LEADERSHIP AND EMPLOYEE TURNOVER IN HOTEL INDUSTRY
With the highest employee turnover rate, the hospitality industry need to encourage employees to voice their opinions, ideas, and any of their other concerns for improving performance and reducing employee turnover. The purpose of this study is to investigate the impact of different types of organizational culture and different leadership styles on employee voice in the hospitality industry. Hospitality human resource practitioners could modify their organizational culture and leadership style according to the results of the study, in order to encourage their employee voice. The results of this study could also contribute to the literature about factors that influence employee voice.
As according to www.skagitwatershed.org “Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. Leaders carry out this process by applying their leadership attributes, such as beliefs, values, ethics, character, knowledge, and skills”.
Leadership is a process of getting things done through people. Leadership is not a science. So being a leader is an adventure because we can never be sure whether we will reach our goal — at least this time. The touchdown drive may end in a fumble. The troop may have a bad weekend during the camporee. Or the city’s citizens may not be convinced that the mayor’s policies are right. So these leaders have to try again, using other methods. But they still use the same process the process of good leadership (Oran’s, 1997).
As according to Wood (1992), “defines employee turnover as the rate of change in the number of employees of a concern during a definite period commonly a month”. In some other ways it is defined as a measure of the extent to which old employees leaves and new employees enter the service of the concern. Whereas in its sociological context employee turnover implies to a process of change in the size of the work force and this signifies the reasons, which cause this phenomenon to occur in any industrial unit. Employee turnover is in fact movement of employees in and out of firms and the main reasons could be voluntary or involuntary.
Through the ages we have learnt that the only way to put the customer first in the hospitality industry is by putting the employee first. The rationale may not be very obvious, but it is certainly compelling. Satisfied employees lead to satisfied customers. Worldwide researches have suggested that employee turnover is among the highest in the hospitality industry. Studies have shown that average annual employee turnover range from around 60 to 300 % (Mehta, 2005). Hotels spend thousands every year for each new employee they must train to replace a seasoned worker who leaves. It is no longer a startling fact that the cost of losing an employee is between half and one-and-a-half times their annual salary.
There are studies that support the fact that employees leave an organisation for many reasons, but two common causes are the quality of the selection system and the quality of leadership (Mehta, 2005). Arguably hotels support a culture that fosters dependence and relies on the traditional chain of command, and not all supervisors are good managers and good team leaders that leads high employee turnover. In the light of this proposition, the proposed research plans to examine as whether leadership leads to high employee turnover. The research will be conducted with reference to Delhi based hotels.
AIMS AND OBJECTIVES
The proposed research aims to examine as whether leadership leads to high employee turnover. The research is to be conducted with reference to Delhi based five star hotels. The research will attempt to accomplish following objectives:
To examine the degree of employee turnover problem in hotels
To identify and evaluate the foremost causes employee turnover in hotels
To examine leadership role as causing employee turnover in hotels
To investigate what are the causes for the high employee turnover in the hotels.
To examine are what the consequences of the high employee turnover in hotels.
To study how the reduce turnover and increase employee retention in hotels.
Are qualities of leadership foremost reasons of employee turnover in hotels?
Is wrong leadership causes high degree of employee turnover in hotels?
Structure of dissertation
Author has divided the dissertation in five chapters, in the first chapter author has discuss about the aims and objectives of the report, research mythology in which he has used primary and secondary research. He has discussed about the limitations and background of the dissertation in this chapter. In the second chapter author has given a literature review discussing the meaning of employee turnover and its importance in today’s world. Author has also explained leadership and employee turnover and how it can make a difference in successful and not so successful businesses. Also the author has shown different ways to measure employee turnover. Finally, the author has explained how employee turnover is making a difference in a hotel industry and their employee. In the third chapter author has done a research mythology discussing sampling techniques and sample size which is been used for a completion of the report. In the forth chapter author has done findings and analysis based on a questionnaire prepared by the author. And finally in the last chapter author has done his conclusion on the report.
This section presents the theoretical concepts in the context of above mentioned research aims & objectives and research questions.
“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). The term “turnover” is 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, 2002).
Most researchers (Kalliath and Beck, 2001; Kramer et al., 1995; 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 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 organisation. 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 (Firth et al., 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 (Firth et al., 2004). Manu et al. (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.
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 (Zuber, 2001). In organizations where there was a high level of inefficiency there was also a high level of staff turnover (Alexander et al., 1994). Therefore, in situations where organizations are not stable employees tend to quit and look for stable organisations because with stable organizations they would be able 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 employee turnover. Therefore management should not use quantitative approach in managing its employees. Adopting a cost oriented approach to employment costs increases employee turnover (Simon et al., 2007). All these approaches should be avoided if managers want to minimize employee turnover an increase organizational competitiveness in this environment of globalization.
Organization’s valuable assets are its high performing employees; and when they start leaving, it’s an indication that the organization is in trouble. It appears that organizational management does not care much when low performing employees leave the organization. “In other words, the employers have to understand the damages resulting from high performance employees leaving, and the benefits resulting from poor performance employees leaving.” (Hong and Chao 2007, p. 216).Employees may stay longer in an organization if they are motivated and rewarded. Studies show that a motivated employee is a productive employee; therefore, it is the responsibility of organizational leadership to ensure that all employees are productive. To be productive means supporting the mission and vision of the organization. Employees may stay longer with organizations if they are well paid and motivated. Management and leadership motivate and reward high performance employees in order to prevent them from leaving. Organizational management and leadership pay particular attention to high performance employees and the attention given them has made them less likely to leave. “The negative relationship between performance and turnover appears to be the major conclusive finding, indicating that high performance employees would be less likely to leave than lower performance ones.” (Hong and Chao, 2007 p.217). Losing high performance employees means higher costs of human resources in form of rehiring, training, and placement. Management action may cause some low performing employees to leave an organization; this is due to the fact that such employees are viewed as liabilities and may not be contributing to the accomplishment of the organizational mission and vision.
In SLT, leadership effectiveness is thought to be enhanced if a manager uses the style of leadership that best matches the readiness, ability and willingness of subordinates and that a good match between leadership style and subordinate readiness leads to a higher level of subordinate satisfaction and performance. The four quadrants in SLT represent four basic leadership styles: high task and low relationship ; high task and high relationship; low task and high relationship; low task and low relationship, The central precept is that as the level of follower readiness increases, effective leader behavior will involve less structure and less socio-emotional support, A leader’s task and relationship behaviors interact with subordinate readiness to significantly influence leader effectiveness, which is defined as the extent to which a follower demonstrates the ability and willingness to accomplish a specific task. According to Hersey et al. (1996), at the lower levels of readiness, the leader needs to provide direction but with higher levels of readiness, followers become responsible for task direction. There is no one best way to influence people and leaders need to assess the readiness level and then use the appropriate leadership style. Thus, it is the follower who dictates the most appropriate leader behavior.
In the high tech hotel industry, a work environment with proper implementation and management of technology is vitally important. Any great manager will agree that human resources still plays the most important role in any successful high tech hotel venture. Employees are the backbone of hotel industry, and they need effective leadership so that they will be motivated to do the best jobs they can do.
Today, the high tech industry is beset by several factors that make it difficult to hire and retain good employees. The economy is down and the national unemployment rate is high.
Good leadership, however, can inspire employees and motivate them to work harder at their jobs. The question is how. Leadership is not a random event. Rather, it is a dynamic process continually adjusted to an ever-changing environment. A great leader is able to influence the behavior of individuals and groups. Harry Truman once said, “Leadership is getting people to do what they don’t want to do, and like it.”
In the past, a leader’s personality or charisma was considered key. Leadership effectiveness also was defined in terms of attitudes. The most effective leaders were deemed to be those who placed the greatest emphasis on “people and production.” Today, this view has been modified. Now the leader needs to vary his style to fit the readiness of his subordinates. A leader’s attitude is based on his concern for both his people and their productivity. Leadership behavior also is based on two dimensions: task behavior and relationship behavior. In attempting to lead, an individual always engages in each of these behaviors to some extent. Task behavior involves directing others – telling or showing them exactly what to do and how to do it correctly. Typically, direction is characterized by “unilateral communication,” which may take the form of oral or written instructions expected to be carried out as dictated. Instructions to employees may be explained by saying, “This is how you would do this.”
By contrast, relationship behavior is characterized by more supportive, facilitating actions and by bilateral communication among individuals. Here, direction typically involves dialogue between a manager and his subordinates or between co-workers.
The number one reason an employee leaves a company is because of their manager. The leader that employee’s work for determine who sticks around and who hits the road. Employee turnover costs are substantial ranging from 150% to 250% of an employee’s annual compensation. That means to replace an employee that makes 100,000 it will cost the company 150,000 to 250,000. If you can reduce your employee turnover then clearly you will reduce your bottom line. Extraordinary leaders make a substantial impact on employee turnover and therefore, the bottom line.
How to reduce employee turnover
Few things in business are as costly and disruptive as unknowingly having the proverbial revolving door for employees to exit from. While there are many secondary and tertiary items that can influence an employee’s decision to leave, in this week’s column I’ll address the one single factor which constitutes the overarching reason that drives a person’s decision to leave their employer.
â€¢ Leadership Continuity: Great companies have a clear vision, mission, and strategy, which are evangelized by a cohesive leadership team. A crisply articulated vision, and continuity of leadership creates an engaged workforce that understands the business model and key objectives of the enterprise.
â€¢ A Planned Transition: Outstanding leadership teams set employees up for success and not for failure. They have an established on boarding process which puts forth an initial roadmap for a successful transition by clearly defining key performance indicators, business objectives, and other key metrics.
â€¢ Compensation: Great leadership teams understand the value of tier-one talent, and are not afraid to pay-up in order to attract it and retain it.
While today’s column was a bit of an extemporaneous highlight covering only a few critical issues, I hope it clearly portrayed the value of leadership in employee retention and development.
Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached.
The process of employee retention will benefit an organization in the following ways:
Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss.
Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff.
Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization.
A career in the hospitality industry can be both challenging and rewarding. The hospitality industry includes restaurant, hotel, and resort positions that cater to serving guests with a smile. However, the staff turnover is high in the hospitality industry, and anyone considering a management position within this segment should understand the reasons people leave their jobs.
Common reasons for high turnover include:
1. Seasonality- Many hospitality positions are seasonal in nature. While lay-offs are a necessity for business survival, they are hard for workers who will receive minimal unemployment benefits. It can lead to understaffing during off-peak seasons which has a negative impact on employee morale.
2. Organizational culture & Leadership – If an organization does not possess a positive culture, the work environment will be unpleasant. With other considerations, this adds to the reasons why employees quit.
3. Labor Pool -The labor pool for the hospitality industry is often untrained, unskilled workers. Higher skilled workers are harder to find, and even those workers are vulnerable as they seek better opportunities. Many employees are young, students, or using hospitality jobs as a fallback or stepping stone to other careers. This increases the chances of turnover.
Five Leadership Fundamentals
He then realized that his job as manager became very simple. To motivate high performance and, at the same time, ensure employee satisfaction within his group, he just needed to:
Provide employees with a clear sense of where we’re going and why.
Make sure they have the necessary resources to get their job done.
Be attuned to their professional needs and try to provide them with assignments that meet these needs (not always easy but still attainable).
Regularly meet with them both formally and informally to give and get feedback on what’s going on.
Get out of their way and, at the same time, be available when needed.
What are the leadership qualities that make all this possible?
First and foremost the leadership qualities that build and create a “change readiness” culture are totally focused on understanding and “reverse-engineering” the critical disconnects between organizational leadership and management, and the rest of the non-management employees. These disconnects can be summarized as an organizational management and leadership that is detached from direct feedback from the frontline and the human consequences of their decisions.
This is all about moving away from the prevalent transactional leadership style with its reward and punishment mechanisms to gain compliance, and moving towards facilitative leadership that engages directly with the informal networks and aspects of the organization.
This isn’t so hard for organizational leadership to take on board and enact once they realize that in so doing they are dealing directly with the crustacean rock bottom root causes of resistance to change whilst simultaneously unleashing a flood of new innovations and solutions.
Implicit or Informal Theories of Employee Turnover
Employers and employees share some common causes of employee turnover in India. Among demographic factors, the majority of Singaporeans hold the view that the young and more educated change jobs more often than the old and less educated. Labour shortage (or perceived alternative employment opportunities) and job-hopping among the uncontrollable factors stand out in the perceptions of most people as important factors causing turnover (Debrah, 1993;1994). Further, most Indians consider satisfaction with pay, a controllable factor, one of the most important causes of turnover intention (Debrah, 1994; Koh & Goh, 1995). We do not propose any hypotheses on implicit theories of employee turnover. However, we would like to explore to what extent these implicit theories are valid. Specifically, how much of the variance in the turnover model do age, level of education, perceived alternative employment opportunities, job-hopping, and satisfaction with pay explain? If these factors explain a lot of unique variance, we can say that there is a lot of truth in implicit theories on employee turnover held by Indians.
Sampling and Data Collection
Data were collected using a questionnaire that contained measures of job satisfaction (satisfaction with pay, satisfaction with nature of work, and satisfaction with supervision), organizational commitment, organizational justice (distributive and procedural), job-hopping, perceived alternative employment opportunities, and turnover intention. In addition, the questionnaire included questions on demographic characteristics of the respondents. The Ministry of Labour, India, publishes quarterly resignation rates by occupations and industries. These quarterly resignation reports provided us the starting point. Both manufacturing and services sectors are important for the Singapore economy. Consequently, we included industries from both manufacturing and services in our sample. Within each sector, we selected one industry with the highest resignation rates and the other with the lowest resignation rates over the last four years. In the manufacturing sector, the food and beverage industry had the highest resignation rates and the marine and shipping the lowest. On the other hand, in the services sector, the retail industry had the highest resignations and the banking the lowest.