Employee Turnover in Relation to Specific Human Resource Management Practices
Category : Employee Empowerment, Human Resource Approaches
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Problem and Its Background
The way trade and commerce is conducted nowadays has evolved. Everything involving the operations of the organisation demands a more expeditious means of addressing issues and changes in the external environment. Though this apparently would drive weak companies into the verge of exiting the market, the good ones find a way for this intense demand for constant improvement to their advantage. There are some who find a way to make these incessant demands for change trigger the developmental needs of the company. This is especially true in the case of the hospitality industry. In this industry, the focus is more on the service rendered to the public; hence there is a distinct possibility for it to be indistinguishable and interchangeable. Though the external environment has been regarded by numerous organisational studies to be one of the key elements for organisational success, this end could not be achieved without initially having a strong and stable internal environment. This study will focus on that element of the organisation, particularly of Shangri-la Hotels and Resorts. Specifically, the study shall take into consideration the issue of employee turnover in relation to specific human resource management practices provided by these organisations in the hospitality industry. For this chapter, the subsequent parts shall give further details about the intention of this paper. Specifically, the chapter shall provide for the background of the topic, the actual aims and objectives of the organisation, the plan for the study, its rationale, significance to the existing literature, and its scope and limitations.
Background of the Topic
The internal environment provides the foundation on which an organisation establishes a firm base so as the demands of the external environment does not lead it away from its ultimate goals. In the past and existing literature, there are a couple of models on which the internal environment is managed. These two prevailing models include personnel management and human resource management. These models are often used interchangeably and espouse confusion to those unfamiliar with the differences. Personnel management is essentially the more seasoned model than human resource management which imposes key administrative processes in the common organisation. ( 1990, ) The issue on the use of this model is that its potential could only be maximised when the organisation imposes a strict bureaucratic model. (2001)
On the other hand, the emergence of human resource management basically uses the same principles as that of personnel management. However, the scope has been broadened to cover elements not limited to the administrative functions of the organisation. These key elements, in relation to human resource management, are now compounded with the consideration of motivation and morale of the employees. (1995, Hence, this addition have made the process more agreeable to the processes of the private sector as the model has veered away from the accepted notion that the people in the organisation are mere elements of the administration.
Aims and Objectives
Human resource management has become one of the more important models of management applied in the modern organisation. In this study, a closer look on the labour turnover in the hospitality industry shall be made. Specifically, the conditions surrounding Shangri-La shall be the basis of the discussions in the ensuing chapters. This study intends to establish the relationship of the effective implementation of human resource management and employee turnover in the hospitality industry. In order to carry out this study, the researcher shall carry out the following objectives.
· What is the existing employment structure in Shangri-La?
· How does Shangri-La practice its human resource management functions?
· How do the employees regard the company’s performance in terms of:
o Training and Development
o Working Conditions
o Organisation and Productivity
o Empowerment and Employee Involvement
o Management and Supervision
· How does Shangri-la sustain a level of retention of the well-performing staff in the organisation?
What is the relationship of
labour turnover and the implementation of human resource management practices of
Plan for the Study
The paper shall carry out both quantitative and qualitative analysis of the possible causes of labour turnover in Shangri-la Hotels. To be more specific, the analysis of the practice of human resource management initiatives of the respondent company shall be made to determine whether or not it has a direct effect on the overall retention and turnover of personnel.
The dissertation shall be divided into several chapters. This will ensure that the discussions are clear and consistent with the distinct areas covered by each chapter. For the purposes of this dissertation, the discussions shall be divided into five Chapters. This first chapter basically forms part of the introductory elements of this paper. It offers a discussion on what the dissertation intends to tackle and what organisational issue it seeks to resolve. An introduction to the general problem of turnover in the hospitality industry, a background of the current environment of the said industry and the rationale why and how this general problem needs to be addressed shall be indicated in this chapter. Hence, the first chapter shall build the foundation on which the subsequent chapters will relate.
The second chapter shall provide for the review of related literature pertaining to employee retention, labour turnover and human resource management. On a more specific note, the discussions shall fall squarely on how the existing literature points to the concepts and issues mentioned in the aims and objectives of this paper. Moreover, this chapter will also provide some description of past studies that shows similarities with the intended ends of this paper. These discussions will then be used to relate to the actual findings of this study.
The third part of the paper shall cover the methods and procedures used in this paper. Simply, the discussions on this chapter shall cover the models used in the data acquisition processes in the paper. Statistical tools as well as other concerns which the researcher encountered during the course of the study shall be taken into account. This is to provide a transparent account on how the data is acquired and that the data used in the analysis are credible.
The fourth chapter shall present, interpret and analyse the data acquired from the respondent company. In this part of the study, tables and charts shall be used to summarise the findings made by the research process. Specifically, the processed data from the quantitative research shall be discussed and related to the objectives of the paper. In addition to that, the discussions shall also relate the findings on the existing theories pointed out in the earlier literature review.
The last chapter shall be giving out the summary, conclusions and recommendations based on the findings of presented in the preceding chapter. In doing so, this chapter will succinctly specify the implications of the study on the overall field of organisation and human resource management. The recommendations given in this chapter shall cover the observations and arguments made throughout the dissertation.
Rationale of the Study
Organisational studies have emphasised time and again of the importance of offsetting the demands of the external environment with the internal environment of the organisation. This harmony provides for the overall success of the organisation. The very manifestation of this stated harmony is seen in the flexibility of the company in dealing with the demands of their operations. This is especially true for the hospitality industry as they tend to operate in a much wider scale compared to other fields. ( 2006,) The management and supervision of the environment is thus a given prerequisite.
As stated in the earlier parts of this chapter, the internal environment serves as foundation for the company in dealing with the nuances of the external environment. However, this can only be done if the organisation holds on to a competent set of workers and employees dedicated to the realisation of organisational goals. ( 2004,) The problem with this requirement is that this rarely takes place. Companies, after training their employees to meet the standards that they require, do not stay too long in the organisation as they seek other opportunities elsewhere. Studies have also pointed out that employee turnover tends to increase the costs incurred by the company and at the same time opens it up for significant losses. This is compounded by the fact that turnover of employees has the propensity to be driven by personal decisions of the individual employees. Studies have pointed to this phenomenon as voluntary turnover. Acts like resignation and retirement are among those that signify voluntary turnover. ( 2004, Hence, retention is deemed as an indispensable ends on which the company has to achieve.
Significance of the Study
In the past decades, the study on human resource management has become one of the most contested and debated topics. Scholarly journals and academic articles have assailed every nature of the model. In the same manner, a good number has been made for the purpose of analysing the importance of retention and the effects of turnover. This dissertation would be a welcome addition to this existing literature. In addition, the analyses and findings of this dissertation will fill in the rather scant studies on the effects of turnover and the importance of retention in the hospitality industry.
In this regard, it is important to mention that the study will be focusing on a particular hotel in China. Hence, the setting of the study will also establish the existing conditions surrounding the hospitality industry in China. It will also be able to provide a succinct description of the nuances on which may help multinational companies seeking entry on the said market. Furthermore, this study will also be helpful for academics seeking to pursue further studies on the matter. This may trigger an impetus to further improve the knowledge of the existing environment and the industry on which the respondent company operates. To this end, the study will beneficial to a number of sectors in society. The implications of the findings are not limited to organisational studies alone. It affords an advantage to the actual trade and industry as well as in the academe.
Scope and Limitations
The discussions in the succeeding chapters shall limit itself on the rationale and the stated aims and objectives on this chapter. Subsequently, the data acquired from the primary and secondary sources shall be treated with the utmost ethical standard to ensure that the discussions are all original. In the same manner, all the other claims adapted from previous studies are to be cited while the data acquired from the respondents shall go though a process free from the personal biases of the researcher. All these are done so as the discussions and the contents of this dissertation will not fall under scrutiny and claims of preconception and even unethical manoeuvrings. On the whole, the findings of this dissertation are intended to be treated with the utmost objectivity devoid of any subjective claims coming from this researcher.
Review of Related Literature
The hospitality industry in China is one of the first areas of economic activity to open to outside world and to obtain advanced international management skills as a result. It is evident that China has a bright future in this area, as the rapid development of tourism has been based on a solid foundation. By April 2004, the number of graded star level hotels had reached 8,880 with total turnover of 1,000 billion RMB ($120.48 billion) ( 2005)
People are one of the most important resources for businesses throughout the world. This is particularly true with respect to a service-intensive sector such as hospitality. The hospitality industry’s employment base is in the largest of any industry in China. ( 2005) However, the hospitality industry in China and elsewhere is facing with the problem of a shortage of qualified personnel. With globalization which is heightening competition, organizations must continue to develop tangible products and products and provide services which are based on strategies created by employees. These employees are extremely crucial to the organization since their value to the organization is essentially intangible are not easily replicated (2002).
Organizations invest a lot on their employees in terms of induction and training, developing, maintaining and retaining them in their organization. Therefore, management of an organization at all costs must minimize employee’s turnover. Although, there is no standard framework for understanding the employees turnover process as whole, a wide range of factors have been found useful in interpreting employee turnover . (2004). Managers must recognize that employees as major contributors to the efficient achievement of the organization’s success (2000). Managers should control employee turnover for the benefit of the organization success.
Employees’ turnover is a much studied phenomenon (1998). Labor turnover is also a key competitive parameter in the hospitality industry. The importance of employees was highlighted by (1991) who suggested that a total service approach was needed which included qualitative as well as quantitative elements to deliver what customers expected. Companies today generally do recognize the important contribution that their employees play in delivering the offer. However, they also make every effort to drive down internal costs as part of the price commitment. Labor turnover is seen as one area of cost which can be measured and benchmarked. It is seen as a significant factor which management can influence , 1995). Low turnover is seen as an asset in the competitive war. High turnover is seen as a problem to be managed ( 1986; 2004). (2002). The importance of allowing managerial discretion to store managers in dealing with the problems they face was recognized. (1995) suggested that companies need to invest resources in developing employees. This would lead to increased motivation, enthusiasm and overall lower labor turnover.
This paper focuses on a case study of one international hotel management company in china’s hotels and uses a number of it data sources. It then examines relationships that can account for labor turnover in the light of previous research. The literature on employee turnover is divided into three groups: causes of employee turnover, effects of turnover and the strategies to minimize turnover.
Labour Turnover Defined
The term “turnover” is defined by (1997) as: the ratio of the number of organizational members who have left during the period of being considered divided by the average number of people in that organization during the period. (2000) gives the statement on employee “turnover” is the rotation of workers around the labor market; between firms, jobs and occupations; and between the states of employment and unemployment. 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. This replacement cycle is known as turnover (1995). this term is also often utilized in efforts to measure relationships of employees in an organization as they leave, regardless of reason.
Voluntary vs. Involuntary Turnover
There are many reasons why employees may leave an organization. Traditionally labor turnover has been seen to be either voluntary (the volition of the employee) or involuntary (, 2000; 1977; ., 2001). Voluntary turnover includes push factors such staff leaving due to lack of interested in the job, and pull factors such as staff being attracted to another job by incentives. There is a vast literature on the causes of voluntary employee turnover dating back to the 1950s.
Many studies are based on only a small number of variables which often only explain a small amount of variability in turnover. Most researchers (1982; 2001; Kramer et al., 1995; ., 1981; 1996) have attempted to answer the question of what determines people's intention to quit by investigating possible antecedents of employees’ intentions to quit. To date, there has been little consistency in findings, which is partly due to the diversity of employed included by the researchers and the lack of consistency in their findings. Therefore, there are several reasons why people quit from one organization to another or why people leave organization. The experience of job related stress (job stress), the range factors that lead to job related stress (stressors), lack of commitment in the organization; and job dissatisfaction make employees to quit (2004). This clearly indicates that these are individual decisions which make one to quit. They are other factors like personal agency refers to concepts such as a sense of powerlessness, locus of control and personal control. Locus control refers to the extent to which people believe that the external factors such as chance and powerful others are in control of the events which influence their lives (2004). Manu et al. (2004) argues that employees quit from organization due economic reasons. Using economic model they showed that people quit from organization due to economic reasons and these can be used to predict the labor turnover in the market. Good local labor market conditions improve organizational stability (1983). Large organizations can provide employees with better chances for advancement and higher wages and hence ensure organizational attachment 1990). (2001) argues that local unemployment rates interact with job satisfaction to predict turnover in the market. Role stressors also lead to employees’ turnover. Role ambiguity refers to the difference between what people expect of us on the job and what we feel we should do. This causes uncertainty about what our role should be. It can be a result of misunderstanding what is expected, how to meet the expectations, or the employee thinking the job should be different Kahn et al. 1990. Insufficient information on how to perform the job adequately, unclear expectations of peers and supervisors, ambiguity of performance evaluation methods, extensive job pressures, and lack of consensus on job functions or duties may cause employees to feel less involved and less satisfied with their jobs and careers, less committed to their organizations, and eventually display a propensity to leave the organization ( 1997). If roles of employees are not clearly spelled out by management/ supervisors, this would accelerate the degree of employees quitting their jobs due to lack of role clarity.
The idea of what constitutes involuntary turnover has changed over the last decade. ( 1991) There are some factors that are, in part, beyond the control of management, such as the death or incapacity of a member of staff. Other factors have been classed as involuntary turnover in the past such as the need to provide care for children or aged relatives. Today such factors should not seen as involuntary turnover as both government regulation and company policies created the chance for such staff to come back to work, or to continue to work on a more flexible bases.
Causes of Employee Turnover
Job Related Factors
Most researchers 1982; , 2001; , 1995;, 1981; , 1996) have attempted to answer the question of what determines people's intention to quit by investigating possible antecedents of employees’ intentions to quit. Over time there have been a number of factors that appear to be consistently linked to turnover. An early review article of studies on turnover by (1979) revealed that age, tenure, overall satisfaction, job content, intentions to remain on the job, and commitment were all negatively related to turnover (i.e. the higher the variable, the lower the turnover). To date, there has been little consistency in findings, which is partly due to the diversity of employed included by the researchers and the lack of their findings. Therefore, there are several reasons why people quit from one organization to another or why people leave organization. The experience of job related stress (job stress), the range factors that lead to job related stress (), lack of commitment in the organization; and job dissatisfaction make employees to quit ., (2004). This clearly indicates that these are individual decisions which make one to quit. There are other factors such as a sense of powerlessness, locus of control and personal control. Locus control refers to the extent to which people believe that the external factors such as chance and powerful others are in control of the events which influence their lives Firth et al. (2004).
(2004) argue that employees quit from organization due economic reasons. Using economic model they showed that people quit from organization due to economic reasons and these can be used to predict the labor turnover in the market. Good local labor market conditions improve organizational stability (1983). Large organizations can provide employees with better chances for advancement and higher wages and hence ensure organization attachment. (I 1990)
(2001) argues that local unemployment rates interact with job satisfaction to predict turnover in the market. Role stressors also lead to employees’ turnover. Insufficient information on how to perform the job adequately, unclear expectations of peers and supervisors, ambiguity of performance evaluation methods, extensive job pressures, and lack of consensus on job functions or duties may cause employees to feel less involved and less satisfied with their jobs and careers, less committed to their organizations, and eventually display a propensity to leave the organization ( 1997). If roles of employees are not clearly spelled out by management/supervisors, this would accelerate the degree of employees quitting their jobs due to lack of role clarity.
Organizational instability has been shown to have a high degree of high turnover. Indications are that employees are more likely to stay when there is a predictable work environment and vice versa ( 2001). In organization where there was a high level of inefficiency there was also a high level of staff turnover (, 1994). Therefore, in situations where organizations are not stable employees tend to quit and look for stable organizations because with stable organizations they would be able to predict their career advancement.
Many studies have reported a significant association between organizational commitment and turnover intentions ( 1998). (2000) study confirmed the link between commitment and actual turnover and (2000) analysis showed that organizational commitment was a better predictor of turnover than overall job satisfaction. Researchers have established that there are different types of organizational commitment. (1990) investigated the nature of the link between turnover and the three components of attitudinal commitment: affective commitment refers to employees’ emotional attachment to, identification with and involvement in the organization; continuance commitment refers to commitment base on costs that employees associate with leaving the organization; and normative commitment refers to employees’ feelings of obligation to remain with the organization. Put simply, employees with strong affective commitment stay with an organization because they want, those with strong continuance commitment stay because they need to, and those with strong normative commitment stay because they feel they ought to. study indicated that all three components of commitment were a negative indicator of turnover. In general, most research has found affective commitment to be the most decisive variable linked to turnover.
The relationship between satisfaction and turnover has been consistently found in many turnover studies ( 1998). Mobley et al 1979 indicated that overall job satisfaction is negatively linked to turnover but explained little of the variability in turnover. (2000) found that overall job satisfaction modestly predicted turnover. In a recent 2003) found the main reason by far for people leaving their employer was for more interesting work elsewhere. It is generally accepted that the effect of job satisfaction on turnover is less than that of organizational commitment.
(2001) noted that the notion of job satisfaction and organizational commitment being causally related has not been incorporated in most turnover models. His study indicated there were strong causal links between stress and satisfaction (higher stress leads to lower satisfaction) and between satisfaction and commitment (lower satisfaction leads to lower commitment). He further noted a reciprocal relationship between commitment and turnover intentions (lower commitment leads to greater intentions to quit, which in turn further lowers commitment). In summary, only commitment directly affected turnover intentions.
Characteristics of Employees
Despite a wealth of research, there appear to be few characteristics that meaning fully predict turnover, the exceptions being age and tenure. Age is found to be negatively related to turnover (i.e. the older a person, the less likely they are to leave an organization). However, age alone explains a little of the variability in turnover and as age is linked to many other factors, alone it contributes little to the understanding of turnover behavior. Tenure is also negatively related to turnover (the longer a person is with an organization, the ore likely they are to stay). in concluded that length of service is one of the best single predictors of turnover. et al also found that age and tenure have a negative relationship to turnover.
There is little evidence of a person’s sex being linked to turnover. 2000 meta-analysis re-examined various personal characteristics that may be linked to turnover. They concluded that there were no differences between the quite rates of men and women. They also cited evidence that gender moderates the age turnover relationship (i.e. women are more likely to remain in their job the older they get, than do men). They also found no link between intelligence and turnover, and none between race and turnover.
Wage and Conditions
The research conducted on the link between dissatisfaction with pay and voluntary turnover appears to be inconclusive. (1979) concluded that results from studies on the role of pay in turnover were mixed but that often there was no relationship between pay and turnover. Other studies found no significant relationship. On the other hand, (1991) cited in Tang suggests that the most important reason for voluntary turnover is higher wages/career opportunity.
(2000) noted pay and pay-related variables have a modest effect on turnover. Their analysis also included studies that examined the relationship between pay, personal performance and turnover. They concluded that when high performers are insufficiently rewarded, they leave. They cite findings from (1999) that where collective reward programs replace individual incentives, their introduction may lead to higher turnover among high performers.
For some individuals pay will not be the sole criterion when people decide to continue within an exiting job. (2000) examined the relationship between attitudes towards money, intrinsic job satisfaction and voluntary turnover. One of the main findings of this study is that voluntary turnover is high among employees who value money (high money ethic endorsement), regardless of their intrinsic job satisfaction. However, those who do not value money highly but have also have low intrinsic job satisfaction tended to have the lowest actual turnover. Furthermore, employees within high intrinsic job satisfaction and who put a low value on money also had significantly higher turnover than this second group. The researchers also found that placing a high value of money predicted actual turnover but that withdrawal cognitions(ie thinking about leaving) did not.
Training and Career Development
(2003) detected a complex relationship between turnover and training. He suggested that establishments that enhance the skills of exiting workers have lower turnover rates. However, turnover is higher when workers are trained to be multi skilled, which may imply that this type of training enhances the prospects of workers to find work elsewhere. The literature on the link between lower turnover ant training has found that off the job training is associated with higher turnover presumable because this type of training imparts more general skills ( 2003).
(1999) examined the relationship between career commitment, organizational commitment and turnover intention among Korean researchers and found the role of career commitment was stronger in predicting turnover intentions. When individuals are committed to the organization they are less willing to leave the company. This was found to be stronger for those highly committed to their careers. The author also found that employees with low career and organizational commitment had the highest turnover intentions because they did not care either about the company or their current careers.
Individuals with high career commitment and low organizational commitment also tend to leave because they do not believe that the organization can satisfy their career needs or goals. This is consistent with previous research that high career committers consider leaving the company if development opportunities are not provided by the organization. However, this group is not apt to leave and is likely to contribute to the company if their organizational commitment is increased. found that individuals become affectively committed to the organization when they perceive that the organization is pursing internal promotion opportunities, providing proper training and that supervisor do a good job in providing information and advice about careers.
Comparison of Alternatives
Aggregate level economic studies provide consistent and significant evidence of the impact of labor market conditions on turnover rates at an aggregate level. As(1979) pointed out, at an aggregate level the relationship between economic factors such as employment levels or job vacancies and turnover has been well established. At an individual level, the labor market approach emphasizes expected utility and rational economic choice among employees and the perceived availability of alternative job opportunities.
The relationship between alternatives and turnover on an individual level has been researched widely since 1958 seminal work on ease of movement. Much of the subsequent research focused on the link between job satisfaction, perceived alternative opportunities and turnover. Later, researchers began to focus on the role of both actual and perceived opportunities in explaining individual turnover decisions. Subsequent research has indicated that actual alternatives are a better predictor of individual turnover than perceived opportunities. Research on the impact of unemployment rates as a proxy for actual opportunities in employee turnover revealed that unemployment rates affected the job-satisfaction/turnover intent relationship but not actual turnover ( 1999). They concluded that macro level analysis predicted turnover patterns but perceptions of opportunities did not. This point was reinforced in their study on medical centers in various locations used measures of perceived and objective opportunities in internal and external labor markets. The authors concluded that objectives opportunities were a better set of explanations of actual turnover behavior than either perceived internal or external labor market opportunities. Nevertheless, while actual alternatives appear to be a better predictor of turnover, there is also well-established evidence of the link between perceived alternatives and actual turnover. In their most recent meta-analysis, 2000) confirmed that perceived alternatives modestly predict turnover.
Intent to Quit
Much of the empirical research on turnover is based on actual turnover, although some studies are based on intentions to quit. Apart from the practical difficulty in conducting turnover research among people who have left an organisation, some researchers suggest that there is a strong link between intentions to quit and actual turnover. (1979) noted that the relationship between intentions and turnover is consistent and generally stronger than the satisfaction-turnover relationship, although it still accounted for less than a quarter of the variability in turnover. Much of the research on perceived opportunities has been found to be associated with intentions to leave but not actual turnover ( 1999). One of the possible reasons is that intentions do not account for impulsive behavior and also that turnover intentions are not necessarily followed through to lead to actual turnover.
Implications of Turnover
The impact of turnover has received considerable attention by senior management, human resources professionals, and industrial psychologists. It has proven to be one of the most costly and seemingly intractable human resource challenges confronting organizations. Analyses of the costs associated with turnover yield surprisingly high estimates. The high cost of losing key employees has long been recognized. However, it is important for organizations to understand that general turnover rates in the workforce can also have a serious impact on an organization's profitability, and even survival.
Employee turnover is expensive from the view of the organization. Voluntary quits which represents an exodus of human capital investment from organizations (1992) and the subsequent replacement process entails manifold costs to the organizations. These replacement costs include for example, search of the external labor market for a possible substitute, selection between competing substitutes, induction of the chosen substitute, and formal and informal training of the substitute until he or she attains performance levels equivalent to the individual who quit John (2000). Addition to these replacement costs, output would be affected to some extend or output would be maintained at the cost of overtime payment. The reason so much attention has been paid to the issue of turnover is because turnover has some significant effects on organizations (1987; 1990; 1991; 1992).Many researchers argue that high turnover rates might have negative effects on the profitability of organizations if not managed properly (, 1992;1993; 1990). Turnover has many hidden or invisible costs(1990) and these invisible costs are result of incoming employees, co-workers closely associated with incoming employees, co-workers closely associated with departing employees and position being filled while vacant. And all these affect the profitability of the organization. On the other hand turnover affects on customer service and satisfaction (2002). (2002) argue that turnover include other costs, such as lost productivity, lost sales, and management’s time. This demonstrates that turnover affects the profitability of the organization and if it’s not managed properly it would have the negative effect on the profit.
Research estimates indicate that hiring and training a replacement worker for a lost employee costs approximately 50 percent of the worker’s annual salary (, 2000 - but the costs do not stop there. Each time an employee leaves the firm, productivity drops due to the learning curve involved in understanding the job and the organization. Furthermore, the loss of intellectual capital adds to this cost, since not only do organizations lose the human capital and relational capital of the departing employee, but also competitors are potentially gaining these assets (2002). Therefore, if employee turnover is not managed properly it would affect the organization adversely in terms of personnel costs and in the long run it would affect its liquidity position. However, voluntary turnover incurs significant cost, both in terms of direct costs (replacement, recruitment and selection, temporary staff, management time), and also (and perhaps more significantly) in terms of indirect costs (morale, pressure on remaining staff, costs of learning, product/service quality, organizational memory) and the loss of social capital (2001).
Minimising Turnover: Strategies and Courses of Action
Strategies on how to minimize employee turnover, confronted with problems of employee turnover, management has several policy options viz. changing (or improving existing) policies towards recruitment, selection, induction, training, job design and wage payment. Policy choice, however, must be appropriate to the precise diagnosis of the problem. Employee turnover attributable to poor selection procedures, for example, is unlikely to improve were the policy modification to focus exclusively on the induction process. Equally, employee turnover attributable to wage rates which produce earnings that are not competitive with other firms in the local labor market is unlikely to decrease were the policy adjustment merely to enhance the organization’s provision of on-the job training opportunities. Given that there is increase in direct and indirect costs of labor turnover, therefore, management are frequently exhorted to identify the reasons why people leave organization’s so that appropriate action is taken by the management. Extensive research has shown that the following categories of human capital management factors provides a core set of measures that senior management can use to increase the effectiveness of their investment in people and improve overall corporate performance of business: Employee engagement, the organization’s capacity to engage, retain, and optimize the value of its employees hinges on how well jobs are designed, how employees' time is used, and the commitment and support that is shown to employees by the management would motivate employees to stay in organization’s. Knowledge accessibility, the extent of the organization’s “collaborative ness” and its capacity for making knowledge and ideas widely available to employees, would make employees to stay in the organization. Sharing of information should be made at all levels of management. This accessibility of information would lead to strong performance from the employees and creating strong corporate culture (2002). Therefore; information accessibility would make employees feel 052 . Manage. that they are appreciated for their effort and chances of leaving the organization are minimal. Workforce optimization, the organization’s success in optimizing the performance of the employees by establishing essential processes for getting work done, providing good working conditions, establishing accountability and making good hiring choices would retain employees in their organization. The importance of gaining better understanding of the factors related to recruitment, motivation and retention of employees is further underscored by rising personnel costs and high rates of employee turnover ( 1988; 1989; 1989; , 1981; 1986). With increased competitiveness on globalizations, managers in many organizations are experiencing greater pressure from top management to improve recruitment, selection, training, and retention of good employees and in the long run would encourage employees to stay in organizations. Job involvement describes an individual’s ego involvement with work and indicates the extent to which an individual identifies psychologically with his/her job 1982). Involvement in terms of internalizing values about the goodness or the importance of work made employees not to quit their jobs and these involvements are related to task characteristics. Workers who have a greater variety of tasks tend stay in the job. Task characteristics have been found to be potential determinants of turnover among employees 1988; and , 1980; 1989; , 1984). These include the five core job characteristics identified by (1975, 1980): skill variety, which refers to the opportunity to utilize a variety of valued skills and talents on the job; task identity, or the extent to which a job requires completion of a whole and identifiable piece of work - that is, doing a job from beginning to end, with visible results; task significance, which reflects the extent to which the job has a substantial impact on the lives or work of other people, whether within or outside the organization; job autonomy, or the extent to which the job provides freedom, independence, and discretion in scheduling work and determining procedures that the job provides; and job feedback, which refers to the extent to which the job provides information about the effectiveness of one’s performance (., 1997). Involvement would influence job satisfaction and increase organizational commitment of the employees. Employees who are more involved in their jobs are more satisfied with their jobs and more committed to their organization (, 1989; 1989; , 1988; 1982). Job involvement has also been found to be negatively related to turnover intentions ( 1989). Job satisfaction, career satisfaction, and organizational commitment reflect a positive attitude towards the organization, thus having a direct influence on employee turnover intentions. Job satisfaction, job involvement and organizational commitment are considered to be related but distinguishable attitudes ( 1989). Satisfaction represents an affective response to specific aspects of the job or career and denotes the pleasurable or positive emotional state resulting from an appraisal of one’s job or career 1976; , 1974;, 1986). Organizational commitment is an affective response to the whole organization and the degree of attachment or loyalty employees feel towards the organization. Job involvement represents the extent to which employees are absorbed in or preoccupied with their jobs and the extent to which an individual identifies with his/her job ( 1988).The degree of commitment and loyalty can be achieved if management they enrich the jobs, empower and compensate employees properly. Empowerment of employees could help to enhance the continuity of employees in organizations. Empowered employees where managers supervise more people than in a traditional hierarchy and delegate more decisions to their subordinates (, 1997). Managers act like coaches and help employees solve problems. Employees, he concludes, have increased responsibility. Superiors empowering subordinates by delegating responsibilities to them leads to subordinates who are more satisfied with their leaders and consider them to be fair and in turn to perform up to the superior’s expectations ( 1995). All these makes employees to be committed to the organization and chances of quitting are minimal.
Methods and Procedures
This chapter of the dissertation shall give an account of the methods and procedures used to acquire the primary data used in this study. The chapter shall also give a description of the research process executed in the course of the dissertation. In the same manner, a presentation of the statistical processes used in processing the acquired data from the respondents.
The study encountered a whole lot of barriers in its completion. These include limitations like time constraints and a similarly tight budget. This in mind, the study shall be employing the descriptive form of research. Studies on research design have given certain distinct descriptions on this type of research process. Descriptive research is basically limited to answering specific questions mentioned in the aims and objectives of the study. Moreover, it employs only descriptive statistics to process the data. The reason for this is to establish simple and uncomplicated statistical applications shall be used to make sure that the presentation is understandable and unambiguous. Such statistical processes shall include the likes of such as averages, percentages, histograms, and frequency distributions. ( 2000, )
It is also imperative to point out that the study will be employing an amalgamation of both the qualitative and quantitative research. This intimates that the study will be using both the existing organizational studies and the reports of the Shangri-La Hotels along with the acquired data from the survey conducted from the employees of the Shangri-La Hotels. In using the two types of research, the study is able to discern the significant contributions of the said modes of research on the overall findings of the study. (2003, Moreover, the amalgamation of the two research types provides this dissertation the acquisition of both shallow numerical data and interprets it using the rich qualitative data.
The primary data used in this study is the responses of the respondents from the survey. A survey has been conducted from 15 July, 2008 to 30 July, 2008. Primary data was collected from Director of Human Resources in 24 Shangri-La hotels in China using a survey questionnaire with 24 responses were returned, representing 100% response rate. The questionnaire was developed based on the review of labor turnover in hospitality in the literature. Three faculty members of Shangri-La Hotel Group headquarter evaluated the content. The feedback and suggestions were analyzed, and the questionnaire was refined.
For this study, the primary tool employed for data acquisition shall be the survey questionnaire made by the researcher. The initial part of the survey questionnaire covered the respective characteristics of the respondents. This is essential to establish an overall account of the demographic involved in the study. Moreover, queries on gender, age, job description, and the number of years in the company shall be conducted to similarly determine the variety of the company’s labour force.
The second part of the study will be asking questions that fit with the the aims and objectives of this dissertation. Specifically, questions on employee turnover and organisational development will be given. In the same regard, the Likert scale will be used to measure the responses of the employees. Below is the series at which the respondents will be giving their responses on the questions on this portion of the questionnaire:
4.50 – 5.00
3.50 – 4.49
2.50 – 3.49
1.50 – 2.49
0.00 – 1.49
The third part of the questionnaire shall provide open-ended questions to permit the respondents to generously and unreservedly provide their responses. It must be likewise assured by the researcher that the responses of the respondents on this part of the paper will be used with absolute discretion.
Validity of the Research Instrument
In order to guarantee the soundness of the instrument, the researcher will be giving a draft of the survey questionnaires to the consultant for approval. After the slight modifications and resulting approval of the research tool, the researcher shall seek the assistance of the aforementioned departments in Shangri-La to hand out the questionnaires to five employees in the hotels. These employees shall be asked to give their criticism on the research tool and give propositions on how to further develop the questionnaires. After the subsequent simplification and elimination of any immaterial questions, jargons, and any terms that the respondents could not comprehend, the survey will start to the labour force.
Administration of the Research
Subsequent to the giving out of the survey questionnaires and the resulting acquirement of data, it will be calculated to resolve the findings of the study. With the employment of statistical applications, the following methods shall be employed:
1. Percentage – to settle on the scale of the responses to the questionnaire.
% = -------- x 100 ; n – number of responses
N N – total number of respondents
2. Weighted Mean
f1x1 + f2x2 + f3x3 + f4x4 + f5x5
x = --------------------------------------------- ;
where: f – weight provided to each response
x – amount of responses
xt – total amount of responses
With the exception of the technical concerns in the research process, there is likewise a quantity of ethical concerns that the researcher should be aware. Specifically, the researcher is supposed to understand that that concern should be regarded interminably to the respondents within this dissertation. The employees have to continually be comfortable and within the highest possible condition as they are with the bounds of the researcher. It is only appropriate that the employees are not bothered and disturbed as they are in the course of acting in response to the questions of the research instrument.
Furthermore, the researcher must tender the respondents the assurance of privacy and prudence. It has to likewise be guaranteed on the part of the researcher that the survey would not dish up adverse implications to the actual jobs or any other professional responsibilities that the respondents cleave to in the organisation. In doing so, it could be likely that the organisation will give their full assistance in the course.
Presentation, Interpretation and Analysis of Data
The previous chapters have presented the theoretical foundations of employee retention and turnover in an organization. This chapter shall present the findings of the study based on the survey questionnaire forwarded on HR Director of Shangri-la Hotels. In the same manner, the findings shall be presented in a systematic manner specifically by tabulating it thus presenting a summarized form. In doing so, the discussions shall be more concise and the readers are able to discern the arguments more clearly. Likewise, the interpretation and analysis of the said findings shall be directly related to the discussions provided in the second chapter of this dissertation. Specifically, the literature reviewed shall form part of the foundation on which the following observations and arguments are to be based. In the end of this chapter, a sub conclusion shall be made to synthesize the arguments pointed out in the presentation, interpretation and analysis of the findings provided in this chapter.
II. Voluntary vs. Involuntary Turnover
The second chapter of this dissertation has given the actual definition of voluntary and involuntary turnover. In its simplest sense, voluntary turnover covers resignations and retirements by the employees while involuntary turnover includes organizational actions like lay-offs and termination of employment provided for by the management. In discussing whether Shangri-la’s turnover leans towards voluntary or involuntary turnover, the structure of the company should first be taken into consideration. The table below summarizes the existing employment structure of the company.
Table 1. Existing Employment Structure by Division
The table above is divided into the specific division of Shangri-la. Looking at the discussions above, it plainly shows that by the first quarter of 2008, there are twenty-one Shangri-la hotels in China. They are located in Beijing, Hangzhou, Shengzhen, Beihai, Changchun, Qingda, Dalian, Pudong, Wuhan, Harbin, Zhongshan, Fuzhou, Suzhou, Guangzhou, Chengdu, Baotou, Huhhot and Xian city respectively in China. Total staff headcount in individual hotel from 441 to 1461. Each hotel separated into 7 divisions including Administration, Food & Beverage, Finance, Rooms, Human Resources, Engineer and Sales & Marketing. Majority of employee in individual hotel are in Food & Beverage and Rooms.
The table below presents the actual overall turnover of the company in 2007. Based on the table below, the turnover rate of the company is rather substantial in the said fiscal year.
Table 2. Overall Turnover Report
The table presents that the first quarter of the year, Shangri-la Hotels China incurred a total of 8% of the in the first quarter alone. This shows that in the first several months of the fiscal year, a considerable number of employees have severed their employment relationship with the company, though it is not clear as to whether it is voluntary or involuntary.
The findings also show that the Administration & General division turnover rate is 9%, Food & Beverage turnover rate is 8%, Finance turnover rate is 4%, Rooms turnover rate is 8%, Human Resources turnover rate is 3%, Engineer turnover rate is 4% and lastly Marketing turnover rate is 8%. So, it can tell the highest turnover rate division is Administration & General and followed by Food & Beverage, Rooms and Marketing. Hence, this shows that the Administration and General Division has incurred the most percentage of turnover followed by the Marketing and Rooms Divisions amounting to 8% each. It could be surmised with the said data that most of the individuals leaving the company does administrative work, housekeeping, and even those in marketing.
III. Causes of Employee Turnover
The data provided above presents the actual existence of labor turnover in Shangri-la Hotels in China. Though it is seen that the rate have not bee quite high and appears to be at a manageable level, the causes of the turnover is still unclear. The following discussions will show the actual causes of the turnover based on the survey provided by the researcher on the said company. Areas such as the job related factors, organizational factors, wage conditions, and career development shall be considered to establish which field contributes more to the overall turnover in the organization.
A. Job Related Factors
Figure 1. Physical Working Conditions
Figure 2. Work Organisation and Productivity
B. Organisational Factors
Figure 3. Communication in the Organisation
Figure 4. Supervision in the Organisation
Figure 5. Internal Customer Focus
Figure 6. Management of the Organisation
C. Job Satisfaction
Figure 7. Employee Empowerment and Involvement
Figure 8. Job Security
D. Wage and Conditions
Figure 9. Pay and Benefits
E. Training and Career Development
Figure 10. Training & Development / Career Advancement
Figure 11. Performance Appraisal
F. Comparison of Alternatives
Figure 12. Identification and Image of Shangri-La
G. Intent to Quit
Figure 13. Other Reasons for Quitting
IV. Implications of Turnover
V. Sub conclusion
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