Background and Introduction
Discuss about the Employee Dissatisfaction and the Turnover Crises in the Malaysian.
With the enhancement of globalization and international competition, it has become highly crucial for the organizations to recruit, retain, as well as manage resources in order to increase the competitive advantages of the organization. Among the various resources available in the hospitality industry, human resource can be considered as the most valuable one that requires special attention. The X hotel is a multicultural hotel situated at Sydney, Australia. The mentioned hotel has gained a good reputation in both local and global hospitality industry due to its high quality of services offered to the consumers. However, in the past 1 year, the organization had experienced high employee turnover. The turnover rate of the X hotel got increased from 12 percent to 47.5 percent within a time span of 6 months. As a result of this massive turnover, the quality of service of the hotel had deteriorated and this, in turn, had reduced the consumer base of the hotel.
The excessive employee turnover of the X Hotel has imposed a highly negative impact on the quality of service provided by the hotel staff of the organization to the consumers. As a result of this, the number of loyal consumers of the organization has got reduced. The purpose of the research is to find out the impact of employee attrition on the consumer satisfaction of Hotel X. The objectives of the research are as follows:
To find out the reason behind excessive employee attrition in the organization
To find out the degree to which employee turnover has imposed an impact on the employee satisfaction of X hotel.
To find out effective strategies by with the management of X hotel will be able to reduce the employee turnover rate.
Considering the fact that consumer satisfaction is the chief concern of the hospitality industry, this research will help the organizations associated with the global hospitality industry to understand the potential reason of employee turnover and how employee turnover can impose an impact on the satisfaction of consumers.
In this research, a literature review has been carried out for secondary data collection. The literature review is followed by the methodology of the research. Art from that, the research paper also contains discussion on the findings of the research. Finally, a recommendation has been provided in this research paper so that X Hotel can minimize its turnover rate and regain its lost consumer loyalty.
According to AlBattat & Som, (2013), low remunerations, lack of appropriate training and performance appraisal are three chief reasons behind employee attrition in the Australian Hotel industry. Employees are found to exhibit lack of commitment towards the organization where the remuneration rate is low. The author has opined that commitment of employees to an organization can be ensured by implementing a suitable HR System that can help the organization to improve its labour relation as well as the quality of services. () argued that, discrimination on the basis of age, sex, gender and sexual orientation can be considered as another major reason for employee attrition in the hospitality industry. In a good number of Hotels in Australia, there prevails a difference between male and female staff voices in the organization. The number of male employees in the Hospitality industry is much more compared to the number of female employees. As a result of this, sexual discriminations in the workplace are frequent in the mentioned industry. Discrimination in the workplace often leads to conflicts which in turn results in employee turnover. According to Bharwani & Butt, (2012), the difference in job types is a major determinant of employee retention in the mentioned industry. Front office employees are found to be more intrinsically motivated compared to the back office employees. The need for achievement and the need for affiliation is found to be higher in the from office employees. Hence, the turnover rate of front office employees is found to be less compared to that of the back office employees.
AlBattat & Som, (2013) argued that excessive work stress is directly proportional to labour turnover in the hospitality industry. Researchers have asserted that there are direct and indirect costs of work stress which could lead to the crucial problems of labor, employers, and the community. Some of the chief reasons behind work stress are role ambiguity, lack of power and conflict within the organization. However, Zopiatis, Constanti & Theocharous, (2014) argued that role ambiguity and lack of leadership skills in the leaders are two major reasons behind employee turnover. The term role ambiguity can be defined as the lack of knowledge of the employees about their own job role and requirements. In cases where employees lack knowledge about their own job roles, it gets difficult for them to pursue the job and gain job satisfaction. In such cases, employee turnover is an unavoidable phenomenon. Lack of leadership skills among the managers often leads to favoritism as well as conflict among the employees. In cases where employees are dominated by the leaders and lack the power to communicate and execute their duties keeping accordance to their own understanding, job satisfaction of the employees are hampered. Moreover, overly dominating leadership and partiality in the workplace also result in deterioration of the workplace environment. The demotivating workplace environment is a major reason for employee attrition in the hospitality industry.
The significance of the Research
Job satisfaction can be considered as a major factor that determines the stability of an employee in an organization. When it comes to the hotel industry, research suggests that job satisfaction is higher among part-time employees compared to that of the full-time employees (Bharwani & Butt, 2012). Part-time employees are referred to those employees whose working time comprised of fewer hours per day, week, month or year than the full-time employees. The author argues that considering the fact a good number of employees in the hotel industry belongs to the age arranges of 18 to 25 years, part-time contracts permit the employees to invest more time on their education and thus ensures job satisfaction.
However, Ghosh et al., (2013) argued that permanent contracts have a positive impact on the job satisfaction of the employees. Unlike a temporary contract, permanent contract offers job stability and permits the employees to plan their personal as well as professional life in order to ensure a secure future. Moreover, employees with permanent contracts are found to develop emotional attachment with their workplace which in turn has reduces the chance of employee attrition in the organization. 62.3 percent of employees working in the Canadian Hospitality industry prefers fulltime job over part-time jobs.
Mehta, Kurbetti & Dhankhar, (2014) stated that job satisfaction among the employees is directly proportional to the degree of family dependence and the amount of remuneration provided to the employees. The amount of wages received by an individual determines his social status and source of recognition and security to a great extent. More is the number of wages received by an employee more will be his job satisfaction and commitment towards the organization. High remuneration not only enhances the lifestyle of the employees but also provides him or her with freedom and means to acquire other values and services. When it comes to the length of service of an employee there are two opposing opinions among the researchers associated with Job satisfaction. According to a group of researchers, Job satisfaction is inversely proportional to the length of service (Sengupta & Dev, 2013). This is because pursuing a similar kind of job for a prolonged period of time can make the service monotonous and boring to the employees and this in turn often erode a worker’s interest and hence decrease job satisfaction. On the contrary, Employees with less length of service are found to be highly enthusiastic about their job profile and hence are more satisfied with their job role. However, according to another group of researchers, prolonged service makes the employees more committed to the organization (Zopiatis, Constanti & Theocharous, 2014). With prolonged service, the job role of the employee gets clearer and thus the efficiency of the employee also gets increased. The enhanced amount of efficiency leads to performance appraisal and thus enhance the job satisfaction of the employees. According to a survey conducted in an Australian Hotel, 74.3 percent of the employees are found to prefer providing service to the organization where they have been working for more than 10 years (Wu et al., 2013).
Scope of Report
With the enhancement in global competition, employee retention is still a serious issue in the Hospitality and food service sector. According to the Bureau of Labor Statistics, the sector has an annual turnover rate of 73.8%, with over 6% of staff leaving every month (Liang, 2012). One of the best ways to retain employees in the hospitality industry includes incentivizing long-term benefits for the employees. For instance, according to a survey, 75 percent of the employees determine to continue in their current institution depending upon whether retirement benefits are provided to them or not (Jang & George, 2012). Hence it can be understood that retirement benefits are crucial drivers of recruitment and employee retention. Several hotels, restaurants as well as other sectors of the hospitality industry have implemented retirement benefit schedules in order to retain employees and secure their financial future.
Another cost-effective way of retaining employees in the organization is by creating a work-friendly environment in the workplace. The survey states that employees perform 20% better and are 87% less likely to leave than employees who are disengaged. Not only that, organizations with high employee engagement enjoyed a rise in revenue by 2.5 percent compared to organizations with lower employee engagement.
The research paper is conducted to analyze the impact of employee attrition on consumer satisfaction at the X Hotel located in Sydney and to develop effective strategies for employee retention. The researcher had used a qualitative approach to conduct the research. Both primary, as well as secondary data collection method, is used for collecting the data for the research paper. The chief reason behind selecting the qualitative approach over quantitative approach for this research paper was that qualitative approach had helped the researcher to look deeper into the research issue by creating openness and encouraging the interviewee to expand their responses. Not only that, unlike quantitative analysis, qualitative data analysis method has provided the researcher with the opportunity of collecting both primary as well as secondary data. While the primary data collection strategy had helped the researcher to gather in-depth knowledge of the research issue, the secondary research strategy had helped the researcher to evaluate the authenticity of the research paper. The primary data collection strategy involved conducting an open-ended interview with the hospitality supervisor of the X Company. The interview was conducted for 30 minutes and 19 open-ended questions were asked to the interviewee.
For secondary data collection, a literature review of 10 journals associated with the research topic had been conducted. The research question of this research paper is to evaluate the impact of employee attrition on consumer satisfaction in the hotel X. The purpose of the research paper was to develop effective strategies for minimizing employee retention in the mentioned organization. The objective of the research was as follows:
- To find out the reason behind excessive employee attrition in the organization
- To find out the degree to which employee turnover has imposed an impact on the employee satisfaction of X hotel.
- To find out effective strategies by with the management of X hotel will be able to reduce the employee turnover rate.
Literature Review
The literature review was conducted on the basis of the objective of the research paper. The three major topics of the literature review were causes of Employee turnover in Hospitality Industry, Job satisfaction of employees in the Hospitality industry and Employee retention methods in the Hospitality industry.
The research paper was developed within a time span of 15 days. In the first week, primary data was collected by interviewing the interviewee and the data gathered from the interview was analysed. The second week was spent for gathering relevant literature for conducting the literature review and analysing the data gathered from the literature review. In the third week, the data collected from interviewing Mr. Y the hospitality supervisor of the X Hotel is compared to the data collected from the literature review to determine the authenticity of the primary data collection. In the fourth week, the analysed data were evaluated and effective recommendations for the Hotel X to deal with excessive attrition was suggested.
Considering the fact that both primary and secondary data for the research had been collected from authentic sources, the research can be considered as highly credible, dependable and confirmable. The 10 articles used as the source of secondary data collection are peer-reviewed scholarly articles. For analysing the data that has been collected, the research has been coded by using the ‘bubble method’ of coding. Considering the fact the research is confined within a specific institution, the methodology of this research can be replicated by other researchers who want to conduct research with respect to a different situation and a different hospitality related issue.
In order to avoid any ethical issue, the research has been conducted by providing adequate information about the context of the research to the interviewee. Apart from that, confidentiality, anonymity and privacy of the interview had been maintained throughout the research period
The major findings obtained from the literature review are as follows:
- The chief causes of employee turnover in the Hospitality industry are low remuneration, lack of extrinsic as well as the intrinsic motivation of the employees, excessive work stress and inappropriate training session. More than 75 percent of employee turnover occurs due to lack of proper remuneration structure in the Australian hospitality industry. This rewarding system includes both monetary and non monitory rewarding strategies.
- Organizations that have successfully retained their employees are found to follow monitory rewarding strategies like performance appraisal and retirement incentives. Successful non-monitory rewarding strategies include work from home, office party and justified the number of leaves.
- Another major reason for employee turnover includes discrimination in the workplace on the basis of age, gender and sexual orientation. Male employees are greater in number in the hospitality industry compared to that of the female employees.
- Front office employees are found to be more intrinsically motivated compared to the back office employees.
- Job satisfaction of the employees is found to be directly proportional to the remuneration rate and family dependence of the employees. Higher the remuneration higher will be the job satisfaction of the employees. Moreover, employees who have higher family dependence are found to be more satisfied with their job profile.
- Employees who work on a full-time basis are found to be more satisfied with their job profile compared to employees who work on a part-time basis. 62.3 percent of employees working in the Canadian Hospitality industry prefers fulltime job over part-time jobs.
- Length of service period is found to be directly proportional to the job satisfaction of the employees. 74.3 percent of employees prefer working in an organization where they have been working for more than 10 years (Ghosh et al., 2013).
- One of the best measures to retain employees in an organization is creating a work-friendly environment in the workplace. The survey states that employees perform 20% better and are 87% less likely to leave than employees who are disengaged. Not only that, organizations with high employee engagement enjoyed a rise in revenue of 2.5 percent compared to organizations with lower employee engagement (Mehta, Kurbetti & Dhankhar, 2014).
- Major challenges faced by the HR department of the X Hotel during the staff selection and recruitment procedure are the poor quality of the candidates in terms of communication skills and experience, lack of applicant for posts like Casino Hosts, Game dealers and Cruise Ship attendant and the unwillingness of candidates to get relocated.
- Chief criterions that are looked for during recruitment of a new employee in the X organization are a commitment for the job, are Interpersonal skills, problem-solving skills, flexibility and whether the candidate is organized or not.
- According to Mr. Y the hospitability supervisor of the company, negative effects of employee turnover includes deterioration of the workplace environment and employee loyalty, deterioration of the quality of service and product offered to the consumers resulting in consumer dissatisfaction.
- Major causes of turnover in the X hotel are lack of appropriate remuneration structure, conflict in the workplace due to lack of leadership skills in the managers, an increased amount of work pressure due to excessive employee attrition and lack of cultural competency, appropriate training session and payroll within the organization.
- Benefits of employee retention according to Mr. Y are a decrement in the cost of an organization, increment in the annual revenue and reputation of an organization.
- Employee performance in the Hotel industry can enhance by training programs like ‘Guest service Gold’ and ‘Supervisory skill builders’. Extra leave opportunities and reward system also enhance employee motivation and performance.
- Unlike volunteer turnover, non-volunteer turnover enhances the quality of services and improves the workplace environment of the organization.
- Excessive employee turnover is directly proportional to the consumer satisfaction in hotel X. This is because employee turnover deteriorates the quality of services offered to the consumers which in turn reduce the consumer base of the mentioned organization.
- In order to satisfy consumers, job satisfaction of the employees is highly crucial.
From the finding of the research paper, it can be clearly understood that employee turnover has the potential to impose a negative impact on the satisfaction of the consumers. Findings from Both primary as well as secondary data implies that the rate of employee turnover is directly proportional to the consumer satisfaction. In the following paragraphs, the findings of the research will be analysed and compared to other kinds of literature in order to ensure the authenticity and credibility if the research paper.
Causes of Employee turnover in Hospitality Industry
According to findings of this research paper, recruitment of inappropriate employees can be considered as one of the major reasons behind employee turnover in the hospitality industry. This is obvious since poor quality of staffs deteriorates the productivity of an organization. Especially when it comes to the hospitality industry, communication and listening skills, good social perceptiveness, cultural competence, and experience in the field are highly crucial to enhance the quality and consumer base of the organization. As a result of this a majority of candidate suffers from failures in the entry-level position. Unavailability of skilled candidates results in recruitment of the wrong individual for a certain job role. This in turn, results in job-dissatisfaction among the employees. Job dissatisfaction eventually results in employee turnover.
Figure 2: Comparison of employee turnover rate in different industries
Source (Rothfelder, Ottenbacher & Harrington, 2012)
According to Lee & Ok, (2012), lack of pre-employment assessment can be considered as a major challenge faced by the hospitality industry. Majority of the organization associated with the hospitality industry fails to access psychological factors like the degree of commitment and morale of the employees during the time of recruitment. Low morale has the potential to impose a huge impact on the service standards which can tarnish the reputation of the hotel, restaurant and bar and eventually results in erosion of the business. The causes of low morale can vary by business, but some of the top offenders were lack of training, unskilled colleagues, understaffing, stress, and few rewards. Therefore, in order to recruit loyal employees the HR department of organizations should implement effective strategies that can access the psychology of the interviewee during the time of interview. Instead of hiring candidates with high educational qualification, the HR managers of organizations should recruit employees through sources like referrals, the hiring of elderly individuals, minorities, and handicap employees in order to reduce the employee turnover rate. It has been found that employees with lower financial background and elderly or handicap employees have a greater commitment towards the organization compared to young and highly educated employees. Lack of job opportunity and financial support of the former one can be considered as two of the major reason behind their loyalty.
Apart from inappropriate recruitment, the finding states that several other factors are responsible for employee turnover in the hospitality industry. From the literature review t has been found that the five chief reasons behind employee attrition in the hospitality industry are inappropriate remuneration structure, excessive work stress, discrimination in the workplace, lack of workplace friendly environment and inappropriate training provided to the employees. This factor clearly matches with the reason behind employee attrition in hotel X as being stated by Mr.Y. Considering the fact that training is a crucial factor in the hospitality industry since it involves dealing directly with the consumers and satisfying them with the services, lack of proper training affects the skill development of the employees. Lack of skills in the employees directly influences their job satisfaction. Employees are unable to understand their job and hence fail to develop the capabilities to reach their goal. Thus dissatisfaction in the job role results in employee attrition. Inappropriate provision of training also results in poor productivity of the organization. When employees are unsure and lack confidence in their job, it is obvious that their productivity will be reduced. This in turn, not only reduces the annual revenue of the company but also impose the high impact on the reputation of the company. According to a survey, unskilled employees are more likely to suffer from injury in the workplace due to lack of knowledge and skills (Rothfelder, Ottenbacher & Harrington, 2012). Considering the fact that several organizations in the hospitality industry skip the training session in order to save time and cost, the absence of proper training session can not only affect the profit of the organization but can also give birth to legal issues resulting from fatal accidents n the workplace.
Job satisfaction of employees in the Hospitality industry
High work stress and unhealthy work environment are two major reasons behind employee attrition in the hospitality industry. According to Karatepe, (2013), employee stress is a significant issue in the hospitality industry, and it is costly for employers and employees alike. The two most common stressors in the hospitality industry include interpersonal tensions and technological overloads in the workplace. When it comes to working stress, managers of hotels and restaurants are found to be more likely the victim of stressor compared to ground level employees. Excessive workload, apart from imposing a highly negative impact on the work-life balance of the employees also results in physical health issues. High work pressure among the employee leads to deterioration of the workplace environment. According to Ryu et al., (2012) high-stress level often give rise to work-family conflict issues. If not managed properly, WFC can produce many detrimental consequences, including decreased employee performance, job dissatisfaction, lateness, absenteeism, and high turnover. When it comes to the impact of employee attrition on consumer satisfaction, data collected from both literature review and from the interview conducted with the Hotel manager of Hotel X, it has been found that employee attrition results in deterioration of the quality of work which in turn results In consumer dissatisfaction. The hospitality industry is highly dependent on the satisfaction of its consumers. Considering the fact that the mentioned industry is highly congested, the power of consumers in the hospitality industry is high. The low switching cost of the mentioned industry has further enhanced the power of the consumers. Considering the fact that almost similar quality and facilities are provided by the hotels of the hospitality industry of Australia, the consumer can switch from accepting the service of the hotel to another in case of slightest of dissatisfaction. Due to this a high completion prevails among the hotels, restaurants and Bars associated with the Australian Hospitality industry. Excessive employee turnover negatively affects consumer service. Turnover of an experienced employee not only lowers the quality of services of an organization but also reduces the competitive advantage of the company. Moreover, in industries with a high level of competition, experienced employees when get recruited in a rival organization enhances the competitive advantage of that organization. Apart from deterioration of the quality of service of Hotel X, employee attrition had enhanced the pressure of work of the current employees of the organization. Considering the fact that the number of employees in the mentioned organization has got reduced due to excessive employee attrition, a single employee is compelled to provide the service of 2 or 3 employees. According to researchers, excessive work stress deteriorates the quality of service of the employees (Torres & Kline, 2013). Excessive workloads reduce the work-life balance of the employees which in turn reduces their commitment to the job. This deterioration I the service provided in the mentioned hotels has left the consumer unsatisfied and has reduced the consumer base of the organization.
In order to deal with excessive employee attrition, Hotel X should implement the retention strategies discussed in the following paragraph:
- It is highly crucial for the HR department of hotel X to recruit an efficient and loyal candidate to deal with the excessive employee turnover. As being suggested by Lub et al., (2012), the company should recruit candidates who have higher family dependence and lacks a huge amount of job opportunity. For instance the companies can recruit elderly individuals, candidates from the minority community, and handicap candidates in order to reduce the employee turnover rate. Beside that the HR department of the X hotel should implement effective recruitment strategies like conducting a seriate of interviews where open-ended questions are asked to the candidates in order to understand their degree of commitment and expectations from the job.
- Secondly, the institution needs to provide quality training programs in order to enhance the working skills of the employees. Instead of providing on the job training to the employees, a proper training session of at least 2 months should be provided to the newly employed staffs. This is because, unskilled or fresher employees are likely to undergo errors while dealing with the consumers for the first time. This in turn, can impose a negative impact on the consumer satisfaction of the consumers. Provision of a separate training session has the potential to prevent consumer dissatisfaction. A part from proving separate training session to the new employees, the HR manager of X hotel should regularly conduct a performance review of each and every employee. Employees with major issues should be provided on the job training. One of the most effective training programs that can be implemented by the organization to enhance communication and interpersonal skills of the employees is the Guest Service gold training program., the target of which is to create a service-oriented line level employees who know how to engage with their guests and provide the best customer experience possible. Secondly, we have implemented the ‘Supervisory Skill Builders’ training program where managers at all levels will be familiarized with chief subjects like time management, communication, leadership, competence and staffing. This will enable the manager to manage their fellow employees in an effective way and prevent employee attrition (Torres & Kline, 2013).
- Apart from providing training for skill development of the employees, the HR management of X Hotel should educate the employees about the importance of diverse workplace and implement ice breaking programs to enhance the bonding between the employees (Karatepe, 2013). Both formal as well as informal communication between the employees should be encouraged. Enhanced bonding between the employees will improve the workplace environment which in turn will help the management to retain its employees.
- Remuneration rate is one of the major reason behind employee attrition in the X Hotel, the management should restructure and enhance its remuneration rates in order to deal retain experienced employees and attract skilled employees during the recruitment procedure. In spite of the fact that enhancing its remuneration will initially enhance the cost of the Organization, this strategy will provide the company with a competitive advantage in the near future. A part from enhancing the salary of the employees, the HR manager should implement several monitory as well as a non-monitory reward system in order to motivate the employees both extrinsically an intrinsically (Torres & Kline, 2013). While monitory motivation can include implementation of a strong incentive strategy for employees who works over the shift, non-monitory motivation may comprise of the office party, work from home facilities and others.
- Considering the fact that discrimination in the workplace is a major reason behind excessive employee attrition in the mentioned organization, the HR department should remodel and implement strict workplace policies and procedures to eradicate the issue. All the rules associated with antidiscrimination policies should be clearly written and established. An employee handbook should be created where all the benefit that should be provided to the employees along with the rules and regulation will be jotted down. In case of any types of discrimination with respect to race, gender, sexual orientation and age, immediate legal action should be taken by the management of the Hotel. This type of acts will not only ensure the safety of the employees in the workplace but will also enhance the reputation of the organization in the Australian Hospitality industry.
Conclusion
From the above discussion, it can be concluded that employee attrition can impose a highly negative impact on the consumer satisfaction of a company. In the research paper, several reasons behind employee retention in the hospitality industry in general and in the X Hotel specifically have been discussed. It has been found that the chief reasons for employee attrition are low remuneration rate, high discrimination in the workplace, lack of adequate training programs and excessive overload of work. Lack of leadership skill of the managers is another major reason behind employee attrition in the X hotel. In order to deal with the issue, several recommendations have been provided to the management of the X Hotel so that they can cope up with the excessive amount of employee attrition.
Reference List
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