University of Chicago
Type of paper: Thesis/Dissertation Chapter
The reason of high staff turnover rate in hospitality industry
Nowadays, hospitality industry is the largest industry around the world. However, the hospitality industry is now facing on a big embarrassment which is the high staff turnover rate. It is a severe problem to the operation of all hotels. First of all, let’s us first find out what is staff turnover rate.
“Employee Turnover is the Percentage of a company’s employees who leave during a specified period. Although it is most often expressed at annual turnover rate, the calculation can be done for shorter or longer periods.” (F. John Reh, No date.) Simply speaking it is the rate the company loss their staff. Which is “the number of employees who leave the company within a period of time” divided by “the average number of employees in the company within the same period of time”.
And it is know that there are both good side and bad side of the staff turnover rate. The researcher is going to look through the situation happen in hotel industry and find out what is the effect that the high staff turnover rate brings to the hotel industry.
In this paper, we are going to find out the reason of high staff turnover rate within hotel industry and also the solution of this problem.
Is staff turnover rate must be a bad thing to the company? In face no. Within a stable and appropriate of staff turnover rate, it can improve the performance of the organization.
First, it can bring in new idea to the organization. New staff always will bring some fresh idea, which makes the organization enable to have an innovative environment. It is good for creating new ideas and solutions. Also, it remains the competitiveness of the organization. Internal turnover allows existing staff move to a suitable position that he/she may do a better job. And also, external turnover will let the existing staff have “sense of crisis”, that their job may replace by other candidates, in order to motivate them to do their job better.
A coin has two sides, so as staff turnover. It also brings a lot of trouble to the organization.
First, it is time consuming. If a firm always has a high staff turnover rate, which means that this firm must spend a lot of time on recruiting new staffs. Time is always an important winning factor in the business world. No firm will willing to spend a lot of times on finding the suitable staffs again and again. Instead they can use that time to go a better training of staff or make a better work force plan. ‘Lowering staff turnover is also vital in reducing recruitment agency costs and the inconvenience of starting the hiring process.’ (Startup World Staff, 19 January 2014)
Second, the expense will be high. If the staff turnover is the external one, which means that the original staff leave the organization and thus the employer need to replace the staff by hiring someone from outside the organization. During the process, the organization will have expense on recruiting (advertisement, agent fee, etc.) and also training. ‘Experts estimate it costs upwards of twice an employee’s salary to find and train a replacement. And churn can damage morale among remaining employees.’ (Three Rivers Press, 2009)
Third, it may affect the stability of the operation and development of the organization. Especially for the high turnover rates of skilled professionals can pose as a risk to the business organization, due to the human capital (such as skills, training, and knowledge) lost.
Fourth, affect the service quality. New staff always needs a period of time to get familiar with the working environment and job. During their adaptation period, the quality of services of job performance may be affected.
Fifth, the clients resulted opportunity. The organization may loss part of their regular client because of the staff turnover. Some staff may bring their regular client to the new working organization when they change their job.
“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 research conducted by the American Hotel and Motel Association.” (CHA International 2009)
According to CompData Surveys 2011 BenchmarkPro survey, overall employee turnover declined from 18.7 percent in 2008 to 14.4 percent in 2011, primarily because the majority of employees remain with their current employers (CompData Surveys, 2011)
For more information, the research done by Nobscot Corporation in 2006 shows that average turnover rates in the United States varied between around 15 percent annually for durable goods manufacturing employees to as high as 56 percent for the restaurant and hospitality industry.( David Ingram,)
All these data show that the normal staff turnover rate in other industry is around 15%. This contradistinction shows that the staff turnover rate of the hospitality is really high.
The reason of high staff turnover rate in hospitality industry By analysis the reasons that makes the high staff turnover rate in hospitality industry. The high staff turnover rate shows that the staffs in hospitality industry are not so willing to stay in their organization. What makes this situation happen? It can be divided to 3 types of factors, which are individual factors, enterprise factors and industry factors.
First of all, individual factors:
Unstable and long working hours
Working in hospitality industry always requires employees work for long period of time. And working overtime is also always happen. Employees with personality that more concern on family life and freedom will find out that they are no longer willing to work in hospitality industry, as it takes too much of their time and even affect their life. And even for employee that without these kind of personalities, the unstable and long working time will also erode their enthusiasm to work. When employees are tired with the job, they will decide to quit it and leave the industry to change another job.
Money has always been an important factors concerned by employees. In hospitality industry, the wage of front line staffs is usually low or not high. This situation is more serious in China. Front line staffs may find that the wage level is too low and thus they become very wage level sensitive. They will be willing to change their job from one firm to another just because the salary payment in the other firm is a little bit higher than what they got in the original firm. Beside this, employees in hospitality will find out that that the wage level in other industry such as education industry, transporting industry (etc.) is higher than hospitality industry. To earn more money, they will change their job.
Cannot reflect self-worth
Finding the self-value through your job is one of the reason that why people work. It is because the daily in most of the hospitality industry is simple, boring and always the same every day. For example, for the food and beverage attendant, his/her daily job is taking order, cleaning tables, folding napkins. Employees find that they cannot reflect their self-worth through their job. Especially in hospitality industry, they hired many young people. For young staff, they are more concern about is the things they do is meaningful or not. If they find out that the job they do cannot provide them a chance to reflect their own personality and self- worth, they may rather to change a different job.
Monotonous job content
As we talk above, the daily job and work in hospitality can be very boring and repeat. A lot of staff cannot endure such a boring life. Especially for the Y generation.(Now, most of the employees are come from generation Y)They looking for flexible working time, different job task with different challenge. Monotonous job content stop many people from getting in the hospitality industry. Relationship with supervisor
This is not only happening in hospitality industry, but also in other different industries. But it is the truth that a bad/not good relationship between employees and supervisors will affect the employees’ decision about if they will still work in this company or not. If the relation between the employees and supervisor is not good, they will have bad mood during working. This type of negative emotion encourages them to quit the job.
Second, the enterprise factors:
In some enterprise, the organization architecture may not be well-organized. The chaos architecture may lead to confuse decision sending and thus affect the services standard, this kind of situation will make the employees with positive attitude feel disappointed with the enterprise. And they don’t want to work under this kind of organization. Thus these kind of motivated staff will leaving the enterprise, and cause the vicious cycle. The situation within the organization will become worse and worse.
In order to provide a higher quality of services to customer, many enterprises in hospitality industry will set up very high standard, working standard process or requirements to their employees. For example there are hotels require their staff have the unique and standard gait. These types of unreasonable or too high standard of requirement initiate the negative emotion of employees.
Uncertainty of career development
In hospitality industry, not every enterprise will help their staffs do the career development plan, without the career development plan, staffs are lower motivated and lack of loyalty toward the enterprise.
Lack of communication
High level manager don’t have communication with the front line staffs and don’t care about their feeling and opinions. Thus employees don’t have the senses of belonging toward the enterprises.
Third, the industry factors
Unfair to front line staffs
In hospitality, the working hours and workload of front line staff are longest and heaviest. But at the same time their payment are the lowest one. This is the situation happen in hospitality industry around the world. This is one of the main reasons of the high staff turnover rate within the industry.
Different from other industry, hospitality industry provide the intangible product to guest, which including their smile, warm attitude, and body language. Not every employees can bear that, after working in this industry for a while, they may find out that they are really unsuitable for this job.
Especially, staff who working in the operation department. Night shift is required. Employees who need to look after their family (especially with little child) may not willing to work in this industry. They may look for another job that allows them to balance their life and working hour.
How to reduce staff turnover
Staff is the most important resource in a company. It has some of different ways to solute those problems effectively.
Actually, the solution of high staff turnover rate of individual factors is very similar. What should a company do for their staff is let them know the company attach importance to them. To make the staff understand that they are an important resources in the company. Make sure they extract satisfaction with their position. To enable them have a sense of belonging
to the company.
“For some employees, acknowledgment of a job well done can mean almost as much as a pay increase.” (Chris Joseph, no date.) When staff completes their job very well, company should praise them. It is meaningful to that staff. To let them know the company is care about their feeling. This method can also solute the problem ‘cannot reflect self-worth’ and ‘relationship with supervisor’. Not only can let the staff reflect their self-worth, also is a good chance to promote the relationship between supervisor and staff.
“Keep employees engaged to prevent them from becoming bored and losing interest in their work.” (Chris Joseph, no date.) Try to find out what the staff feeling in their job to keep their interest. Allow them to express their ideas. It can ease as a result of ‘monotonous job content’ problem. Simultaneously, it is a method to solute ‘relationship with supervisor’ and ‘lack of communication’.
Suitable compensation, benefits and working schedule
“Get creative when necessary with benefits, flexible work schedules and bonus structures” (Three Rivers Press, 2009) With a flexible work schedules and bonus structures, it can solute the problem ‘unstable and long working hours’. Also, company should review the compensation and benefits regularly. Pay attention to trends in the marketplace and update the compensation and benefits. It can solute the problem ‘Low payment’.
In enterprise factors, many problems can be ascribed by ‘chaos architecture’. So, better way to solute high staff turnover rate in enterprise factors for the company to do is fix this problem first.
Organisational Structures and Systems
It is important for every company to design a well structures and systems. It can optimization the communication between departments and also between staffs. With a suitable structure and system, it can decrease confusing decision sending effectively. “Methodical procedures are important because they have a direct impact on an organisation’s ability to be efﬁcient, trustworthy and credible – pre-requisites for effective functioning. An organisation has a large number of elements, but all have to be managed well.” (Toronto, 18 June 2004) It can also solute the problem ‘lack of communication’. Reset and reasonable working standard
Design a clear and explicit working standard for the staff. It is easily for the staff to abide by the standard. At the same time it should be a sensible standard. ‘Unreasonable Required’ can be solute by this solution.
Use of personnel
Invest more in the staff. “This does not just refer to compensation, which is vital to retaining top talent, but also spending the time to mentor, train and advance your staff.”(Heather Huhman 2013 cited in Lynn Dixon no date) It is because staff is one of the most important resources in a company, especially in hospitality industry. Try to arrange staff with the related skills to the corresponding position. To make sure that the staff has space for the career development. ‘Uncertainty of career development’ can be solute by this solution.
Practically, it is the most difficult one to solve. It is hard to change the feature of hospitality industry. However, it still has a method to decease the high staff turnover rate in industry factors.
‘Create benchmarks against which to evaluate applicants for future job openings so that you focus on hiring candidates who exhibit similar attributes.’ (Ruth Mayhew, no date) Set up a strategy to hire the right staff for your company to ascertain if the staff is a good fit for your workplace culture. It helps relieve the staff turnover in industry factors.
Acconding to this report, high staff turnover rate is a biggest problem in hospitality industry. It bring in many damage to the company.
It has three major factors to result high staff turnover rate: individual factors, enterprise factors and industry factors.
Companies can formulate some method to reduce high staff turnover rate. A simple way to remain your staff, more attach importance to them. At the same time, set up a great organisational structure and system. For a clearly management, invest more resources in your staff, it can be remain your staff effectively. And turn down the high staff turnover rate in your company. To be able to remain your staff, can be able to be a successful company.
CHA INTERATION, 2009, ‘The Employee Turnover ?..The Challenge’, viewed 13 April,2014 http://cha-international.com/The-Hotel-Employer-Turnover
Chris Joseph, no date, Recognize Accomplishments, ‘Staff Turnover Solutions’, Chron, viewed 13 April,2014 http://smallbusiness.chron.com/staff-turnover-solutions-10086.html
Chris Joseph, no date, Promote Engagement, ‘Staff Turnover Solutions’, Chron, viewed 13 April,2014 http://smallbusiness.chron.com/staff-turnover-solutions-10086.html
F. John Reh, no date, ‘Turnover’, About.com Management, viewed 11 April,2014 http://management.about.com/od/metrics/g/Turnover.htm
Heather Huhman, 2013, ‘10 Tips For Reducing Employee Turnover’, TLNT, viewed 13 April,2014 http://www.tlnt.com/2013/05/17/10-tips-for-reducing-employee-turnover/
Ruth Mayhew, no date, ‘How to Reduce a High Turnover Rate’, Chron, viewed 15 April,2014 http://smallbusiness.chron.com/reduce-high-turnover-rate-60283.html
Startup World Staff, 19 January 2014, ‘Flexibility stems costly staff turnover says Regus’, my startup! would, viewed 11 April,2014 http://www.mystartupworld.com/2014/01/19/flexibility-stems-costly-staff-turnover-says-regus/
Three Rivers Press, 2009, ‘How to Reduce Employee Turnover’, guides.wsj.com, viewed 14 April,2014 http://guides.wsj.com/management/recruiting-hiring-and-firing/how-to-reduce-employee-turnover/
Toronto, 2004, ‘Organisational Structures and Systems’, ‘Governing and Managing Organisations Guidelines for AKDN’s work with CSOs No 5’, AKDN, viewed 16 April,2014 http://www.akdn.org/publications/civil_society_booklet5.pdf