Retention of Employees Within The Hospitality Industry

Introduction

This study puts forward a review of the past literature, dated mainly within the last 2 decades, providing a historical and present day understanding of employee retention, and how it is perceived as a challenge for the Hospitality industry, as well as explicitly detailing the factors which contribute to turnover or retention of employees within the Hospitality industry. These factors include aspects of work-life balance, job satisfaction and career advancement, pay and training and development, all of which are common and re-occurring themes within the vast amount of literature relating to retention specifically and especially for Hospitality organisations.

Retention

Employee retention is one of the most critical issues facing managers in organisations as a result of the shortage of skilled labour economic growth and high employee turnover in almost all industries. Therefore, it is of the upmost importance that managers recognise and appreciate the importance of retaining talented employees within their organisations for as long as possible, and devise strategies to this effect. Although, employee retention is a main issue for many organisations, it remains widely understudied and overlooked. There is a limited amount of research that identifies and establishes the connection between an employee’s retention and an organisational retention efforts. High employee turnover and poor retention rates are a source of constant concern for organisations, therefore it requires further research and interrogation amongst hospitality academics.

According to the Chartered Institute of Personnel and Development employee retention refers to the “extent to which an employer retains its employee and may be measured as the proportion of employees with a specified length of service (typically one year or more) expressed as a percentage of overall workforce numbers”.

Many sources within the literature describe a similar concept of retention. Workforce Planning, Wisconsin State Government (2005); defined employee retention as ‘a systematic effort to create and foster an environment that encourages employees to remain employed, by having policies and practices in place that address their diverse needs’. Cardy & Lengnick-Hall (2011), summarised employee retention quite simply as, that which refers to an organisations ability to retain their employees.

Retention levels vary widely across industries, and occupation(s) within these particular industries. The hospitality industry, however, is the industry with the highest rates of turnover. Therefore, establishing they also have the lowest rate of retention, especially and unsurprisingly within hotels. This is due to its ‘uninviting nature’, specifically in relation to the negative perceptions of the industry, in regard to the perceived low wages, unpleasant labour, inflexible work schedules and little to no career advancement opportunities for its employees.

In a report completed by Deloitte (2015); it was identified that the Hospitality and Tourism industry had the highest rate of turnover, of approximately 30% in the United Kingdom. Significantly higher in comparison to the national average turnover rate of just 13%.

On the other-hand, the annual rate of retention within the industry is at an estimated rate of just 70%, which is considerately under the UK’s average of 85%. Workforce company ‘Deputy’ (2018), identified the industries low pay, inconvenient hours and lack of career advancements as the top 3 indicators for the low retention rates.

The data cements the idea that organisations need to focus on retaining their more valuable and talented employees as it is becoming increasingly difficult to recruit skilled employees even more so, due to the UK’s impeding departure of the European Union. Therefore, an emphasis needs to be placed on manging the talent that already exists within the organisation. Panoch (2001), agreed it is of high importance for organisations to secure their current skilled work-force and appreciate their value, as good employees are becoming significantly harder to find.

As with many industries, retention remains one of biggest challenges for the hospitality industry. It is undeniably difficult to be able to recruit and retain employees, especially because of the demand within the industry and the need for skilled workers, which are of a limited supply due to the aforementioned negative reputation and nature of the industry.

In studies completed by Mobley et al (1979), they considered a variety of factors that had a significant impact on employee’s retention, specifying determining factors to include pay, and career advancements which documents the historical impact of these factors have had and the lack of progress within the hospitality industry. In more recent years, these borders have been expanded to include family life, and other life responsibilities outside of the work place, now widely referred to as a ‘work-life balance’.

Re-affirmed by Dawson et al., (2011) the occupations within the hospitality industry are typically viewed as low wage, long and irregular working hours, lack of job security and minimal opportunities for career development. Factors, all of which have noticeable and significant impact on an employee’s retention – these key factors need to be the focal points for the Human Resource practitioners within these organisations, as the retention of promising talent is fundamental for organisational success and achieving a competitive edge.

As is evident from the literature, an employee’s retention is not determined by any singular factor, but a number of issues relate to and impact upon their decision making, in regard to their retention, because of this management must place an emphasis on implementing strategic methods of employee retention focusing on the issues that are responsible for affecting an employee retention within the organisation.

The following are the factors, which have been well documented and cited through-out the literature as being the most significant in identifying the causes of low retention rates based upon, on the level of work-life balance, pay and rewards, training and development as well as job satisfaction and perceived lack of career advancements.

Work-Life Balance

Work life balance has become an increasingly interesting concept in the last 15 years, due to the concerns which have derived from an unbalanced work life, inclusive of reduced health and performance outcomes for employees and employers alike. Work-life balance has been described as ‘the extent to which an individual is engaged in – and equally satisfied with – his or her work role and family role.

“Attracting and retaining talented people is become increasingly difficult as a result of specific demographic and psychological trends” implying that management within industries needs to be inclusive of employee’s needs. In the present day, work-life balance is an increasingly important factor for an employee’s retention. Mainstream literature on this concept has started to develop however, this concept is not highlighted nor has much literature on this topic emerged within the hospitality industry specifically.

The long and unsocial working hours within the hospitality industry, have been well documented within research, as well as the contingent labour, and low pay received for doing so. Often, a balance between work life and personal life has been regarded as a ‘privilege’ by employers including having a satisfactory amount of time off, flexibility in the workplace, and support of a work-life balance from superiors. If an employee has a significant lack of work-life balance, this can become clear through their work and performance, employees with heavy work-shifts and low work life balance are less focused on their job and show decreased job performance.

As Work-life balance is a growing issue in society, organisations need to do more via their human resources department to ensure that they have practices and policies in place to support such movement for their employees whereby decreasing the amount and reoccurrence of invasive working hours, ensuring that employees aren’t being forced to sacrifice their own personal lives and social life and commitments (Lewis, 2010). A survey from YouGov and Deputy (2018) found 55 percent of employees said more control over their work life and shift patterns would help more workers stay in the hospitality industry.

Work life balance has been deemed an essential strategy in retaining staff, especially that of the more talented employees within an organisation – increasingly becoming recognised as a key driver of retention. Maxwell (2006), noted that not only will the implementation of such strategies that affect flexible working hours, arrangements and suitable breaks cover work-life balance concerns, but this would also positively influence an employee’s intention to remain in an organisation.

An organisation that encourages and allows an employee to be able to fully uphold their responsibilities and contribute to their personal lives and fulfil such commitments increases the likelihood of employee retention. It has been noted that there is a direct relationship between the existence of a work-life balance and retention – an organisational emphasis needs to be placed upon creating and establishing a ‘harmonious’ relationship between the two.

Retaining talented and skilled employees is of a constant source of concern within the hospitality industry, again, it therefore must be a continuing area of interrogation for academics. There is a significant important upon placing an emphasis on work-life balance strategies, to influence an employee’s level of satisfaction within their job role. The inter-link between work-life balance and job satisfaction is an extremely important approach for retention.

Job Satisfaction and Career Advancements

Job satisfaction is defined by Locke (1976, p.1304) as a “pleasurable or positive emotional state resulting from the appraisal of one’s job or job experience”. It can also be explained as “the agreeable emotional condition resulting from the assessment of one’s job as attaining or facilitating the accomplishment of one’s jobs values. Therefore, any dissatisfaction stems from an employee harbouring negative emotional states regarding their work. This is critically important within the hospitality industry, because of its existing reputation as discussed.

An employee’s level of satisfaction for their job, is influenced by several aspects, including that of their pay, the working environment, communication levels and organisational commitment instilled within the employees by the organisation. It has even been stated within the literature on this topic, that there is a distinct relationship between an employee’s job satisfaction and turnover intentions; the suggestion being that a distinctly high level of job satisfaction therefore establishes lower levels of employee intention to part with an organisation. Academics have even gone as far as to refer to job satisfaction as a strong and primary determinant of an employee’s intention to quit.

The link between satisfaction and turnover intentions has been well documented, therefore it is the responsibility of the human resource practitioners to recognise this link and address any existing dissatisfaction of the operating and organisational procedures currently being practiced within an organisation. Again, job satisfaction is a significant indicator of an employee’s intention to quit, sided by a magnitude of other factors which are inclusive of wages, hours and other job variables – both of which are highly important in the prevention of the potential quits.

It was theorised that pay or (lack of) can have a negative impact on retention within the hotel industry, and even lead to job dissatisfaction and as a result; even turnover. In addition of the concept of ‘Pay’ in relation to an employee’s retention; another closely related affecting factor is the subject of ‘Career Advancement’. As it appears, suitable salary and pay initiatives have a high influence in staff retention, similarly, as does ensuring opportunities for employee’s career progression. Yang (2012) found in her sample that from a large majority of employees, the ones who had resigned, had done so because of career advancement opportunities elsewhere; as well as offering more than just career opportunities, as a strategy to attract and retain. This being supported by Rolfe (2005) who in his research observed that there is a direct relationship between an employee’s career development opportunities and that employee’s retention. Highlighting the importance that both personal and professional growth has on an employee and that promotional opportunities increase the likelihood and commitment to remain in their job role and current organisation.

Pay

Income and compensation i.e. pay are valuable determinants of job satisfaction, which is directly associated with employee retention. Thus, demonstrating that pay is another important factor to consider whilst on the topic of employee retention. The subject of pay, salary, reward or benefits – is one that appears continuously through-out the literature, many authors have varying opinions, to which must be explored further.

It was reported by Kifle (2014) that an employee’s overall satisfaction stems from their wage, and their wage in relation to others, the opportunity for one’s rank to rise, via career development for example, along with wage increase has a higher impact on indicating overall satisfaction with their organisation. Echoing this sentiment is Jung and Yoon (2015) who weighed in to state that a fair an appropriate pay package can and does, increase an employee’s engagement with their work and even decreases the chances of the employee withdrawing from their job. Therefore, the following is a credible suggestion, management must create and establish worthwhile pay scales in an effort to both attract and retain skilled workers – as established under-compensating well trained and performing employees, runs an extremely high risk of those employees leaving the organisation to seek out fair wages and other benefits from within another (usually rival) organisation, for which there is an extensive amount of hotels, constantly trying to attract talent existing with the industry, as they all face similar recruitment difficulties.

However, although pay is an important factor is employee retention, it has been suggested within the research that pay does not bare sole responsibility, nor is it as important as managers believe in managing employee retention. Research determined that although pay is an important factor of turnover, it is however nothing if not a weak predictor of turnover intention.

As previously mentioned, job satisfaction is an important aspect, and strong predictor of an employee’s intentions to leave; as there is only so much influence monetary rewards can have on an employee and as suggested by (REF) it is not usually the first element which makes them re-think their current working situation; many factors influence this decision, with an increase of pay being an additional bonus if they were to find a similar position within another organisation.

There is an extensive amount of strategies that can be implemented to keep employees in a comfortable position within their current workplace. However, pay is not the highest form of motivation to retain an employee. As Kaye and Jordan-Evans (2014) state that workers are significantly interested in partaking in stimulating and inspiring work, with opportunities for learning and development.

Training and Development

Training is an activity that employees partake in to gain an enhanced level of skill, knowledge and competency, all of which are deemed as essential to perform effectively and efficiently within their job role. Effective methods and valuable training enable employees, to operate by the pre-set systems and standards in which the business operates by on a daily basis.

Training and development is a highly important contributor to the retention of employees; as noted by Brum (2007) who stated that the employees who are presented with more opportunities of training, tend to show a heightened level of organisational commitment. Messmer (2000) also agreed with this sentiment as he viewed training and development as a key factor of employee retention. Thus, being echoed by Leidner (2013) stating that through the implementation of proper training and development strategies, employee loyalty was affected and improved by this movement.

However, as according to Pratten (2003), he implies that means of formal training are often rare within the hospitality industry. It is assumed that the roles being undertaken are viewed as extensions of existing basic domestic skills, therefore training is not viewed as necessary nor is it given. Nonetheless, it is an error is judgement to overlook the importance of training; supported by Lashley and Best (2002) who observed the negative impact lack of training has on service quality. Furthermore, due to the ever-changing and expanding nature of the hospitality environment, requires constant training and development of its employees, to ensure the constant learning and continuous enhancement of knowledge of both the industry and technologies, to create a competitive edge as well as ensuring that said employee can meet the challenges of the market-place. The collection and application of new information and knowledge is imperative within any market, to keep up and for survival.

The continuous and appropriate training and development of an employee’s knowledge and skill is a crucial area for HR practitioners to explore, as Chaing et al (2005) observed that quality training and development methods were positive influencers for employees relating to both job satisfaction and the employee’s intention to remain.

Conclusion

As is evident from the existing literature regarding the retention of employees within the hospitality industry, it can be concluded that the hospitality industry, has one of the highest rates of turnover, and the lowest rate of employee retention, of almost all industries – this being due to the negative reputation the industry holds, including the long working hours, unpredictable schedule, and the demanding work-load. Low levels of retention is a huge and persistent problem for employers; therefore, the implementation of strategies to curb high turnover is paramount. Strategies that tackle the issues as discussed through-out the literature, in regard to a work-life balance, leading onto job satisfaction and opportunities for career advancements, as well as other job related issues, including the matter of fair and appropriate pay, as well as adequate training and development resources.

This is consistent with Pare and Termblay (2008), who revealed that active and observable involvement from Human Resources has a positive impact on employee retention, as when employees feel supported, they feel a sense of obligation to return the favour. Retention is heightened when an employee receives the impression that their organisation values them and what they bring to the organisation as an individual. Cemented by Gberevbie (2010) who agreed that when relevant and appropriate retention strategies are fostered and honed by an organisation, their employees will be inclined to remain within that employment and work towards fulfilling organisational goals.