Introduction
Background of the Study
Hospitality companies constantly require to ensure the satisfaction level of its employees. It is due to the fact that the companies are more effective when they take steps to satisfy their employees (Langton, Robbins & Judge, 2007). The satisfied employees are considered an effective labor force and they become the key asset for the company’s effectiveness (Tepper, Lockhart & Hoobler, 2001). Various authors have identified the organizational performance as well as the willingness of employees to have sound working conditions.
According to Jin-Zhao and Jing (2009) human resources are one of the key parts of the product performance in relation to the enhancement of a company’s image. Hospitality industry heavily depends on the humans, who directly communicate with the customers. In relation to a service model, there is a need to develop a heterogeneity among the customers and their suppliers (Kusluvan et al. 2010). Human resource is the key for the companies to increase their business but sometimes employees’ needs make it difficult for the companies to retain them. Hence, it is important for the companies to understand their needs to achieve the goal of employee satisfaction (AlBattat & Som, 2013).
Kuria, Alice and Wanderi (2012) specified the internal and external reasons of the employee turnover in the Kenyan hotels situated in the Nairobi. They stated that unfavorable working conditions, job stress, long working hours with low wages and poor training programs are reasons of job dissatisfaction of employees and high turnover. Haven‐Tang and Jones (2012) indicated that poor management, low wages, poor working conditions and lack of job opportunities are the main causes of the turnover.
Significance of the Issue
The issue of increasing turnover rate in the hospitality industry is significant due to the costs linked to it. In relation to the hospitality industry, there are two main financial implications of the employee turnover. One of the costs is that the employee turnover leads to inconsistency and poor customer service that negatively affect the revenue and profitability. The employees with the intent to leave the hotel feeling demotivated and are not able to perform the assigned duties in an effective manner. For newly hired employees, it is difficult to acquire the appropriate skills to perform duties during shorter time period. Accordingly, stress posed by short-timers and the employees who left the hotel reduce the ability of new employees to meet the expectations of the guests and can develop burnout. Second financial cost is that expenses, enhance as a consequence of employee turnover (Tracey & Hinkin, 2008).
This is the reason that evaluation of the factors that contribute to high turnover rate in the hospitality industry is important. In addition, it is important to understand the factors that lead to improvement of job satisfaction of employees and reduce turnover rate. Hence, the aim of the report is to provide an overview of the factors that contribute to job dissatisfaction of employees in the hospitality industry along with the factors that improve the job satisfaction level. The research questions are as follows:
What is the impact of turnover rate in the hospitality industry?
How job dissatisfaction factors lead to high turnover rates in the hospitality industry?
What are factors that improve the job satisfaction level of employees and reduce the turnover rate in the hospitality industry?
Literature Review
High level globalization and growing competition have increased the importance of the recruiting, retaining and management of resources that enable the companies to increase the competitiveness in the hospitality industry. In relation to the resources, human resources need special attention. The key reason is that human resources play an important role in the service industry. Employee job satisfaction, level of commitment, and motivation increase the positive behavior of the employees through organizational citizenship behavior and competitiveness of the hospitality industry.
Turnover Intention and Job Satisfaction
Turnover intention refers to the behavior of the employee to leave the current job (Tracey & Hinkin, 2008). Tracey and Hinkin (2008) specified that the intention to leave the company is the behavior of employees on whether they want to leave or stay. It is specified by AlBattat, Som and Helalat (2013) that turnover intention is the accurate interpreter of the real turnover crisis. Ghiselli, La Lopa and Bai (2001) stated that employees are influenced by the intrinsic satisfaction in the shorter time span. They identified the point that in case the intrinsic needs of the employees are not met on a continuous basis, extrinsic satisfaction will then lead to long-term turnover intentions.
Karatepe et al. (2003) and Karatepe et al. (2006) argued that the companies that focus on the intrinsic factors of job satisfaction are more inclined to reduce hotel employee attrition as well as turnover. In other words, intrinsic and extrinsic aspects of job satisfaction are important determinants of intention to quit. They indicated that paid vacations, salary and sick leave (extrinsic factors) are the sources of dissatisfaction than intrinsic factors. It is also identified that extrinsic factors are the drivers of other jobs. It means there is a negative association between job satisfaction and turnover intention.
Cost of Turnover
Labor turnover is the important tangible dollar cost along with an intangible/hidden cost linked to loss of skills, inefficiency and replacement costs (Davidson, Timo & Wang, 2010). According to Davidson et al. (2010) loss of training investment and loss of experienced staff are the key examples of turnover costs and opportunity costs. Tracey and Hinkin (2008) stated that the hard costs like newspaper ads put direct financial impact on the company and known as expenses. On the other side, soft costs are related to the time required to interview applicants. They specified the five types of costs linked to turnover. One of the costs is pre-departure cost. These are the costs that occur in case of prior notice by the employee. For instance, the time required to prepare and conduct exit interviews is the pre-departure cost.
Other pre-departure costs include time spent on the administrative aspects like processes linked to filling of forms and costs related to severance packages. Recruitment costs include direct costs linked to promotional materials, ads, and sources of recruitment. Selection is another turnover cost as various steps are involved in selecting the new candidate to replace the employee, who left the company. This is the reason that it is the most expensive step of the replacement process. New employees are required to be trained. Hence, the companies have to make the costs related to training and orientation. Last but not the least, productivity loss is the cost associated with the turnover due to loss of experience and skilled staff. In addition, new employees feel stressed because of workload that affect their productivity (Tracey & Hinkin, 2008).
Factors lead to Employee Turnover
There are two types of employee turnover, such as voluntary turnover and involuntary turnover. Voluntary turnover refers to the turnover that includes resignations not initiated by the employers. Involuntary turnover is initiated by the employer. Voluntary turnover is avoidable and can be controlled that includes employees left the companies because of dissatisfaction with some characteristics of their job (Taylor, 2005).
Ghiselli et al. (2001) provided a notion that poor working conditions as part of extrinsic factors lead to employee turnover. The hospitality industry employs various young workers who do not stay with the companies for the long-term. About 60% of the eating and drinking places’ employees are about 29 years old and the wages in the industry are also lower. In turn, poor working conditions like long-hours influence the employees to leave the companies.
Deery and Jago (2009) provided an overview of the relationship between labor turnover and the work-life balance. They specified that the levels of conflict between work and family are moderated by the levels of perks received by the employees, their personal characteristics regarding job, the norms of the industry and the way all the earlier described factors are managed by the company. It is argued that unstable working hours in hospitality industry, lack of emotional support and numbers and types of customer interactions contribute to job stress and work-life imbalance. In addition, the front line employees in the hospitality industry faced the issue of spending time with their family members due to job responsibilities. Accordingly, they are more inclined to emotional exhaustion. High level of emotional exhaustion faced by Frontline employees is due to issues like irregular working hours, long working hours, and heavy workloads that contribute to turnover intentions (Deery & Jago, 2009).
Zainal, et al. (2012) argued that one of the basic reasons of turnover intention of employees in the hospitality industry is the low pay. Hospitality industry’s image is linked to low pay, low job status/job security and poor working conditions like unstable working hours, long working hours, and seasonal employment that make employment difficult in the hospitality industry. The earlier described factors enable employees to make a decision to leave the hotels. Furthermore, Bright (2008) corroborated that recognition and job advancement are the factors that directly links to the job satisfaction of employees. Lack of recognition and job advancement opportunities induce employees to leave the organizations.
Babakus, Yavas and Karatepe (2008) argued that job demands are known as job stress and include role ambiguity, role conflict, overloading of role and interpersonal conflicts. These factors are important determinants of turnover rate in the hospitality industry. For instance, when an employee does not have information about his/her role and face high level uncertainty in relation to performing the job-related duties he/she make the decision to leave the company.
Babakus et al. (2008) further explained that there is a relationship between job resources and turnover. If the employees in an organization do not achieve performance feedback, autonomy, training, empowerment and supervisory support, they are more inclined to leave the organization. These factors are important along with pay and rewards. Poulston (2008) specified that poor training is one of the reasons of the employee turnover in the hospitality industry because of lack of importance to training of the managers. Training and development affect the job satisfaction level of employees and the organizational citizenship behavior that in turn affect the rate of staff retention. The main point is that intrinsic and extrinsic factors are the contributors of staff turnover in the hospitality industry.
Factors that Improve or Avoid Turnover Rate in Hospitality Industry
Gunlu, Aksarayli and Sahin Perçin (2010) provided an overview of the motivation theory presented by Herzberg. The theory, also known as the two-factor theory in which two classes of rewards have been presented like intrinsic factors and extrinsic factors. Intrinsic factors are known as job-content factors like achievement, recognition, authority, independence, and job advancement. In addition, extrinsic factors are known as job-contextual factors like pay, working conditions and job security (Silverthorne, 2005). It is identified by Tsai, Cheng and Chang (2010) that the managers that empower their employees in relation to decision making face high level job satisfaction of employees. Milka1, Michael and Tony (2015) stated that the work environment is the key factor in employee engagement.
It is stated by Milkal et al. (2015) that improved working conditions decrease the complaints of employees as well as the absenteeism and turnover, while enhancing the productivity. It indicates the direct relationship between working conditions and employee performance in the hotels. The hotel industry of the Kenya faces various challenges, including turnover, low morale and absenteeism. Satisfied working environment is the measure of earlier described challenges. Moreover, reward system in relation to extrinsic factor to motivation is the measure to reduce the turnover rate.
The reward system includes the policies of the hotels, processes and practices for giving rewards to employees with respect to their performance, skills and capabilities. The reward system comprises of fixed and variable pay and benefits. In addition, the system includes non-financial rewards that lead to a reduction in the turnover rate (Milkal et al. 2015).
The non-financial rewards include recognition, advancement and personal growth like training and development. Karatepe et al. (2003) provided a notion that work itself is the key determinant of job satisfaction and a remedy to reduce the turnover rate. For instance, employees in the service industry like hospitality industry should have a number of diversified skills to perform the duties. They need specific skills and autonomy to be satisfied as satisfied employees perform at higher levels. In addition, this initiative helps companies to retain employees.
Moreover, Karatepe et al. (2003) stated that supervision is one of the employee retention strategies that improves the job satisfaction level and motivate employees to show citizenship behavior. As part of effective supervisory style, behaviorally oriented feedback should be the policy of the company to satisfy employees to overcome the issue of turnover. Furthermore, higher pay is the most effective strategy/factor to reduce turnover. All in all, intrinsic factors like recognition, empowerment, training and development and advancement and extrinsic factors such as pay, rewards, and working conditions are the factors that improve the turnover rate by satisfying the employees in the hospitality industry (Gunlu et al. 2010; Silverthorne, 2005; Tsai et al. 2010; Milkal et al. 2015; Karatepe et al. 2003).
Objective
The study will help the hotel managers and hospitality institutions to understand the needs of the employees to reduce turnover. The study will help them to make effective strategies to increase the satisfaction level of the employees by providing them the opportunities they want to reduce the turnover rate. One of the contributions of the study is that the employees will be able to understand their needs and rights to excel in the career and to increase job satisfaction level. The key objectives of the study are as follows:
Research Methodology
Research Design
Research refers to the joint human activity in which social reality is observed on the objective basis with the focus of achieving a valid understanding of it (Della Porta, 2014). Marais (1998) specified that there are three approaches of conducting research, such as qualitative research, quantitative research and mixed research. In this study, quantitative research methodology will be used that is linked to positivist perspective. It means quantitative research keeps into consideration the maintenance of focus of the study based on observable facts. In other words, deductive approach will be used in the study with respect to quantitative research approach. The deductive approach enables the researcher to set up hypothesis with the help of theory. Various steps are included in the deductive approach like development of theory and hypotheses, observation via data and information and confirmation (Hall & Page, 2014).
In this study, the focus will be on the explanatory research that includes quantitative research and tools. It attempts to provide clarification why a specific phenomenon occurs and analyzes the casual relationship between variables (Gray, 2013). Quantitative approach is chosen in relation to this study due to the advantages it provides to the researchers. Quantitative research offer two distinct advantages. One of the advantages of the approach is that the results are statistically reliable. It means the approach reliably provides a notion that whether the idea is better than the alternatives. Secondly, the results obtained through quantitative research are projectable to the population (Nykiel, 2007).
Sampling Method
Sampling is the critical feature of research. It is due to the fact that it acts as the basis for the key claim of generalizability. The design of the sampling can be complex, depending on the objective of the study (Biemer & Lyberg, 2003). Saunders et al. (2007) identified that sampling frame refers to the complete list of all cases of the study of the total population from which the sample is selected. It is determined on the basis of total number of participants in the selected population. According to Wetcher-Hendricks (2011) quantitative data include the random sampling to enable each participant of the study to have equal opportunity of participating in the study and to generalize the sample to the larger population.
Population and Sample
The population of the study will be all employees of the top 50 hotels of the (city name). On the other side, the sample of the study will be the 100 employees of the top 10 hotels of (city name) to get the responses related to turnover rate in the hospitality industry.
Data collection
There are two types of data need to be collected, such as primary data and secondary data. Secondary data will be collected through books, journals and reports. In addition, to collect primary data web-based survey will be used. The main reason to use survey is that it is a quick method to collect opinions and requires less time. In addition, it is an inexpensive method (Wiid & Diggines, 2010). In relation to web-based survey, the questionnaire will be developed and the respondents will be asked to express their opinions based on 5-point Likert scale. The questionnaire will include close ended questions about the factors that contribute to turnover intention and factors that improve the turnover rate in the companies.
Research Procedure
First of all, the participants of the study will be sent an informed consent to be signed. They will be assured about their confidentiality and privacy of data. Upon signing the informed consent, time and date will be set and questionnaire will be sent to the participants of the study. They will be asked to give their responses on the scale of 5. For instance, if they strongly agreed to the statement they will rate it 5 as 5-point Likert scale represents 5=strongly agreed, 4=agreed, 3= neutral, 2= disagreed, and 1= strongly agreed. The collected data will be sorted and analyzed by using the statistical tools.
Data Analysis
The collected data will be analyzed with the help of descriptive statistics. As the correlation coefficient between variables will be determined to know the association between factors that lead to turnover and turnover intention. In addition, relationship between factors that improve job satisfaction level of employees of hospitality industry and turnover rate will be calculated. The dependent variable of the study will be the turnover intention and independent variables will be extrinsic and intrinsic factors. Moreover, to analyze the data SPSS software will be used.
Ethical Consideration
As described earlier, ethical considerations will be part of the study. The participants will be sent the informed consent. The informed consent will include the assurance that the data will be used only for the research purpose. Moreover, it will be kept confidential and privacy will be assured. Only the researcher will have the access to the data and after a certain time period the data will be discarded. The policies of the university/college regarding research will be kept into consideration and permission of the ethical committee will be taken.
Conclusion
The discussion provided an overview that in the next three years, the issue of turnover will be enhanced. It is due to the fact that expectations of the employees in hospitality industry are based on the higher pay, working conditions, and advancement opportunities. To avail these opportunities, the employees look for other job opportunities that leads to turnover intentions. Hence, it is important to evaluate the factors to overcome the issue of turnover.
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