The First Group Asset Management’s March publication on HospitalityNet summarises findings derived through internal research and proposes strategies to combat staff turnover which is a critical issue faced by the hospitality industry.
These strategies are extracted from The First Group Asset Management’s recent study “Staff Turnover and its Effects on a Hotel’s Financial Income Statement”. This research study was conducted over a period of one year, aiming to demonstrate a relationship between the staff turnover rate and both the top-line and bottom-line performance. After having identified the factors which correspond to weaker financial performance, the author assessed strategies which may be applied to mitigate this issue by reducing the staff turnover rate in hotels. There are four main tactics proposed within this research piece.
Employee retention strategies
The first strategy to combat the risk of high turnover requires the correct recruitment strategy to be established. A comprehension process is required to identify the correct fit by employing situational-questions, implementing a brand test during the interview and cross-checking references. Once suitable candidates have been identified, the HR department is responsible for proposing compensation packages which are in line with or above the market benchmark.
The second strategy emphasizes the development of training and learning programs. Hoteliers may contemplate the risk of investing in career development for employees who then resign due to the high costs involved; however, retaining employees whose skills have not been cultivated may have repercussions in the future. It is generally agreed that all employees should have access to basic training in order to promote an understanding of the brand in terms of its values, protocols and standards. It is imperative to note that training programs can be expensive; therefore, the recruitment process needs to be designed and executed correctly to minimise the risk of employing unfit candidates who may add further costs in this respect.
The third strategy is to rethink the organizational culture and adapt their business model accordingly. For example, the bureaucratic nature of hierarchical organisations may demotivate creative employees. In a dynamic hotel environment, it is important that management nurtures and encourages creative talent. Hotel executives must at all times be transparent in their dealings with employees. Management should brief staff about annual budgets and ensure each team member understands their department’s Profit & Loss accounts.
This brings us to the fourth strategy, which is to reconsider the HR Management role. There is a long-standing misconception that HR Management largely assumes an administrative role. Ulrich (1997) coined the term ‘administrative expert’ whereby operational effectiveness or output is their main goal. This perception of the HR department is still considered purely administrative. HR department should be the ambassador of the brand to potential candidates. HR departments should focus on investing in talent management schemes and learning and development programs, aside from handling administrative work such as visa applications, procedures for recruitment and termination, and arranging staff accommodation, transportation and insurance. The HR manager is an organisational architect who is responsible for ensuring operational structures are designed in a way that meets both the company’s and employees’ needs. Such models promote stronger performances in the workforce and a higher Return on Investment (ROI) for the company.