Reducing Employee Turnover Rate in the Hospitality Industry
The hospitality industry is labor-intensive and the efficient utilization of labor resources gives organizations in the industry competitive advantages. However, the relatively high level of employee turnover in the sector has become endemic leading to a substantial loss of investments in human capital, quality, and training. Employee turnover results in an outflow of skills hindering the company’s competitiveness, progress, quality delivery, and efficiency. The following interview will help analyze the factors that contribute to the high employee turnover rates in the industry, and how such risks can be mitigated. The interviewee is the human resource manager of one of the biggest restaurants in the state, Midland Oaks.
Question: How does the organizational setting affect the employee turnover rate?
Answer: The way the organization is structured in regards to recruitment and selection, performance management, the compensation and benefits structure as well as the training and development format will all have an impact on whether an individual chooses to stay in a particular restaurant or not.
Individuals who are recruited through professional means by applying directly to the company possess more information on the requirements of the job compared to individuals who are recruited by employment agencies, and college placement offices. Individuals recruited through these non-professional means are more likely to leave the company than those who applied for the job directly.
Companies with less pay mobility and a rigid pay and compensation structure are also more likely to experience higher employee turnover rates than those whose pay structure is more flexible. Performance management tools including appraisals need to be used continuously to reduce employee turnover as well as to address any psychological requirements for receiving rewards and feedback.
Question: How about organizational politics? Do they play a role in employee turnover?
Answer: I am afraid so. Politics in the restaurant can result in employees leaving because they feel that their positions are threatened or their needs as employees are never addressed. Organizational politics also has the effect of dividing people into camps creating a negative and divisive atmosphere, which is harmful to the progress of individual employees. If an employee feels that the politics in his workplace is curtailing his efforts to carry out his duties diligently or restricting his rise in the corporate structure, he will opt to leave the company for a less restrictive one.
Question: And industry environment and trends?
Answer: They also affect employee turnover rates in restaurants and the hospitality industry as a whole especially when it comes to pay and union laws. If the industry sets a benchmark for pay and some companies cannot reach that benchmark, then there will be a mass exit of employees from such companies. If information points to one sector in the industry having better pay than others do, more people will quit their current jobs and seek positions in the lucrative sector.
Question: Why do these organizational challenges exist?
Answer: They exist because for so long, profits and not human capital has been the focus of the companies in the hospitality industry. Profits are sole objectives of these corporations completely ignoring the integral role that the human resource plays in achieving more profits.
Question: How are the challenges affecting the individuals in your sector?
Answer: Employees usually feel demoralized when their compensation and satisfaction needs are not met. Rather than settle in a work environment where their efforts are not appreciated, they look for other places where their value is matched with better pay, training opportunities, and well-structured reward systems.
Question: What have you tried to reduce employee turnover rate in your restaurant?
Answer: Our company has employed various strategies to reduce employee turnover including developing a formidable pay structure that actually encourages mobility within the structure. The recruitment and selection process has also been overhauled and now we primarily focus on hiring individuals who have applied working with us. A reward system has also been set up that guarantees every employee in the company gets a reward regardless of their role in the restaurant. There is a reward category for every role in the company.