Reason for High Turnover Rate of Hospitality Industry in China Essay Example

Background Over the last two decades, hotel development in China has been impressive, especially considering the modern era only started in the late 1970s as a result of China’s reform and the implementation of its Open Door policy. The first joint-venture hotel began in 1982 with the Jianguo Hotel, importing the management of the Hong Kong Peninsula group (Pine et al. 2000). Since then, China has experienced rapid growth. And China is poised to become the number one international tourist destination in the future. However, hotel’s shortage in HR development, technical staffs and managers are serious not enough to support the hotels’ expanding, and hotel high turnover rate has most likelihood to induce several problems. Hotel industry is a labor intensive industry, so in a sense, the competition between hotels is same to the competition of who owned more outstanding employees and managers.

And the moderate employees’ turnover can prompt hotel’s developing. It expedites hotel’s process of metabolism, optimizes hotel’s human resource management, brings hotel’s new energy, and excites hotel’s innovation ability and so on. But the investigation which from the China National Tourism Association Human Resource Development and Training Center display: in Chain in April 2010, the hotel average turnover rate is 33. 66%, and a large number hotels reach 40% or more, they are far exceed the hotel’s rational turnover rate 10%-15%(CNTA. 010) The rapidly increased turnover speed leads serious fall in management and service quality; breaks hotel work team’s cohesive force; strikes hotel’s on the job employees’ morale; an the same time, if also cause the lose in hotel’s administration cost, the guest source’s wastage, not even leakage of the business secret. Therefore,

it is necessary to analysis the concrete situation, use more powerful data and analysis and professional hotel industry experts’ judgments to show how severe the hotel’s turnover.

Then it is convenient to find some ways to help control it effectively. Hypothesis I believe that the reason for high turnover rate of hospitality industry in China can be measured and be relatively stable. Literature review Dozens of papers and journals discuss the influencing factor of employee turnover and retention. Organizational goals, mission and direction Experimental evidence suggests that the establishment of well defined organizational goals and objectives influence employee turnover and job productivity. Kim et al. 2005) in their study on firm’s orientation found that organizational direction and support had a significant impact on employee job satisfaction and overall commitment. Findings from Susskind et al. ’s (2000) research also suggest that perceived organizational support strongly influences job satisfaction and employees’ commitment to their organizations. A study by the US Department of Labor (1993) on high performance work practices showed that involving employees in decision-making, goals and the direction of an organization through participation in teams will help reduce turnover and produce job satisfaction.

Corporate culture and communication According to Becker and Huselid (1999), culture creates competitiveness since it changes employee behavior by making them act consistently with the firm’s desired corporate culture, thus influencing employee retention. Other researchers who investigated the relationship between organizational culture and employee turnover and retention uncovered similar findings (Chew et al. , 2005; Cho et al. , 2006; Milman, 2003; Milman and Ricci, 2004).

For example, a study by Milman and Ricci (2004) also revealed that among the most powerful indicators to predict hourly

employee retention in the lodging industry were positive experiences with the company’s policies and with the company’s humane approach to employees. Hires and promotions According to Becker and Huselid (1999), selective hiring procedures are necessary to assure effective retention of the most qualified employees while lowering employee turnover in the long term. You can always train people to have the right skills but you cannot train them to have the right attitude. That is why we have developed a recruitment method that emphasizes behavior rather than skill”, explained Flavio Bucciarelli, Sheraton Skyline general manager. (David Pollitt, 2006)” One tool that can assist with ensuring proper screening of candidates is pre-employment tests. Cho et al. (2006) theorize that the practice of pre-employment testing and the result of candidates passing such skill-based tests can heighten new hires’ sense of organizational commitment.

However, their research also dicovered that once employees are on-board and seek upward mobility, promotions can increase turnover rates of non-managerial employees if not practiced appropriately. For example, in instances in which inadequate employee training and development exist, employees can become frustrated and stressed by assuming greater responsibility for which they are ill equipped. Therefore employer policies and practices regarding employee promotions and work designs are among the top reasons why people join, stay or leave an organization (Cafaro, 2001).

Employee recognition, compensation and reward A major and perhaps the most notable among organizational retention initiatives is compensation and benefits. Numerous studies have addressed the impact of employee compensation, rewards and recognition on turnover and retention (Cho et al. , 2006; Guthrie, 2001; Huselid, 1995; Milman, 2003; Milman and Ricci, 2004; Walsh and Taylor, 2007). Several research studies

found that highly competitive wage systems promote employee commitment and thus results in the attraction and retention of a superior workforce (Becker and Huselid, 1999; Guthrie, 2001).

Shaw et al. ’s (1998) study further noted that employees will remain with an organization as long as it serves their self-interest to do so better than the alternatives available to them elsewhere. Work environment and job design Results of empirical studies of lodging properties confirmed that hourly employees’ retention was predicted by self-fulfillment and working conditions, even over monetary rewards (Milman and Ricci, 2004).

These studies found that employees who had a positive experience with regards to working hours, sense of fulfillment with their jobs and higher level of job satisfaction are more likely to stay with their current employer. In a study of restaurant food servers, Wildes (2007) noted that although monetary rewards can be a top motivator for employee retention, having a fun working environment and flexible hours were also important motivators. Other studies suppose that retention practices such as workspace characteristics, job nrichment and socialization can reduce turnover and its effects (Pizam and Ellis, 1999). Walsh and Taylor (2007) study discovered that although it was significant to obtain a good salary and benefits package, whether employees remain with the organization mainly depends on the degree to which their employers respond to their professional growth. Customer centeredness The research study by Dienhart et al. (1992) found that there were positive relationships between customer centeredness and the employees’ constructive views of job security, job involvement and satisfaction.

If employees feel the company takes good care of them, they are, in return, likely to take time to provide a better

service to meet or exceed customers’ expectations. This will likely lead to higher satisfaction among those customers and to better employee performance, thereby making them less likely to leave (Arnett et al. , 2002), positively impacting employee retention. A study by Kim et al. (2005) also revealed that employers with strong customer-centeredness and employee focus have a positive impact on employees’ job satisfaction and overall organizational commitment, therefore significantly reducing employee turnover.

These scholars further suggest that recognizing employees’ work efforts with cash incentives, awards, and promotions should reduce employees’ intention to leave. Training In organizations where employees receive the proper training needed to assume greater responsibilities, turnover rates are generally lower. Several studies show that training activities are correlated with productivity and retention (Shaw et al. , 1998; Terpstra and Rozell, 1993; Walsh and Taylor, 2007; Youndt et al. , 1996).

Becker and Huselid (1999) argue that the economic returns of extensive training are more likely to be captured by the firm if employees are motivated to stay and contribute to the firm’s success fostered in part by selective hiring, competitive pay packages and team-orientated work environments. Youndt et al. (1996) theorize that human resource practices designed to develop talented and team-oriented workers improve employee productivity and customer satisfaction. These findings parallel anecdotal evidence from companies such as Southwest Airlines that ave used selective staffing and comprehensive training in their quest to improve performance (Pfeffer, 1994). According to Shaw et al. (1998), organizations with substantial training opportunities should experience lower turnover rates. Employee performance, assessment and development Examples of firm efforts to motivate employee behavior include the use of performance appraisals. According to Shaw et al.

(1998), these appraisals are ways for organizations to keep track of the value provided by each employee.

Doty (1996) found that results-oriented performance appraisals were strongly related to return on equity and other financial measures of performance. Huselid (1995) reports that linking performance appraisals with incentive compensation are intended to align the interests of employees with those of shareholders (e. g. profit sharing plans). These linkages can create incentives which will align workers more closely with the long-interests of the firm resulting in better communication and increased tenure (Becker and Huselid, 1999).

Traditional consciousness’s affect In Chinese traditional consciousness, the hotel staffs who are in a lower social class and with lower skills (Jiangting, 2010). It is difficult to realize people’s self-worth. And the person is considered hold a bowl with beauty for food, which is working in hotel. Many people believe that hotel service only can be done by the young guys, the older will be selection quit faster, especially for woman, the age is killer, and so most of them must face career change or job transfer when they are on longer owned springtime.

That why some women do not willing to do such job in a long time period. At last, some unhealthy and illegal activities can be easily connected to the hotel, such as prostitution, drag abuse, gambling and so on (China Daily,2010). So the hotel’s image becomes worse and worse in people’s idea. That is also a reason made the employees who are work in hotel leak of sense of pride from their jobs. They do not like their job, so it is easily to understand they want to change others. In the

next section, I will describe the methodology used in the study and how the results will be analyzed.

Methodology According to empirical research and experience, I will study this subject in two methods. Qualitative Investigation As reviewed above, we suppose 9 factors could affect the turnover rate. Qualitative investigation mainly functions as collecting, classifying and recording information in which turns significant supports to above conjectures. There are two ways of qualitative investigation: interview and extended observation. As far as I know, turnover report is required to submit to general manage by human resource department on a monthly basis and quarterly basis.

This is important information for me. Maybe I will start my interview and extended observation from these hotels. In addition, I will interview the employee and employer from different level hotels in order to seek the reason of turnover from different perspectives. The interviews will be with a series of questions I will prepare and present to them. For example, are you content your present job? If not, why? Did you consider quit? If yes, what’s the critical reason? Because this topic is relative sensitivity, the privacy of interviewee must be considered.

Otherwise it's quite possible that I can not receive real and valuable data. Extended observation is necessary during the interview because it can identify if the person is honest. Reliability of data is of crucial importance. Quantitative investigation The quantitative investigation’s major way of study is directing surveys. In this case, the employees are the respondents and their answers of the questionnaires collected to file a database. Charts would be made to analysis the internal factors’ mutual relations.

In addition, the formats of survey could be

phone survey, paper survey and internet survey. The sample of 5000 employees is randomly selected from different star hotel all over the country. Random selection is used to avoid any bias in hotel size or location. I design the questionnaires based the above review. The main question is: What are the major factors to resign? ( Multiple Selections) <> The above 9 sections is the important object of this study. Of course, I also design open question: Describe other reasons of your resignation.

What’s more, some auxiliary problems will be presented in order to be researched further, such as gender, age, region, the frequency of quit and so on. What is most important is though is how both the quantitative and qualitative data relate to one another and how the eventual compilation of data is used. Conclusion In conclusion, the research will study the find out the reason for high turnover rate of hospitality industry in China. The reason for this study is to find some good ways to reduce turnover, cut down hotel costs and improve labour productivity based on the research result about the reason of high turnover.

Hopefully, my research findings can supply to some hotels in China as reference and further I’d like to provide solution to high turnover rate for them. It is well known that the condition of every hotel is different, but I wish to look for their general character of high turnover rate so that hotels can thoroughly check and improve their work. There is research limitation that it is not exactly measure the influence of the variables of creating high turnover rate on the hotel. It will be

my further research direction.

It is hope that the paper could provide a fresh perspective on human resources management for hotel supervisor in China.

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