1.0 Introduction
This is a study which will identify the relationship between employee turnover and organizational profitability in hospitality industry. The hospitality is a sector where the recruitment of employees have increased significantly in the past decade. On the other hand, more and more candidates have been moving to different sectors for the issues they face in the hospitality industry. The pay in the hospitality industry is less when compared the amount of labor they have put in on a regular basis. Therefore, majority of the organizations in the hospitality are facing this issues of managing the employee turnover rate and some of them even prefer having a high turnover rate.
1.1 Problem identification
The work life balance, experience, compensation and benefits are the few attributes which candidates search for while entering into an organization. Survey have been conducted and it shows that majority of the business leaders are facing issues in dealing with turnover rate within the organization. The management in the hospitality industry are facing issues in maintaining their required staffing level in a tight market of labors. Turnover is an indicator of performance within the organization and defines the operational and financial effectiveness of organizations (Sung et al., 2017).
However, majority of the organizations in the hospitality industry have facing issues in dealing with these factors. The stressful working hours, work pressures and compensation is often and opportunities of growth is slow. This is the reason that majority of the companies moving to different sectors for work culture and balance in life. However, high turnover will increase the overall cost so the organizations are losing on their profit margin and net profit is getting is reduced. This study will critically analyze these issues to identify the factors affecting employee turnover and organizational profitability and mitigation techniques for the current issue.
2.0 Literature Review 2.1 Employee Turnover 2.1.1 Overview of employee turnover
Hom et al. (2017) stated that employee turnover refer to the diminished number of the employee working in an organization. The measurement of counting the member leaving the organization helps an organizational to assess the reason for the turnover. Employee turnover are of two types- voluntary and in-voluntary employee turnover (Becton et al., 2017). Nica (2016) furthermore stated that if employees resign from the company on their own will, it is known as voluntary turnover; however, when an employee is being terminated from the company, it is known as in-voluntary employee turnover.
2.1.2 March and Simon (1958) Process Model of Turnover
The model proposed by March and Simon (1958) highlighted some of the crucial factors that can refer the reason of leaving the organization or intention of the employee to leave the company. Some of the major intentions of the employee to leave the organization are dissatisfaction in the current job roles; better perception of the alternatives, future expected utility of the employee turnover, intense work pressure, absence of moral attachments, psychological contract obligations and constituent attachments (Mowday, Porter & Steers, 2013). All these factors develop the thinking among the employees to leave the organization voluntarily. Image 1: March and Simon (1958) Process Model of Turnover
(Source: Mowday, Porter & Steers, 2013)
Employee satisfaction
Rothausen et al. (2017) furthermore depict that satisfaction comes from the way of culture followed in the organization. Employee satisfaction also obtained from the transparency maintained in the organization by the managerial people. Jiang et al. (2012) also stated that if employee are communicated every time regarding the organizational policies and regulation, involve them in all crucial decision making meeting, employees will intends to be more satisfied. Moreover, Becton et al. (2017) also highlight that employees if given job responsibility related to their area of expertise, they will intend to remain associate within the company for longer time.
Work pressures
Jiang et al. (2012) depict that in an organization work pressure is experienced by all the employees in some point of time. However, employee started feeling more pressurized if they are asked to handle some roles that are out of their expertise or they have not prior knowledge of the ways to accomplish the new responsibility. In such cases, employee started feeling pressurized as they have to show their productivity. Schawbel (2016) moreover stated that employee also started feeling pressurized when they have to perform different roles prior any notice which will furthermore hamper their productivity. This will resulted in the feeling that they might lack behind many employees as they started thinking of leaving the job.
Perception of job alternatives
Employee started thinking about other job when they are dissatisfied in their present job or organization. In such case, they started searching for other job alternatives where they can utilize their competency in obtaining the organizational goals. Maynard and Parfyonova (2013) moreover stated that searching for job alternative also followed with the assessment of the benefits that the employee will get from the new job that they have selected. William Lee, Burch and Mitchell (2014) also affirms that the benefits can be in terms of financial or non-financial benefits.
Emotional attachment
This is a non-financial aspect which helps an organization to develop a friendly environment. Salman et al. (2016) portrays that employee intends to associate with the organization of they find that equal right have been provided to all the employees, managers are empathic to all the working personnel and the company are taking effective initiative for developing strong interpersonal relationship with each other.
Rewards and recognition
This aspects show whether or not the companies are concern about the growth opportunities of the employee and credit their work and effort in order to appreciate the employees (Cho & Perry, 2012). Tzabbar, Tzafrir and Baruch (2017) furthermore stated that the leaders are liable for maintaining the morale of the employee and also celebrate their achievements and give positive feedback on failures. The rewards can be financial and non-financial and should be applied in the company for maintaining better organizational outcome.
Training and development
Another approach to highlight the development of the employee in an organization is to provide them effective training session (Miller, Fugate & Golicic, 2017). Lin, Tsai and Mahatma (2017) stated that provision of training on introducing new system or changes in the existing working approaches. This will allow the employees to develop the sense that the company do not want to lose them even if they change their system and give them training so that they can align their ability to achieve the new organizational objectives. All these actions of the company and managers help the employee to get associated with the organization for longer time.
2.2 Organizational Profitability
2.2.1 Overview of the organizational profitability
Hancock et al. (2013) portrays that an organization can be termed as profitable if they attain more financial benefits as the expected margin. Brunetto et al. (2012) also stated that in order to make the organization a profitable entity, company adopts many tactics in which maintaining employee satisfaction is one of the most important reasons. There are some other factors that can drive the profitability of the organization- market share, effective brand image, competition, effective product life cycle, economic growth and cost of products (Lin, Tsai & Mahatma, 2017). Nica (2016) highlighted that all these aspects are business focused but Mowday, Porter and Steers (2013) argued that employees are the building blocks of a company and they should be treated equally and provided with opportunities that can enhance their morale to outperform.
2.2.2 Hannan and Freeman theory of organizational effectiveness
According to Jacobs, van Witteloostuijn and Christe-Zeyse (2013), it has been highlighted that an organization’s effectiveness can be obtained by assessing how well the company obtained their goals and maintain a consistent performance. However, in Hannan and Freeman theory of organizational effectiveness, Michael T. Hannan and John Freeman formulated the concept of organizational ecology that illustrates that organizational environment is one of the important factors for obtaining organizational effectiveness (Fiol & Romanelli, 2012). Michael T. Hannan and John Freeman also stated that the ability of the employees to perform in challenging organizational environment also represents organizational effectiveness.
Internal and External Constraints
William Lee, Burch and Mitchell (2014) stated that a company might feel internal and external constraints that can be unavailability of the resources, financial constraints, lack of working personnel. The Hannan and Freeman theory of organizational effectiveness highlight that an organization is stated as effective even if in the absence of these resources, company will outperform. These constraints can be in terms of internal like change in organizational structure, change in leadership and job roles and responsibility (Cho and Perry, 2012). The internal constraints results in more dissatisfaction if not handled properly that is if for an organizational change, proper training is not provided, this might leads to poor job performance as they do not have proper knowledge in performing the job. Thus, these aspects resulted in the feeling among the employee to leave the job.
Adaptation
According to Hannan and Freeman theory of organizational effectiveness, in this aspect, company needs to deal with the constraints so that they can obtain all the organizational goals. Lin, Tsai and Mahatma (2017) stated that if an organization do not have much financial resources but have updated technology and people, who can suggest effective solutions can also bring effective outcome for the company. Mowday, Porter and Steers (2013) also stated that efficient and knowledgeable employee will always utilize their knowledge and skills to obtain the desired goals with all the available resources. Thus, this is required for the organization to maintain the talent of the working personnel to make them satisfied and retain for longer time of period.
Inertia
Jiang et al. (2012) stated that the term organizational inertia in the Hannan and Freeman theory of organizational effectiveness resembles the obstacle preventing an organization for adapting the occurred changes. This inertia when treated effectively, results in more commitment from the employee; however, if negligence of the training needs has been observed in the manager, employees desire to which for new job as they do not get proper assistance to cope up with the changes. Thus, according to this model the company needs to find out the challenges through which the obstacle can be obtained and then adopt necessary steps through which the adversity can be overcome.
2.3 Correlation between Employee Turnover and Organizational Profitability
The theory of employee turnover taken in this study is March and Simon process model and the theory taken for measuring organizational profitability is Hannan and Freeman theory of organizational effectiveness. The employee turnover model has identified reason for voluntary turnover within an organization and Hannan and Freeman theory different factors responsible for increasing the effectiveness of the organization.
H01: There is no impact of work pressure on adaptation with an organization
H11: There is impact of work pressure on adaptation with an organization
According to the March and Simon’s theory work pressure is a factor which will have an impact on voluntary turnover. In respect to adaptation, work pressure defines the adaptability of the employees to the organizational workforce. The management can facilitate in adaption to improve the turnover rate by assisting employees in dealing with work pressure within the organization.
H02: There is no impact of satisfaction on constraints with an organization
H12: There is impact of satisfaction on constraints with an organization
There are different kinds of constraints faced by the organization and in this scenario it can be seen that lack of satisfaction with the employees is an internal constraint. When the employees have bad experiences related to employee satisfaction it will increase the level of constraints within the organization. Therefore, increase in turnover rate acts as a constraint for the organizations.
H03: There is no impact of moral attachment on constraints with an organization
H13: There is impact of moral attachment on constraints with an organization
The level of attachments of the employees to the organization is essential for success of the organization. Moral attachment represents the level of comfort and belongingness of the employees towards the organization. In the current study, the moral attachment of the organization on the employees will represent the level of satisfaction of employees within the organization and lack of moral attachment is also a constraint which the organization will have to overcome to improve the turnover rate of the organization.
3.0 Research Methods
Research methodology is the identification of the different tools, techniques and models for collecting and analyzing data with in the study. Research methodology is selected based on the nature and purpose of the study. This current study will use sequential explanatory research design where the conclusion of the study has been predefined (Cho & Lee, 2014). The study will have an objective nature where qualitative data analysis will be conducted by developing hypothesis in the study and secondary data will be analyzed to compare the findings
3.1 Methodology
The study will use pragmatism as the philosophy of research as mixed method is the research design in the study. Pragmatism accepts theories if they are supported by proven actions. Moreover, pragmatism believes in the existence of alternate reality and there are different ways of interpreting a similar problem and solution. The study will use both qualitative and secondary data analysis where in the qualitative data analysis primary data will be used and in case of secondary analysis, data will be collected from different journal, articles and blogs (Leavy, 2017).
The qualitative analysis will be able to validate the theories already discussed in the study and the secondary analysis will be compared with the qualitative to understand the deviation and diverse perspective of different authors. The research approach that will be used in the study is deductive in nature where the theories discussed in the literature review section will be proved by using mixed method analysis.
Validity and reliability is an important component of the study and maintaining it is essential for improving the success rate of the study. Reliability will be tested by conducting interviews multiple managers and using different set. This will evaluate where similar result can be obtained by using different data set or not. This method of checking the reliability of the study is known as test rated reliability. Validity identifies whether appropriate methods has been used in the study or not. This will be identified using content validity.
3.2 Population, Sampling Technique and Population sample
There are two types of sampling methods and they are probabilistic and non-probabilistic. Sampling is the method of choosing relevant population respondents that will be used to analyze a given problem (Palinkas et al., 2015). They will represent the overall population in the study. However, the current study will use non probabilistic sampling where in qualitative analysis a single respondent will be taken and in case of secondary analysis 10 peer reviewed journals will be collected.
3.3 Data Collection
In this study, primary data will be collected by conducting a structured interview with a manager working in the hotel industry. The open ended questionnaire will consist of 15 open ended questions which will be recorded and analyzed (Mayer, 2017). Secondary data collection will also be conducted which will consist of thematic analysis where the objectives will be developed into different themes. The secondary data analysis will be used to provide a different dimension in the study and compare the results of the primary data analysis with the secondary data analysis.
3.4 Data Analysis (Open coding – general themes Axial coding)
Open coding will be used to in the currents study to analyze the qualitative data that has been collected in the study. The open coding will evaluate the collected data multiple times to develop meaning not based on the theories and models in the study. Therefore, in open coding the study will try to identify the meaning of the data from the different elements in the data collected (Flick, 2015). Open coding is the interpretation of the collected data in such a way that tentative theories can be developed from it. The key words used by the participant will be analyzed to identify the properties and attributes of the theory and new theory will be developed based on it (Saldaña, 2015).
The secondary data will be analyzed using axial coding where the different themes will be analyzed and data collected from the open coding will be proved using axial coding. The relationship between employee turnover and organizational profitability will be analyzed. Therefore, axial coding will draw inference from the open codes to check the validity of the theories discussed.
Ethical consideration is an essential component of research where the researchers have to abide by the data protection act. This will consist of maintaining the anonymity of the respondents in the study in order to protect their privacy. The respondent will be made aware of the objective of the study and none of the data will be used for other purposes. The data collected will not be manipulated to obtain the desired result (Humphries, 2017). The secondary data collected will be taken from high quality reliable sources for keeping the quality of the study. The respondent will not be forced to take or answer all the questions as some may feel uncomfortable in answering few questions.
Conclusions
The expected outcome of the study shows that there is positive relationship between employee turnover and organizational profitability. Various research has shown that improvement in the turnover rate within the organization means decrease in the overall cost of the organization and increase in the overall profit margin. The new employees are not able to perform to the level of the old employees which is quite natural. The study is expected to derive the same result as it a major problem in the hotel industry where a high percentage of the employees are either casual employees or part time employees. Therefore, these employees are bound to leave the organization within the given period of time.
The study has developed an effective methodologies and developed hypothesis which will be proved using the primary data and the secondary data. Organizational commitment, training and development, and growth opportunities are few factors which are having more influence on the employees. There are employees looking to grow rapidly within an organizational setting and lack of such opportunities causes voluntary turnover. Similarly, training and development is another measure for providing growth opportunities where they can improve the level of their skill. The study is expected to validate all these factor by conducting a comparative analysis between the primary and secondary data using the mixed research method.
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