The most important intangible product in service industry is the employee itself. Losses caused due to replacing them adds up to the economic s. One of the important tools of employee management ‘Motivation’ has been missing out of ‘TO DO’ list from the organisation directors. They seems to believe that since there are less jobs outside available due to recession in today’s job market, employee would not leave and we are in favour to keep them. Fewer turnovers experienced from employee side but what about the productivity of employee. Can that be tackled by forcing the employee to do whatever as the contract always says, ‘duties could vary according to business requirements’, or disciplinary follow?
Organizations become better places to work through improving leadership skills and corporate culture change. Businesses working on a network of hierarchies imagine a business like a triple-decker bus, the directors of the business are on the top deck, the managers are on the middle deck and the employees are on the lower deck. As the bus runs on its normal day to day business, down the normal streets picking up normal day to day people. What is happening is that the bus should be stopping at various bus stops in order to recruit new employees and managers, so that they can come on the bus and of course obviously let the team members off the bus if they decide to leave. The directors would begin to become conscious that the number of employees leaving the bus is increasing and they are not really quite sure why? So they decide what they should do is to commission an employee survey. Now the cost of the employee turnover is obviously something that is an issue or can be an issue for various businesses.
All organizations heavily invest in the human resource department. The cost of interviewing, hiring, training, developing, maintaining and retaining employees are very high. Therefore, managers at all costs must minimize employee’s dissatisfaction and take every step possible to reduce it. 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 (Kevin, 2004). Therefore, there is need to develop a fuller understanding of the employee turnover, more especially, the sources. What determines employee turnover, affects and strategies that managers can put in place to minimize turnover. During this weakened economic condition and heightening competition, organizations must continue to develop tangible 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 and not easily replicated. Therefore, senior managers must recognize that employees are major contributors to the efficient achievement of the organization’s success (Abbasi, 2000). Managers should control employee turnover for the benefit of the organization’s success.
Critically analyse employee motivation level in hospitality industry with a particular focus on operations management.
1. To investigate the need of motivation in hospitality industry
2. To examine the damage caused with de-motivation
3. To critically access alternatives in reducing employee turnover
4. To provide strategic evaluation for motivating operations management whilst smooth running of the business
Several businesses now days are easily slipping into administration; it is not only several job loses but also a huge loss of efforts made by operating team to bring the business to a certain stage to employ that many employees. Truly speaking, businesses are not built solely to provide jobs and the best comfortable environment for people within the community. They are out there to make money and progress which could be any industry. The purpose of this dissertation is to focus on hospitality industry, where we need to find the root of employee turnover. It is easy for a staff at lower level to move in and out of an organisation in relation to the operating management team. What causes that to happen at first place? Do line managers not see the importance of increasing motivation during difficult times? Are management in need of motivation themselves? Are they much more worried about there own survival? So if the upper management team is satisfied, they would certainly be in a position to furnish their head of departments easily.
Global economic condition is struggling and has to face continues challenges with competitions growing. It cannot be right for a profit organisation to just vanish with small bumps of recession. Of course, both employee and business are affected with these downfalls. A need has aroused to look into this matter because as it’s a fact that turnover has always been one of the high business expenses, thus at the time of recession as the economic conditions are not stable, businesses should do something to beat this cost in hand.
Motivation is the cure that spurns employees’ eagerness to work without pressure. To say that nobody can motivate a team employee at work is like saying there are no influential leaders, there are no effective managers, there are no motivational speakers, the psychologists in sports management teams are useless and that motivation is not achievable. Motivation has been used by effective managers to prompt ordinary people to achieve uncommon results in all fields of endeavours.
Vast amount of literature is available in how to motivate your employee, and it would be applicable in the real world around. Simple definition of Motivation by Lindner, J. R. (1998) can be as “the inner force that drives individuals to accomplish personal and organizational goals.”
Understanding what motivated employees and how they were motivated was the focus of many researchers following the publication of the Hawthorne Study results (Terpstra, 1979). Five major approaches that have led to the understanding of motivation are Maslow’s need-hierarchy theory, Herzberg’s two- factor theory, Vroom’s expectancy theory, Adams’ equity theory, and Skinner’s reinforcement theory.
According to Maslow, employees have five levels of needs (Maslow, 1943): physiological, safety, social, ego, and self- actualizing. Maslow argued that lower level needs had to be satisfied before the next higher level need would motivate employees. Herzberg’s work categorized motivation into two factors: motivators and hygiene’s (Herzberg, Mausner, & Snyderman, 1959). Motivator or intrinsic factors, such as achievement and recognition, produce job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job dissatisfaction. Vroom’s theory is based on the belief that employee effort will lead to performance and performance will lead to rewards (Vroom, 1964). Rewards may be either positive or negative. The more positive the reward the more likely the employee will be highly motivated. Conversely, the more negative the reward the less likely the employee will be motivated. Adams’ theory states that employees strive for equity between themselves and other workers. Equity is achieved when the ratio of employee outcomes over inputs is equal to other employee outcomes over inputs (Adams, 1965).
Skinner’s theory simply states those employees’ behaviours that lead to positive outcomes will be repeated and behaviours that lead to negative outcomes will not be repeated (Skinner, 1953). Managers should positively reinforce employee behaviours that lead to positive outcomes. Managers should negatively reinforce employee behaviour that leads to negative outcomes.
Motivation defined by some of the authors is the psychological process that gives behaviour purpose and direction (Kreitner, 1995); a predisposition to behave in a purposive manner to achieve specific, unmet needs (Buford, Bedeian, & Lindner, 1995); an internal drive to satisfy an unsatisfied need (Higgins, 1994); and the will to achieve (Bedeian, 1993); and also more.
Employee turnover is the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment (Abassi et al. 2000). Whereas the term “turnover” defined by (Price (1977) as: the ratio of the number of organizational members who have left during the period being considered divided by the average number of people in that organization during the period. Frequently, managers refer to turnover as the entire process associated with filling a vacancy: Each time a position is vacated, either voluntarily or involuntarily, a new employee must be hired and trained. This replacement cycle is known as turnover (Woods, 1995). This term is also often utilized in efforts to measure relationships of employees in an organization as they leave, regardless of reason. “Unfolding model” of voluntary turnover represents a divergence from traditional thinking (Hom and (Griffeth, 1995) by focusing more on the decisional aspect of employee turnover, in other words, showing instances of voluntary turnover as decisions to quit. Indeed, the model is based on a theory of decision making, image theory (Beach, 1990). The image theory describes the process of how individuals process information during decision making. The underlying premise of the model is that people leave organizations after they have analyzed the reasons for quitting. (Beach, 1990) argues that individuals seldom have the cognitive resources to systematically evaluate all incoming information, so individuals instead, simply and quickly compare incoming information to more heuristic type of decision making alternatives or a more rule of thumb type of decision making.
Most researchers (Bluedorn, 1982; Kalliath and Beck, 2001; Kramer, 1995; Peters., 1981; Saks, 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 employees 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 results in employees deciding to quit (Firth et al. 2004). This evidently indicates that these are individual decisions that cause employees to quit their jobs. 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 other powerful people are in control of the events which influence their lives Firth et al. (2004). (Manu (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 labour turnover in the market. Good local labour market conditions improve organizational stability (Schervish, 1983). Large organizations can provide employees with better chances for progression and higher wages and hence ensure loyalty towards the organization (Idson and Feaster 1990). Trevor (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 uncertainty is usually caused due to inadequate and blurred communication, As a result, it 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. Muchinsky, 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. If roles of employees are not clearly spelled out by management and supervisors, it would accelerate the degree of employees quitting their jobs due to lack of role clarity. And that is what happens at the lower level of the Bus organisation.
Voluntarily vs. involuntary turnover
There are some factors that are, in part, beyond the control of management, such as the unforeseen event of death of an employee 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 be seen as involuntary turnover as both government regulation and company policies create the chance for such staff to come back to work, or to continue to work on a more flexible basis (Simon, 2007).
Organizational instability is one of the leading factors of a high degree of employee turnover. Indications are that employees are more likely to stay when there is a predictable work environment and vice versa (Zuber, 2001). Moreover, In organizations where there was a high level of inefficiency there was also a high level of staff turnover (Alexander 1994). Therefore, in situations where organizations are not stable employees tend to quit and look for stable organizations because stable organizations enable the employees to predict their career advancement. The imposition of a quantitative approach to managing the employees led to disenchantment of staff and hence it leads to labour turnover. Therefore senior management should not use quantitative approach in managing its employees. Adopting a cost oriented approach to employment costs increases labour turnover (Simon, 2007).
All these approaches should be avoided if managers want to minimize employee turnover an increase organizational competitiveness in this environment of economic downturn. Employees have a strong need to be informed. Organization with strong communication systems enjoyed lower turnover of staff (Labov, 1997). Employees feel comfortable to stay longer, in positions where they are involved in some level of the decision-making process. That is employees should fully understand about issues that affect their working atmosphere (Magner, 1996). But in the absence of sharing information, employee empowerment the chances of continuity of employees are minimal. (Costly, 1987) points out that a high labour turnover may mean poor personnel policies, poor recruitment policies, poor supervisory practices, poor grievance procedures, or lack of motivation. All these factors contribute to high employee turnover in the sense that there is no proper management practices and policies on personnel matters hence employees are not recruited scientifically, promotions of employees are not based on spelled out policies, no grievance procedures are in place and thus employees decides to quit. (Griffeth, 2000) noted that pay and pay-related variables have a modest effect on turnover. Their analysis also included studies that examined the relationship between pay, a person’s performance and turnover. They concluded that when high performers are insufficiently rewarded, they quit. If jobs provide adequate financial incentives the more likely employees remain with organization and vice versa. There are also other factors which make employees to quit from organizations and these are poor hiring practices, managerial style and lack of recognition, lack of competitive compensation system in the organization (Abassi, 2000).
Effects of employee turnover
Employee turnover could be very expensive from the organizations point of view, and affects could be more during the hard-hitting period of recession. There are mainly two factors that effect employee turnover. Voluntary quits which represents a mass departure of human capital investment from organizations and the following replacement process entails manifold costs to the organizations (Fair, 1992). The replacement costs would include, search of the external labour 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). In 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 very significant effects on organizations (DeMicco and Giridharan, 1987; Dyke and Strick, 1990; Cantrell and Saranakhsh, 1991; Denvir and Mcmahon, 1992).Many researchers argue that high turnover rates might have negative effects on the profitability of organizations if not managed properly. Moreover, turnover can play a key role in de-motivating employees, resulting in low productivity, inefficient output and therefore loss.
Turnover has many hidden or invisible costs (Philips, 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 also affects customer service and satisfaction (Kemal, 2002).Catherine (2002) argue that turnover include other costs, such as lost productivity, lost sales, and management’s time, estimate the turnover costs of an hourly employee to be US $3,000 to $10,000 each. This clearly 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 (Johnson, 2000) but the costs do not break off there. Each time an employee leaves the firm, we presume that 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 (Meaghan, 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, and the loss of social capital (Dess, 2001).
Cost of turnover
One simple method to calculate the turnover rate of any business is to divide the number of employees who have left the organization within a year, by the total number of employees who work for that company in the same year.
Let’s say there were 100 employees at the beginning of the year, and 100 employees at the end of the year, and at the end of the year, 84 of those employees were the same ones as were there the previous year. You might say that the turnover rate was 16%.
But suppose one of those 16 who left was actually replaced three times. The employee quit in January, the replacement quit in April, and another person was hired who lasted only until November. Then you might want to count every time an employee left the company and another one was hired – in this case you’d get 18%. Another complication: suppose the work force is 100 at the beginning and 90 at the end of the year. Perhaps 16 people have left, but only 6 have been hired during the year, while 2 more were hired and retired within the same year. You might define turnover as 18/100 or as 18/90, or as 18/95, since 95 is the average of 90 and 100. Instead of 95, you might want to do a fancier average, where you actually add up the number of employees on each day of the year, and divide the total by 365.
Strategies to minimize employee turnover
Strategies on how to minimize employee turnover, confronted with problems of employee turnover, management has several policy options like 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 labour 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 labour turnover, therefore, management are frequently exhorted to identify the reasons why people leave organization’s so that appropriate action is taken by the management. Hence, accurate analysis of the cause of turnover is vital to implement the necessary strategy.
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 organizations. Knowledge accessibility, the extent of the organization’s collaboration and its capacity for making knowledge and ideas widely available to employees, would motivate 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 (Meaghan, 2002). Therefore; information accessibility would make employees feel 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 (Badawy, 1988; Basta and Johnson, 1989; Garden, 1989; Parden, 1981; Sherman, 1986). With increased competitiveness during recession, 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 (Kanungo, 1982). Involvement in terms of internalizing values about the goodness or the importance of work motivated employees not to quit their jobs and these involvements are related to task characteristics. Workers who have a greater variety of tasks tend to stay with the job. Task characteristics have been found to be potential determinants of turnover among employees (Couger, 1988; Couger and Kawasaki, 1980; Garden, 1989; Goldstein and Rockart, 1984). These include the five core job characteristics identified by (Hackman and Oldham (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 (Tor, 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 (Blau and Boal, 1989; Brooke and Price, 1989; Brooke et al., 1988; Kanungo, 1982). Job involvement has also been found to be negatively related to turnover intentions (Blat and Boal, 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 (Brooke and Price, 1989). Satisfaction represents an effective 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 (Locke, 1976; Porter, 1974; Williams and Hazer, 1986).Organizational commitment is an effective 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 (Brooke, 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 (Malone, 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 (Keller and Dansereau, 1995). All these factors ensure employees commitment towards the organization and chances of quitting are minimal.
Strategic guidelines for motivating staff whilst smooth running of the business
When the economy is on a slippery slope and when spirits are down, how do managers pick themselves and others up, so that they can meet the ongoing challenges? Hotels still have to operate, and services still need to be provided by employees who are working harder than ever before just so that their organization can survive. Therefore companies need to have some strategic policies to deal with employee motivation during hard times.
Lend a listening ear
Now, more than ever before, the manager needs to listen to what employees are saying, not only to what may seem to be the surface issues, but also to the underlying issues. Roxanne Emmerich, President of The Emmerich Group, stated in an article for the Indiana Bankers Association that, “Guilt, fear, paranoia—as well as a few other destructive emotions—can freeze people’s performance during tough times. The natural response is for a leader to click his or her heels with the hopes of ending up in Kansas. Denial is the natural response when things get tough, but many leaders never move beyond that. The thought of talking about feelings openly sends shivers down the spines of many managers, and ignoring these emotions only causes greater challenges.” In the November 7, 2008, issue of The Wall Street Journal, Jim Harter co-author of “72; The Elements of Great Managing” and a researcher with Gallup, stated in an interview about motivation that, “Organizations have to put more attention into it. They have to communicate more.” Hence if we wish to motivate the staff during tough times, managers need to communicate more, not less.
Be an advocate rather than an adversary
Brian Mclvor, author of “Career Detection: Funding and Managing Your Career” stated in an interview published in the The Irish Times, on February 9, 2009, “You need to be honest and realistic with people… organizations are changing… all bets are off.” However, while discussions with employees may have to be framed against that background, news doesn’t have to be all gloom and doom. Managers need to be advocates for their organizations and realistic about opportunities within the organization. The manager should be an advocate for the future rather than an adversary against the future, which can be an un-stabilizing influence in the organization. Emmerich states, “Lead your people to the understanding that even during the darkest of times, many do well, and you intend to be one of those. Your team needs to shift out of their doomsday story and into one of possibilities. When people say ‘We can’t because,’ the broken record response needs to be, ‘Well, how CAN we?’“ Therefore, be an advocate for the vision rather than an adversary against the vision.
Look for the silver lining
In the February 27, 2009 issue of Business Week, there is an interesting article by Patricia O’Connell. The article discusses a first look at a recent Accenture survey that reveals that women and men feel they have more to offer their employers. O’Connell states, “Managers looking for an edge amid a dismal economy, likely hiring freezes, and even staff cuts may have a hidden resource—their own underutilized staff. According to a winter 2008 Accenture survey, 46 percent of women and 49 percent of men worldwide believe they are insufficiently challenged in their jobs.”
This affords unique opportunities to organizations that will reap possible benefits for employees as well as employers. This may be a time to review the opportunities and challenges of an organization and how the skill sets of individual employees may be used to enrich jobs and the workplace. Armelle Carminati, Managing Director of Human Capital and Diversity at Accenture, stated, “Companies should shy away from the ‘one size- fits-all approach’ with workers… The art of tailoring a career offering is the new space where employers have to go and will be the key to both employees’ and employers’ success.” As time gets tighter and the work force slimmer, this presents a unique opportunity for employers and employees to sit down as a team and evaluate the possibilities for the future. It is amazing the skill sets and aptitudes that may be uncovered when people are challenged to rise to the occasion.
When things go downhill, up-skill
“Up-skill” is a term used in The Irish Times article cited earlier that basically encourages coordinated training during tight economic times. For companies to survive and for employees to retain their jobs, it
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