Impact Of High Staff Turnover On Organizational Performance In Sofitel Auckland

High staff turnover and its negative impact on organizational performance

Dsicuss about the Voluntary Turnover In The Non-Profit Human Service.

The ultimate result of high staff turnover is disastrous for the organisations and the performance of the organisation can be affected by the staff turnover. As stated by Au & Tse (2015), today’s organisations mostly focus on the high organisational performance that can meet the objectives of the organisations in a highly competitive environment. The organisations are taking the strategies that could improve the performance of the organisations reducing the staff turnover. Brown, Thomas & Bosselman (2015), supported this by saying staff turnover and organisational performance are intertwined and it is evident that high staff turnover negatively impacts on organisational financial performance. The productivity, efficiency and effectiveness of the firms are influenced by well experienced and competent workforce. In the hospitality industry, the staff turnover is high as the employees leave the organisations for lack of job security and job satisfaction (Guilding, Lamminmaki & McManus, 2016). The employees who work within the organisation face the low morale and poor performance. Therefore, the increasing pressure on firms to gain the high levels of performance to meet the changing consumer needs necessitates special focus on the role played by the human workforce to facilitate the high performance.

In New Zealand, hospitality industry gives almost 5% of GDP and in the year 2017, approximately 3.7 million travellers visited New Zealand (Kelsey, 2017). The hospitality industry is mainly based on a guest-service industry where the service to the guests is the main factor. The staffs can play the major role to provide satisfaction to the guests. However, in the hospitality industry, the employee turnover in New Zealand reached 18% in the year 2017 (Kelsey, 2017). The management has been failing to fill the gap by recruiting new staffs. The lack of staffs within the Sofitel leads to low employee morale and low customer service. The HR department of the Sofitel Hotel cannot ensure the employee retention and the management is facing the issue of high attrition are and turnover of talents (Sofitel.com, 2017).

This research has strived to identify the possible reasons behind the high staff turnover at Sofitel Auckland and poor organisational performance due to the high staff turnover.

The aim of the research is to explore the impact of high staff turnover on organisational performance in Sofitel Hotel, Auckland.

The objectives of the research are:

• To find out the reasons behind high staff turnover rate in the hospitality industry in New Zealand
• To identify the strategies taken by Sofitel hotel in Auckland to accelerate organisational performance
• To establish a relationship between high staff turnover and organisational performance
• To recommend some possible solutions to Sofitel hotel in Auckland to reduce high staff turnover rate

Primary research question

Factors contributing to high staff turnover in the hospitality industry and in Sofitel Auckland

What is the impact of high staff turnover on organisational performance in the hospitality industry in New Zealand?

Secondary research questions

• What are the reasons behind high staff turnover rate in the hospitality industry in New Zealand?
• What are the strategies taken by the management of Sofitel hotel in Auckland to accelerate organisational performance?
• What could be the possible recommendations for possible solutions of Sofitel hotel in Auckland to reduce high staff turnover rate and increase organisational performance?

This study would try to highlight the hospitality management practice that can contribute the staffs’ development and employees’ retention in New Zealand. In the hospitality industry, the management must identify the employees who like to work in hospitality sector. The research is based on primary data. The research has highlighted the theoretical framework of the research. The limitation of the study is to lack of funds to continue the research as credible secondary data cost high, lack of time and lack of participants in the research.

Figure 1: Theoretical framework

(Source: Self-developed)

Staff turnover is the rate at which the staffs leave the organisation voluntarily; layoff and termination do not have any relation to this. (Zin-Zhao & Jing Wang, 2014) pointed out that employee turnover is the measurement of employees’ staying within the organisation. Staff turnover can be calculated dividing number of separations with the average numbers of employees.  The employees leave the organisations when team members of a team are treated in a different way. As stated by Kandampully & Suhartanto (2016), the employees leave the organisations only because of the immediate supervisors. If the company culture is very toxic and employees do not find enough career development opportunity, the employees leave the organisation. The employers in hospitality sector need to recognise the hard work of the staffs. Organisational performance can be divided into three basic parts; financial performance is about return on investment or assets. The market performance can be defined as the company’s gain of market share and lastly, shareholder’s value is about the company’s measurement of the company’s success. As stated by Guilding, Lamminmaki & McManus (2016), organisational performance is about effectiveness, efficiency, relevance and financial viability of the organisation.

This theory talks about two important factors of an organisation. First one is motivator that can motivate; however, a lack of motivators does not cause dissatisfaction.  Motivator factors in the work are recognition, achievement, responsibility, recognition; work itself, advancement and personal growth (Hur, 2017). Hygiene factors can influence hygiene factors can cause dissatisfaction but cannot motivate. Hygiene factors in workplace are working condition, co-worker relations, basic wage, salary and supervisor quality.     

The employees join in an organisation as they get attracted to the position and the employees have their expectations. High performing employees are retained within the organisation.  As stated by Qin et al. (2015), employees participate in the professional life, the employees participate in the community life and they develop the professional and community life as well. The relationships help to become more embedded to stay on the job. The employers need to provide motivation both extrinsic and intrinsic in order to stay within the organisation. The employees leave the organisation when because of lower job satisfaction. The employees can leave the organisation because of better pay, better opportunity and better hours. In this regard, as opined by Kerney (2018), retention diagnostic is a process of benchmarking that can recognise the costs and uncover the effects of performance, engagement and employee loyalty process.

Theoretical framework of staff turnover and organizational performance

The loss of the employees can be very harmful to the firms as it relates the output of the organisation. The key performance of the organisation can be financial performance and replace the employees’ costs three times more value for the organisation. When old employees leave, new employees are needed to provide training Limarev et al., 2015). Lower job tenure can hamper the production goal of the organisation. In the hospitality sector, if the employees leave at a relatively high rate from an organisation, the organisational performance will eventually decrease. In theoretical perspective, staffs join in an organisation if they find something enticing and high-performing employees are motivated to look for better work. Employees stay within an organisation if the organisation can provide enough motivation. Motivation can come from extrinsic factors like a bonus, reward and recognition and motivation can also come from intrinsic factors like interest and job responsibilities. As opined by Selden & Sowa (2015), in the hospitality organisations quality attributes can play the determining role in customer satisfaction. Quality can play both tangible and non-tangible for the brand organisation; companies want the experienced employees’ mutts be retained.

There are mainly two types of data collection procedures, primary data collection and secondary data collection. Primary data are raw data, on the other side; secondary data are collected from secondary sources. In this research, the researcher has collected primary data. As stated by Taylor, Bogdan & DeVault (2015), primary data are helpful to do the research as they are directly collected from respondents. In order to collect the primary data, the researcher has conducted a survey. The researcher has prepared 10 close-ended multiple-type questions to ask the respondents. The questionnaire contained two types of questions, demographic questions and subjective questions. Some of the questions were also in the form of Likert scale. The researcher has collected the email ids of the respondents and sent the questionnaire to the respondents. 

The sample population of the study was the staffs of Sofitel Hotel and Resort in Auckland. The sample size of the study was 35. In Sofitel Hotel and Resort in Auckland, numbers of the staffs were more than 75. The researcher has selected the sample size based on Simple Random Sampling technique. According to Lewis (2015), simple random sampling can be defined as a subset of the statistical population through which each of the individuals of the subset has the same opportunity of getting selected.  The researcher took the permission before sending the questionnaire to the respondents and ensured that confidentiality would be maintained. The researcher asked the respondents revert within 7 days of the period.

Sample population	Sample size	Sampling technique	Sample frame
The staff of Sofitel Hotel and Resort	35	Simple random sampling	Soft copy of the questionnaire using email ids

Importance of employee retention and motivation in enhancing organizational performance

Table 1: Sampling of the survey

(Source: Self-developed)

In this research report, quantitative data analysis technique has been used. Quantitative data are numerical data that are collected from the survey (Flick, 2015). The researcher has used the tables to show the data findings. The researcher has also used Excel software to analyse the data findings and to present the data findings in a visual way. Data findings have been analysed linking with the literature review.

Survey responses findings have been shown as follows:

Specify your gender.

Options	Number of respondents	Response percentage (%)	Total respondents
Male	20	57.14%	35
Female	15	42.85%	35

How long have you been working in Sofitel Hotel?

Options	Number of respondents	Response percentage (%)	Total respondents
Less than 3 months	08	22.85%	35
3-6 months	12	34.28%	35
7-12 months	09	25.71%	35
More than 12 months	06	17.14%	35

How far do you agree that employees leave the Sofitel hotel frequently?

Options	Number of respondents	Response percentage (%)	Total respondents
Strongly agree	13	37.14%	35
Agree	08	22.85%	35
Neutral	03	8.57%	35
Disagree	07	20%	35
Strongly disagree	04	11.42%

Are fringe benefits offered by the organisations necessary to retain the employees?

Options	Number of respondents	Response percentage (%)	Total respondents
Yes	19	54.28%	35
No	10	28.57%	35
Sometimes	06	17.14%	35

What is the most important reason behind the high staff turnover at Sofitel Hotel?

Options	Number of respondents	Response percentage (%)	Total respondents
Work stress	13	37.14%	35
Immediate supervisor	06	17.14%	35
Poor teamwork	03	8.57%	35
Inflexible working hours	06	17.14%	35
Unfair pay	08	22.85%	35

What is the most useful strategy taken by Sofitel hotel to increase the organisational performance?

Options	Number of respondents	Response percentage (%)	Total respondents
Engaging the employees	07	20%	35
Strong leadership practice	09	25.71%	35
Training and development of the employees	11	31.42%	35
Changing business strategy	08	22.85%	35

How far do you agree that employee leaving can lead to lower guests’ satisfaction?

Options	Number of respondents	Response percentage (%)	Total respondents
Strongly agree	11	31.42%	35
Agree	13	37.14%	35
Neutral	02	5.71%	35
Disagree	04	11.42%	35
Strongly disagree	05	14.28%

Does Sofitel hotel put emphasis on employee recognition that can help to do employee retention?

Options	Number of respondents	Response percentage (%)	Total respondents
Yes	10	28.52%	35
No	21	60%	35
No Comments	04	11.42%	35

How likely do you want to work at the Sofitel hotel?

Options	Number of respondents	Response percentage (%)	Total respondents
Extremely likely	07	20%	35
Very Likely	03	8.57%	35
Neutral	04	11.42%	35
Slightly	12	34.28%	35
Not at all likely	09	25.71%	35

What could the Sofitel hotel do in order to increase the organisational performance?

Options	Number of respondents	Response percentage (%)	Total respondents
Right payment	06	17.42%	35
Employee engagement	08	22.85%	35
Flexible working hours	05	14.28%	35
Recognition and rewards to the employees	10	28.57%	35
Taking right leadership	06	17.14%	35

From the above findings, it has been noted that in Sofitel Hotel and Resorts, numbers of male staffs are more than the female staffs. One more important factor is that the maximum staffs are just one year old in the organisation and this factor proves that the employee retention rate is very low. The employees leave the organisation and almost 37.14% of the respondents strongly agreed with the fact. The survey proved the fact that employees want to have the fringe benefits that the organisations offered to them as approximately 54% said that fringe benefits can provide a positive impact on employee retention. Employers need to motivate the employees using two factors hygiene factor and motivator factors. Motivators in the workplace provide positive satisfaction and these arise from the intrinsic condition, on the other side, hygiene factors are maintenance factors that the employers should maintain (Lee, 2017). According to the Sofitel, the reasons behind the high staff turnover are work stress (37.14%), immediate supervisor (17%), poor teamwork (8.5%), inflexible working hours (17.14%) and unfair pay (22.85%). Therefore, the major reasons for high staff turnover are clear and maximum staffs put stress on work stress and unfair pay of the organisation Sofitel. Supplanting employees can cost organisations thrice the esteem that the representatives will add to the organisations inside a year. Therefore, this is on account of new representatives must be prepared as the active workers likewise should be repaid in light of the motivation behind why the worker left the organisation. In spite of the fact that the capability and viability of the approaching worker is a key determinant of the size of the money related misfortune caused by the organisation if there should arise an occurrence of a representative turnover. Most of the firms have revealed negative budgetary exhibitions because of high staff turnover. With unpractised staff individuals because of high worker turnover inside hospitality organisation, low benefits or, all things considered, misfortunes in light of the fact that the recently obtained representatives have a tendency to be less effective in their activity while expending a ton of assets through preparing.

Data collection and analysis methods

Thus, staff turnover cannot be sound for hospitality organisation monetarily on the grounds that unpractised workers are described by high wasteful aspects and high costs. All the more along these lines, high staff turnover additionally prompts burnouts among the representatives which may to a great extent affect on the adequacy inside the organisation, prompting the general decreased money related execution inside the organisation. It can in this way be contended that money related execution is typically contrarily influenced by high employee turnover in organisations. It normally moves toward becoming trouble for the organisation to keep up institutionalized quality characteristics in their items and administrations. While at times staff turnover can carry new abilities into the organisation, and henceforth prompt enhanced quality inside the organisation, the majority of the past experimental investigations have uncovered that employee turnover can have a negative effect on quality traits with hospitality organisations (Boxall, Guthrie & Paauwe, 2016). The Sofitel organisation tried to solve the issue of staff turnover and they focused on improving organisational performance. The organisation has been using the strategy of engaging the employees within the organisation, strong leadership practice that can help the staffs to stay motivated, providing training and development programmes and the organisation tried to opt for changing business strategy. Sofitel staffs believed that high staff turnover eventually leads to low guests’ satisfaction. Therefore, the Sofitel hotel needs to put emphasis on employee recognition in order to improve the organisational performance.

This shows that staff turnover meddles the item improvement efficiencies and developments inside organisations. Therefore, as discussed in the article of Singh et al., (2015), employee turnover on the grounds that unpractised staffs’ battles with imaginative manifestations not at all like experienced partners who can without much of a stretch think of new and more inventive models since they are more utilised as a part of their work. Moreover, it can accordingly be contended that high employee turnover in hospitality antagonistically influences item advancement and developments inside the organisation. The challenges faced by the Sofitel for high staff turnover are the high-cost implication as the HR department needs to give training to the employees, hire new employees and loss of services and low guests’ satisfaction. Overall business performance is getting lower as the new employees take time to be efficient and the work culture is getting depressed. Turnover is difficult to control; however, the organisation needs to retain more employees taking some possible strategies as it is difficult to manage a workforce that is constantly in flux.

Survey findings on staff turnover and employee retention at Sofitel Auckland

Conclusions

It has been observed that in the hospitality sector, the staffs leave the organisation without any prior notice of the employee satisfaction level is very low. The hospitality industry is service-oriented industry where the staffs play the most important role in providing guests’ satisfaction. Therefore, leaving of the employees provide lack in organisational performance regarding financial performance, efficiency and productivity and reputational loss. The reason behind leaving the staffs from the hospitality sector may be the senior employees’ attitude and leaving the employees would eventually impact on the competitiveness, quality delivery and efficiency. The organisations in hospitality sector cannot retain the staffs as the job responsibility is high where the salary is low. Leaving of the staffs from the hospitality sector can reduce the organisational performance and it would result in the low revenue of the organisation as well as low customer satisfaction. Sofitel hotel has been facing the negative impact on customer service and quality attributes. Organisational performance is also associated with the innovations, Sofitel can opt to take some database management in order to understand the possible retention factor and inexperienced employees may not understand the innovation. High staff turnover also adversely affects the innovation and service development of the organisation. The Sofitel has been facing the issue of low employee morale, high-cost implication, poor team working and leadership ineffectiveness and resource usage of the organisation. 

1. Proper hiring and selection

The HR department should hire the right people from the beginning who have a long-term plan in the hospitality industry. Human resource planning is very important in the hospitality sector as it is associated with the guests’ satisfaction and staffs’ engagement. The proper selection process can lead to the skill set and Sofitel organisation can get the qualified candidates from the New Zealand labour market. The Sofitel hotel can recruit the staffs using external recruitment policies with experience. The organisation needs to recruit people who are organisation-fit and have a long-term plan.

1. Rewards and recognition

The HR department can keep the compensation and benefits currently in order to motivate the staffs. The employees in hospitality sector do not have proper fringe benefits that are the addition to the wage of the employees. The management of Sofitel hotel can prepare a fringe benefit plan for the employees where the staffs would be given to the achievement awards, accident and health benefits, educational assistance, employee discounts, meals, moving expense and commuting benefits. These are the extrinsic motivation to work within the Sofitel and the employees will get interested to work for the organisation for a long-term. Therefore, employee retention can help the organisation to gain organisational productivity and efficiency.

1. The flexibility of the working hours

The management body of Sofitel hotel can offer flexibility in working hours to the staffs an opportunity of growth. In the hospitality sector, the employees need to work for long working hours as the guests need the staff anytime. The roaster plan of the Sofitel hotel needs to be proper so that the employees are given a flexible working time. Flexible working time leads to work-life-balance of the employees. 

1. Staff engagement to provide guests’ satisfaction

Paying proper engagement to the staffs can increase guest satisfaction and overall organisational performance as well. At first, the management needs to do the proper employee engagement survey and the management can focus on the organisational level. The staffs’ engagement can lead to the good team working and team members can share their views to build a proper working culture. The managers must show his/her proper leadership skills to hold the employees to accounting the employee engagement. Right staff engagement can lead to the guests’ satisfaction that can lead to the organisational better performance and organisation can go towards revenue generation.

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