has long been unexplained (Hinkin & Tracey, 2000).

Worldwide researches have suggested that employee turnover is among the highest in the hospitality industry. Studies have shown that the average turnover level among non-management hotel employees in the US is about 50%, and about 25% for management staff. Estimates of average annual employee turnover range from around 60 to 300 percent, according to the research conducted by the American Hotel and Motel Association. Staff turnover is high in the hospitality industry, and anyone considering a management position within this segment should understand the reasons people leave their jobs in order for him to be in a better position to contain this problem. High turnover in the hospitality industry occurs for many reasons. Large contributors are seasonality, pay and hours, lack of leadership, customer service issues, labor pool, and training.

Though debate varies, suggested reasons for this high turnover include: low-skilled and low-paying work, unsocial working hours, low job satisfaction and the lack of career advancement within each establishment (Aksu, 2004; Hinkin & Tracey, 2000). As noted in Iverson and Deery (1997), a turnover culture has been created and reinforced within the hospitality industry. Hotels generally regard high turnover as part of the work-group norm and employees frequently hold the belief that they are entering jobs with limited career development opportunities.

Organizations invest a lot in their employees in terms of induction and training, developing, maintaining and retaining them in their organization. Therefore, managers at all costs must minimize employee’s turnover. Although, there is no standard framework for understanding the employees turnover process as a whole, a wide range of factors have been found useful in interpreting employee turnover, Kevin et al. (2004). Therefore, there is need to develop a fuller understanding of the organizational factors that affect employee turnover, more especially their causes, what determines employee turnover, effects and strategies that managers can put in place to minimize turnover.

As is usually the case, most employees make a number of transitions between jobs during their working lives. These may include both job changes within a single employer and leaving one firm to take a job in another firm. In either case, there are usually the intention to grow and increase in skills, responsibility, and remuneration, and/or improve the “fit” between employee skills, desires and job requirements. While many leading companies place more effort in employee retention, most are clueless. They accept employee turnover as a normal part of doing business.

High turnover organizations spend disproportionate amounts of resources on recruiting and replacing their workforce, while smart organizations invest in employee retention. Companies take a deep interest in their employee turnover rate because it is a costly part of doing business (Beam, 2009). Companies incur direct and indirect expenses, which include the cost of advertising, headhunting fees, human resource costs, loss of productivity, new hire training, and customer retention;

FACTORS INFLUENCING EMPLOYEE TURNOVER IN THE HOTEL INDUSTRY

Chapters: 1 - 5
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Number of Pages: 75

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