Analysis of High Employee Turnover Rate at Imperial Hotel

Employee Management as a Contemporary Issue in the UK Hospitality Industries

Employee management is one of the contemporary issues in the hospitality industries in the United Kingdom today. According to Cohen et al. (2016), poor employee management has led to closure of numerous hospitality premises in the United Kingdom especially within London. The author reveals that 10% of the hotels and restaurants closed from 2014 to 2017 were as a result of poor employee management. According to Huang et al. (2016), many hospitality human resource departments face a lot of issues when it comes to choosing the right people as part of their staff. The authors note that poor selection of employees is one of the major causes of high turnover rate in the hospitality sector. When poor quality workers are included in the production of services in hospitality sector, customers will not be satisfied hence, they will look for other competitors who may provide the best services as per their satisfaction (Huang et al. 2016).

The Challenges Faced by the Imperial Hotel in London

Currently, the Imperial Hotel situated in London is undergoing a lot of challenges which have negatively impacted their sales. According to Peter Farnsworth, the company new manager, the business is undergoing high employees’ turnover at the rate of 80%. The turnover has led to a lot of other challenges in the hotel including poor customer satisfaction. According to Zohar (2016), 80% workers’ turnover rate is too high for the hospitality industry. The author states that, this rate is normally experienced in the construction and mining industries. The effects of high employee turnover have caught the attention of the Imperial Hotel management. They need quick solution to the problem so that they can save the hotel. Hence, the report herein has been designed to analyse the situation in the Imperial Hotel and give recommendations on the best solutions to be implemented.

The Aim of the Report

The main aim of this report is to come up with solutions that can help Imperial Hotel overcome high employee turnover rate within 12 months.

Impact of High Employees’ Turnover at Imperial Hotel

The concept of Employee Turnover

Hom et al. (2017) define workers’ turnover as the number of personnel exiting an organisation due to different reasons. According to the authors, some of the reasons why employees leave an organisation are uncontrollable for example, retirement, relocation, when a contract expires, and poor quality work by the personnel. However, there are other reasons caused by the management including poor pay, poor working conditions and staff mistreatment. According to the case study of Imperial Hotel, the management is the cause of the firm’s high staff turnover. Peter Farnsworth must understand the types of staff turnover for him to easily solve the current problem at his working place. According to Brown et al. (2015), understanding the types of turnovers can help an organisation trace the causes of the issue. The authors report that, there are three types of staff turnover including involuntary turnover, voluntary, and retirement. The imperial Hotel is faced with voluntary staff turnover because the poor working conditions in the firm.

Causes of High Staff Turnover at Imperial Hotel

In the world of business, employee’s turnover is not a new term. However, managers must understand the causes of the employees’ turnover in their place of work so that they can easily create solutions to the problem. According to Brown et al. (2015), the fishbone diagram can be of help when looking for solutions to a problem in an organisation. The diagram invented by Dr. Ishikawa was developed to help organisations learn the causes and effects of a problem before finding solutions to the issue (Brown et al. 2015). Imperial Hotel’s current manager must use the diagram to learn the root cause of the issue within the firm. The figure below shows the fishbone diagram.

Figure 1 showing the fishbone diagram on causes of employees’ turnover (Brown et al. 2015)

According to the fishbone diagram above, employees may leave an organisation due to the personal, health, work status, satisfaction, job demand, and work development related reasons (Brown et al. 2015). At the Imperial hotel, the workers were leaving the organisation due to work demands, personal, status, satisfaction and demand reasons. First, the employees at Imperial Hotel were not satisfied with the salaries they were being paid. The case study reports that the workers left to seek jobs at other hospitality firms due to poor pay at Imperial Hotel. Second, the work demand was too high and there were no allowances for the overtime services.

In the case study, the previous management of Imperial Hotel were not compensating the workers for overtime services. The management were too demanding hence making the employees leave at work late. Third, other workers left due to their personal reasons. The Hotel mainly employed students from the European Union working part-time jobs. When schools opened, the student would leave the firm to go back and study. Fourth, the management also harassed the employees on frequent occasions. According to Han et al. (2016), workers can leave a firm if they do not feel respected. The authors report that, if the employee does not feel like part of the company, he or she will leave and search for better working conditions. Lastly, the Imperial Hotel management did not invest on their workers by giving them proper training and education. The reasons above are the main causes of 80% employees’ turnover rate at Imperial Hotel.

Effects of High Employee Turnover at Imperial Hotel

High employees’ turnover rate can rapidly bring the sales of a business down most especially the hospitality organisations. First, according to Guchait et al. (2015), high staff turnover can lead to customer dissatisfaction with the business’s services. The authors reveal that, customer dissatisfaction can lead to low sales within an organisation. The case study reports that Imperial Hotel was ranked among the five star hotels which have drastically reduced their sales in the current hospitality market in London. The case study also reveals that most of the customers left the hotel to seek the firm’s competitors’ services because they were not satisfied with Imperial. High turnover normally affects the sales of various hospitality firms in London. According to Lu et al. (2016), hotels in London have lost more than $10 million due to high staff turnover from 2012 to 2015.

High employee turnover can lead to wastage of a lot of resources in a firm. According to Kim et al. (2016), a lot of capital can be used by organisations to solve the problem of high turnover rate. For example, the time and capital the current Imperial Hotel manager is wasting to find solutions for the high employees’ turnover could have been used to increase the production of the firm in a different way. The Imperial Hotel case study shows that, the firm has lost 35% of the company resources in solving employees’ issues. The firm spends huge capital in hiring and recruiting employees every year and unluckily they leave the company. Third, high turnover rate can reduce the production of a business. Most of the former Imperial Hotel’s customers have left due to low production. Most activities in the firm are left unattended to due insufficient workers caused by high turnover rate. The hotel was ranked last among the five star hotels in London due to its low production and sales. According to Cohen et al. (2016), hospitality industries should not have 80% employees’ turnover rate. The authors narrate that the only industries allowed to have such kind of turnover are the construction sectors.

The Link between High Turnover rates at Imperial Hotel with Other Problems

Apart from the turnover issue, Imperial Hotel is also suffering some other challenges including customer dissatisfaction, ineffective leadership, lack of cultural diversity, poor team work and poor controlling and operating procedures. All the problems above are because of poor leadership at the organisation. As reported in the case study, the workers of Imperial Hotel were not exposed to training to help them operate and work with computers. According to Huang et al. (2016), if customers are well trained on importance of work diversity, teamwork, and other lessons like computer packages, Imperial Hotel could have avoided all these problems. According to the authors, all the problems revolve around workers management.

Peter Farnsworth’s Suggestions

Peter, the new Imperial Hotel manager has suggested some solutions to curb the high staff turnover in the organisation. Frist, the manager has suggested that the company should attract and retain employees to significant positions. According to Zohar (2016), this is a motivation strategy. Promoting staffs to key positions in the firm motivates them to stay and work hard. The employees cannot go anywhere if they are recognised and motivated for their good works (Zohar 2016). Second, reward the employees by offering offer packages and bonuses. Farnsworth can do this by compensating the workers for providing overtime services. The management can also offer pay packages by introducing employee’s performance awards. The award can be used to reward the best performing staff.

Third, benchmark pay scales against other hotels. Business managements should conduct research and find out the salaries of employees from other opponent firms and compare it with theirs (Hom et al. 2017). The management should then pay its workers the salaries that match the market. However, they should not overpay or underpay the workers, they should be moderate. Fourth, Farnsworth suggests that Imperial Hotel should offer frequent training and help talented staff to improve their talents. Training can help the workers understand their roles better for example, they can be able to work with computers. Helping the workers to nurture their talents can make them feel as part of the organisation. For example, Imperial Hotel can train and improve staffs interested to be leaders and retain them for future leadership positions in the firm. Lastly, Farnsworth suggest that the management should treat the staff more friendly and effectively. This can help the staff work to the maximum of their ability because they feel respected and adored. The solutions provided by Peter are significant in reducing personnel turnover.

Implications of Farnsworth’s Solutions

The solutions provided by Peter can improve the employees’ morale in the organisation hence reducing the rate of staff turnover. The solutions will add employees experience hence, they will work to satisfy the firm’s customers. However, for these solutions to be fully implemented, the firm will use a lot of funds in training, improving pay, and rewarding the staffs.

Further Recommendations

Apart from Peter’s solutions the following can also help the firm reduce staff turnover rate within 12 months of their implementation. First, the management should come up with flexible work timetable which can fit the schedule of all the employees. For example, the firm can schedule workers for night shift and day shift (Brown et al. 2015). This can allow the workers who are busy during the day to report at night and vice vasa. Second, the frim should hire most qualified and right staff for the job. They should not hire more intern students like how the previous management did.

Implications for the Recommendations

If the firm will implement the above recommendations together with suggestions from Peter, the problem of staff turnover will solved completely. However, hiring most qualified hospitality staff is so expensive, thus, the firm must be ready to spend a lot during hiring.

Conclusion

In conclusion, high workers’ turnover rate can affect sales and production of a business. Managers should apply good management skills in managing their staff and ensure that they are satisfied. Imperial Hotel has been largely affected by staff turnover and this menace has even led to other problems the firm is incurring. However, if the current management implement the suggestions by Peter together with the recommendations herein, the problem will be gone within 12 months and the hotel will be back at its feet again. Though implementing these solutions might be expensive, the outcome will outshine the capital used to solve the menace. These solutions can also serve as answers to the other five problems.

References

Brown, E.A., Thomas, N.J. and Bosselman, R.H., 2015. Are they leaving or staying: A qualitative analysis of turnover issues for Generation Y hospitality employees with a hospitality education. International Journal of Hospitality Management, 46, pp.130-137.

Cohen, G., Blake, R.S. and Goodman, D., 2016. Does turnover intention matter? Evaluating the usefulness of turnover intention rate as a predictor of actual turnover rate. Review of Public Personnel Administration, 36(3), pp.240-263.

Guchait, P., Cho, S. and Meurs, J.A., 2015. Psychological contracts, perceived organizational and supervisor support: Investigating the impact on intent to leave among hospitality employees in India. Journal of Human Resources in Hospitality & Tourism, 14(3), pp.290-315.

Han, S.J., Bonn, M.A. and Cho, M., 2016. The relationship between customer incivility, restaurant frontline service employee burnout and turnover intention. International Journal of Hospitality Management, 52, pp.97-106.

Hom, P.W., Lee, T.W., Shaw, J.D. and Hausknecht, J.P., 2017. One hundred years of employee turnover theory and research. Journal of Applied Psychology, 102(3), p.530.

Huang, Y.H., Lee, J., McFadden, A.C., Murphy, L.A., Robertson, M.M., Cheung, J.H. and Zohar, D., 2016. Beyond safety outcomes: An investigation of the impact of safety climate on job satisfaction, employee engagement and turnover using social exchange theory as the theoretical framework. Applied ergonomics, 55, pp.248-257.

Kim, J.S., Song, H.J. and Lee, C.K., 2016. Effects of corporate social responsibility and internal marketing on organizational commitment and turnover intentions. International Journal of Hospitality Management, 55, pp.25-32.

Lu, L., Lu, A.C.C., Gursoy, D. and Neale, N.R., 2016. Work engagement, job satisfaction, and turnover intentions: A comparison between supervisors and line-level employees. International Journal of Contemporary Hospitality Management, 28(4), pp.737-761.

Appendix

Week 4 Seminar – Imperial Hotel Case Study Planning Sheet

The Imperial Hotel Assignment - Formative Exercise

Please complete this form to discuss in the week 4 seminar with your team. Please hand in the completed form on week 5 seminar

to your seminar tutor. Your seminar tutor will review your submission and hand it back to you in the Week 5/6 seminar.

The purpose of this planning exercise is for you to begin to understand the complexity of the problem in relation to the other problems in the hotel. It will also offer a foundation for your ongoing weekly reflections for your final analysis of the management problem for the final report.

Student Name/No:

Group/Seminar Tutor:

Date of submission:

Problem No:

Problem 2: High staff turnover with 80% of the staff leaving within the year

What do you consider the core reasons for this specific problem at the hotel?

Briefly comment (around 50-100 words)

The main reason for high rate of staff turnover in Imperial hotel has been caused by poor working conditions at the organisation. The previous supervisors were not treating the workers with respect for example, forcing them to work up odd hours without compensation. According to Han et al. (2016), employees cannot work were they feel useless. The pay was also low as compared to other hotel in the city. Han and colleagues report that good payment is part of the good working conditions.

Briefly identify how your specific problem may be linked to any other of the 5 remaining problems identified in the hotel case (Confer with your team members who investigating the other listed problems)

Briefly comment (around 50-100 words)

High staff’s turnover rate can drastically lead to other problems the company is facing. For example, customer dissatisfaction is as a result of fewer workers in the firm. The organisation also suffers poor management. According to Brown et al. (2015), poor management can lead to high rate of employees’ turnover. This is evident where the case study reports that some workers left due to harassment from supervisors, a sigh of poor management.

How useful do you consider the suggested actions are proposed by Peter Farnsworth to resolve your specific problem?

Briefly comment (around 50-100 words)

The suggestions proposed by Peter Farnsworth can effectively reduce the high rate of staff turnover at the hotel.  For example, the manager recommended that the company should retain key position for the workers. According to Zohar (2016), motivation is one way of maintaining staffs in an organisation and promising them promotion is one of the motivation strategies. In general, the solutions by Peter will greatly solve the problem within shortest time possible.

Consider two alternative ways that this specific problem could be resolved which have not as yet been considered.

Briefly comment (around 50-100 words)

Apart from the suggestions from the new manager of the hotel, the following recommendations can also help to reduce the menace in the firm. First, the managements should always work together with the human resource department and ensure that the right workers are hired. Imperial Hotel should stop hiring more interns that permanent staffs. Second, the management should always include the workers in the organisation decisions. The workers cannot leave the firm if they feel like they are part of the organisation.