Award of Degree of Bachelors of Business Administration (Honors) in Finance
Session: 2008 to 2012
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RESEARCH COMPLETION CERTIFICATE It is certified that M.Azam Qayyum, ID No. 08U0340 Session 2008 to 2012 has carried out and completed the research project entitled Labor Turnover Issue Faced by Serena Hotels under my supervision for requirement for the award of Degree of Bachelor of business Administration Honors (Finance) by Lahore School of Economics. Research supervisor
(Zehra Raza) Lahore School of Economics
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TABLE OF CONTENT ACKNOWLEDGEMENT....................................................................................................3 ABSTRACT .........................................................................................................................4 CHAPTER 1: INTRODUCTION.........................................................................................5 CHAPTER 2: LITERATURE REVIEW.............................................................................10 CHAPTER 3: METHODOLOGY.......................................................................................22 CHAPTER 4: RESULTS AND ANALYSIS......................................................................33 REFERENCES....................................................................................................................45 APPENDICES.....................................................................................................................46
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ACKNOWLEDGEMENT I would sincerely thank and express my gratitude to all those who provided me with any kind of assistance and helped me in completing my thesis. I gratefully acknowledge the help of my supervisor, Ms. Zehra Raza, who has provided me a lot of help whenever needed. In this entire duration of this thesis, she has given most valuable advice and suggestions and has explained each and everything to me in great detail. Without her help, instructions and analysis of the mistakes, I would not have been able to complete this project. She made it very easy for me to confidently carry out my research. I would also thank my friends and family who have supported me during all times.
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ABSTRACT The research reported in this thesis was on Labor Turnover issue faced by Serena Hotels. The purpose of research was to study the main causes, effects and the solutions of the Labor Turnover at Serena hotels. The secondary data was collected through the literature already written on the topic of labor turnover. It was available on the Internet. The primary data was gathered by designing and distributing questionnaires. Coding of the questionnaires was done and then SPSS software was applied to analyze the data. Cross Tabulation was done of all the variables. The results were interpreted by usual principles of statistics. The findings of the research were that the employees leave one job mainly because of the Job dissatisfaction and lower monetary and other rewards. The hypothesis proposed in the research were all accepted.
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Chapter 1 INTRODUCTION OVERVIEW Labor Turnover refers to the ratio of the number of employees that leave the organization during a particular period to the number of employees that are already in the organization in the same period. It is defined as the movement of the employees in and out of the business or organization. The employees can leave due to any reason. They can leave through attrition, dismissal, or resignation. In simple words, it is the rate at which the old employees are leaving and the new employees are taking their place. It is an important issue for every organization as a high turnover rate would also increase the costs for the company and would reduce the productivity and hence, the profitability. These days the accommodation industry is already suffering from high costs and low profitability due to the recession and fall in the tourism rate all over the world. So, the cost of labor turnover would further worsen the situation. The company would have to go through the selection process all over again. Also, the new labor/employee would take some time to adjust to the new environment and to get acclimatized to the organizational culture. Productivity would also suffer if skilled labors are leaving. The task of keeping the turnover low requires the whole process to be effective. There needs to be an effective management of the labors/employees so that they may not feel alienated with the work. Also, management should make sure that the employees are motivated and satisfied with their job. They should also be rewarded appropriately. There should be an effective communication system. If the companys staff turnover is higher than the other companies in the Research Thesis 6
same industry, then it is a point of concern for the management which then has to take corrective actions. On the other hand, turnover can be beneficial for the employees. Some scholars are of the view that the employee turnover is an integral part of any business. It is because it increases the skills of the employees when they move from one organization to another. They feel that it is right for the employees to move in search of better employment opportunities. Overall, high labor turnover is an issue for any organization and it needs to take corrective measures to control it. It should make sure that the employees remain loyal to the organization and do not move to other organizations.
BACKGROUND The labor turnover problem first arose when the trend of self-employment died down and people started to work for only one employer in the early 19 th century. Therefore, the rate was first calculated at that time. Later, when the importance of agriculture declined and more and more firms started to employ people, the causes and implications of labor turnover were measured. Labor turnover increased drastically in the early part of the 19 th century but declined in the 1920s. It was because of the increase in techniques used to improve relations between Labors and management. In 1940s and 1950s, it followed a volatile trend and is following the same trend till date. However, recently, the management of the large organizations has introduced several techniques to keep the employees satisfied with the jobs by providing them fringe benefits. The highly valued employees of the business are paid handsomely and they are Research Thesis 7
also provided accommodation and other services. Moreover, they are paid bonuses as well. Organizations have identified several measures to make sure that employees are in a healthy and cordial relationship with the management and other employees who are on the upper or lower levels of hierarchy.
EFNGFIFINGIS OF LABOR TURNOVER AROUND THE WORLD This topic or issue of Staff Turnover is very important around the world. The reason is that in the Capitalist world, labors and employees are of utmost importance. They are the resources through which the final product is made. They are one of the key resources in generating profits for the businesses. That is the reason why the organizations provide rigorous training to their employees to get them equipped with the required skills so that the productivity can be improved. An organization spends a lot on the employee for training and other benefits. So, when he/she gets skilled and leaves the organization, it not only costs the firm in terms of expenses but also in terms of reduced output. Its importance can be judged from the fact that according to the studies, the cost of turnover can be up to 250 percent of the salary of the employee leaving the organization. These days, the competition has increased a lot. Each company is making a run for their money as companies are fighting for market share. Due to all this, the companies can pay any amount to the employees of the competitors for their services and expertise. Therefore, recently, the issue of labor turnover has gained much importance.
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IMPORTANCE OF LABOR TURNOVER TO SERENA HOTELS In Pakistan, Labor Turnover follows a somewhat mixed trend. As the unemployment rate in Pakistan is high and poverty is also increasing, so in this situation finding the job is very difficult for the manual labor. Therefore, when they finally get a job, even if the conditions are not beneficial they hold on to that job. That is why the turnover is low among the lower level employees. In the IT industry and other major industries where technical knowledge and skills are required, the demand is more. The turnover rate is 20 percent. Therefore, the employees get attractive offers from other companies due to which turnover increases and employee retention costs also increase. Labor turnover is important to Serena Hotel because staff turnover in the hotel industry is driven by workers, tasks, firms and markets etc. The managers need to understand the causes so that the policies can be devised to retain the workers. There are push and pull motives for the employees to leave the hotel they are already working in. Push motives for the employees of Serena Hotels are related to the dissatisfaction with the current job they are doing. On the other hand, the pull motives are the opportunities available to them to improve their career opportunities. There are many pull motives for the executive jobs in the hotel industry. The importance of employee turnover to Serena Hotels can be assessed from the various costs of turnover that are enumerated in the following lines. Initially, there is a cost of the person who fills in the position while the job is vacant. Secondly, there is a cost of training the employee who has left. Serena Hotel invests in internal training, external programs and external academic education. Serena Hotel also helps its employees to get different licenses to do the job effectively, For example, driving license. Not only this, there is also a cost of the customers that the employee is taking to the other Hotel with Research Thesis 9
them. For example, when the General Manager of the Pearl Continental Hotels left the job and came to Serena Hotels, many customers who had links with the manager shifted to Serena Hotels. Therefore, it is also a cost for the hotels. Besides all these costs, there are recruitment costs and training costs as well. As mentioned above, due to the high direct and indirect costs involved in turnover in the Hotel industry, it is of utmost importance to the Serena Hotels too. Serena Hotels are one of the Leading Hotels of Pakistan and that is why the management has to maintain the image of the organization. It pays special emphasis on the quality of employees and how they are treated. It pays them effectively and slightly above the market rate. It is because the management needs to make sure that they do not leave the organization if they are offered more salary. Besides this, there is a lot of emphasis on the training of the employees. Research Question What are the causes of employee turnover and how this problem is affecting Serena Hotels?
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Chapter 2 LITERATURE REVIEW The literature review will review the critical points of the current knowledge including substantive findings as well as theoretical and methodological contributions to the related topic. The main aim of this literature review is to identify the causes, effects and solutions of labor turnover in the hotel industry. Deery and Snaw (2000) conducted a research on the turnover culture in the hotel industry in Australia using Organizational culture as predictor variable. The objective of this research was to explore the concept of an organizational culture which promotes employee turnover. It drew on the extensive literature on both organizational culture and turnover. For this analysis both quantitative and qualitative research techniques were used. Initially, the methodological considerations centered on the use of quantitative data. For this purpose, the questionnaire was used. The questions were critically analyzed by the expert panel like in Delphi Method. Data were collected from a convenience sample of 45 hotels. Using a cluster analytic approach, nine distinct clusters of variables were produced. The implications for management practice in controlling a turnover culture are examined. The first order and the second order analysis were used to determine the number of dimensions underlying the constructs of turnover, culture, and turnover culture. The findings of the research were that the exploratory research into the existence of a turnover culture in the hotel industry has provided evidence that such a phenomenon may exist. The research provided a positive and a negative turnover culture.
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Zatzick, C. et al. (2003) conducted a research on the effects of racial composition on Voluntary turnover. The fundamental reason behind this research was to find out whether the racial composition has any effect on the employee/ labor turnover. Six hypotheses were developed. The first hypothesis stated that for minority employees, the higher the proportion of an employees own race in their job, the lower the probability of their turnover. Second hypothesis stated that for minority employee, the higher the proportion of an employees own race in their job, the higher the probability of their turnover. Third one was that the higher the proportion of other minorities in their job, the higher the probability of their turnover. Fourth hypothesis proposed that the level of effect of the racial proportion is not linear. It is because at lower levels, the correlation is high and at high level, the correlation between racial composition and turnover is low. Hypothesis 5 predicted that proportion of own race in one level above the focal employee would decrease the likelihood of turnover. Hypothesis 6 stated that the proportion of own race in the level above the focal employee will increase the likelihood of turnover. To study this, the methodology that was used was that the personnel data was collected from a Fortune 500 service organization which contained detailed work histories of all full-time employees of three years. As the focus was on a single firm, detailed structural and individual data was accumulated on an entire population across different business units and levels of hierarchy. Turnover was taken as a dependent variable and racial composition was also measured. Regression analysis was carried out to test the hypotheses. It was concluded from the results that the first hypothesis is true. If the proportion of ones own minority member increases, the turnover falls. It was negatively and significantly related to the turnover. However, the hypotheses 2 and 3 were not supported. Likelihood Ratio Test was also applied to determine the improvement of the fit from the proportion variables. Hypothesis 4 proved to be true as the Research Thesis 12
relationship plot was a U-shaped curve. Logistic Regression Model was applied to test the hypothesis 5. This hypothesis was weakly supported. Hypothesis 6 was not supported. This topic is important because the turnover costs are high for a company especially if there are labor shortages. Firm suffers in terms of cost and lost productivity.
Thoms, P. et al. (2001) carried out the research regarding the relationship between immediate employee turnover and employee theft in the restaurant industry. The main aim of the research was to analyses whether the employees who know that they are going to leave the organization start stealing more or not. In this regard they created 3 hypotheses. First one stated that the correlation between turnover and employee theft would be significant. The second hypothesis was more specific. It stated that if the workers knew that they are going to leave in two weeks time then there would be more probability of stealing. The last hypothesis was related to the controls in an organization. It stated that the workers are going to steal more in the organization which have loose controls as compared to those who have tight controls. To test these hypotheses, field study and laboratory study was carried out. Large Restaurant Chain was selected. The total numbers of employees at each chain were 40-50. Interviews and discussions were carried out with the employees and managers. After the data was gathered, the simple regression analysis was used to calculate the results. The correlation between employee theft and turnover was 0.47 with beta 10.25. Also, the correlation between annual sales and employee theft was -0.03. A t-test result shows that the number of employees do not change the findings calculated above. The findings of the study prove the first hypothesis true. In Study 2 (laboratory), the sample size of 152 students was selected. Methodology that was used in this study was that the students were given different situations and they were asked that what they Research Thesis 13
would steal if they were in that position. Demographic data was also gathered after the answers. Means, standard deviations and correlations were measured. ANOVA table was also used for testing the hypothesis. Finally, after conducting both the studies, it was concluded that immediate turnover is an important factor in employee theft. Also, the employees are going to steal more if they know that they are going.
Davidson, H. et al. (1997) did a research on the effects of health care reforms on job satisfaction and voluntary turnover among hospital based nurses. The objective of this study was to identify and examine the effects of the modifications in hospitals on the nurses job satisfaction and turnover. The method that was used was the longitudinal survey of 736 hospital nurses. This sample was used to learn about the turnover that was caused due to the changes and also the job satisfaction levels at that stage. The major source of the data was survey. After gathering the data, different statistical models were applied, statistical tests were conducted and then the results were concluded. Multi-Variate analysis was also carried out which revealed that poor communication and a lot of workload was 2 of the most important reason of low job satisfaction. In conclusion, if the hospital administration carries out certain steps, then the job satisfaction can be improved and so the turnover would fall.
Henry Ongori (2007) did a research regarding the employee turnover problem, its causes, effects/costs and its remedies. The main objective of this research was to examine the sources of employee turnover and suggest different types of strategies that the managers can adopt to make sure that the employees continue to work in the organization and increase productivity. The researcher mainly used secondary research to analyses the main reasons which characterize the Research Thesis 14
labor turnover. The main factors that were analyzed were Job related factors like working environment, voluntary and involuntary turnover, organizational factors, and effects of employee turnover. The strategies proposed were employee participation in job design and other decision that are going to affect them. Also, the communication and knowledge should be passed down to the lower levels of employees so that they feel like they are an important part of the organization. Work force optimization is another important aspect. The management should make proper resources available for the workforce so that the work can be done and completed without any interruption or breakdown. Besides this, employee empowerment could also help in retaining the employees. So, the result of the research was that many firms are facing this turnover problem and these problems can be solved by following the proposed strategies. Each employee that leaves the job, the employer should identify the cause and should make sure that if the fault was on the part of the employer or the organization, then it does not happen again. Also, performance related pay should be introduced. By doing so, labor turnover can be reduced a great deal.
Lam, T. et al. (2000) researched on the issue of Job Satisfaction of the Hotels of Hong Kong. As turnover is related to the Job satisfaction, so the main aim of the study is to examine the demographic characteristics of hotel employees and the level of their job satisfaction. Emphasis is also paid to the job variables. Employee morale is an important factor in turnover. Turnover causes the firm to bear additional costs like recruitment costs and lost productivity costs. The research measures the job satisfaction of the Hong Kong hotel employees and impact of demographic characteristics on job satisfaction. Research methodology that has been used is that the research design was descriptive and quantitative in nature. Samples were selected using the stratified sampling method. The data was collected from five hotels. Samples of 200 existing Research Thesis 15
and 200 reedsigned employees were randomly identified. All types of questions were included in the questionnaire closed ended, open ended, rating and yes/no questions etc. One way Analysis of variance and Independent samples t-test were also used to analyze the data. The results concluded that more than 42.2 per cent of the employees believed that pay was one of the most important factors contributing to Job satisfaction. The reason was that high income level enables the workers to spend leisure time and also they want to save for any future contingency. Promotion is another important factor. Also, 35 per cent stated that supervision was not that much important to them. Article also concluded that the employees with low education are dissatisfied with their promotional path. Students who graduate from good universities feel that that should be given higher salary and rank as they have invested more in their education. So, if they are not given higher salary they would leave the job in search of better jobs. The management should make sure that the employees are satisfied. Management should use different strategies to keep them motivated like job rotation and enrichment. Also, the leadership style should be democratic.
Breukelen, W. et al. (2004) conducted a research on the voluntary employee turnover. The research combined variables from the traditional turnover literature with the theory of planned behavior. The main aim of the study was to find that whether the theory of planned behavior provides any explanation and elaboration regarding the voluntary turnover of the employees. The research was done on the factors of job satisfaction, organizational commitment, age and tenure to find out whether these traditional variables define or explain anything about the voluntary labor/employee turnover. If all these factors rating are high, it means that there is high labor force motivation and fewer turnovers. Method that was used was longitudinal study. The Research Thesis 16
sample size selected was 296. Questionnaires were given to all of them. The respondents were serving in the Navy. After six months, the same questionnaire was again filled by the same respondents and the results were compared. After collecting the data, appropriate statistical models were applied and the correlation between the main variables was calculated. According to the findings, the behavioral intentions were the best predictor of turnover. Hypothesis one proved to be true.
Hom and Kinicki (2001) did a research on how dissatisfaction drives employee turnover. The main aim of the research was to identify the reasons and get the insight of the turnover that is caused by lack of job satisfaction or dissatisfaction. The methodology adopted was that the national survey of retail store personnel was used to identify variables like inter-role conflicts and job avoidance that lead to turnover. Five hypotheses were created regarding each variable. Hypothesis 1 was that inter-role conflict decreases job satisfaction. Hypothesis 2 was that the inter-role conflict increases withdrawal cognitions. Hypothesis 3 was regarding job satisfaction i.e.-e Job satisfaction reduces job avoidance. Hypothesis 4 stated that Job avoidance increases withdrawing cognitions. Hypothesis 5 predicted that Unemployment decreases withdrawal's expected utility and turnover. All these hypotheses were tested one after the other and appropriate results were obtained. Managers, salespersons and auto-mechanics were surveyed. The discriminant validity tests showed that all factors discriminably differed from one another. Diagrams were drawn from the results obtained through the application models. According to the results, inter-role conflict induces dissatisfaction and withdrawal cognitions. So, Hypotheses 1 and 2 were sustained while Hypotheses 3 and 4 were upheld. Moreover, unemployment did not cause any change impact withdrawals expected utility. So, hypothesis 5 was not true. Therefore, Research Thesis 17
the objective of the research was achieved as various reasons of how dissatisfaction causes turnover were obtained and tested.
Theresa S. Cho (2005) developed the theoretical framework of involuntary executive turnover. The main objective of this research was to explore the causes of such turnover. Many researches are available regarding the lower level employees leaving the organizations. This research analyses the causes due to which the senior level of management or employees are forced to leave due to the reasons other than health or age. There is a conflict of interest between the managers own goals and the firms goals. So, in the organizations with strict controls, managers are bound to follow the objectives of the organizations but in other firms, managers can pursue their own goals. For analytical purposes, managerial discretion is divided into 2 parts, latitude of actions and longitude of actions. Latitude of objectives explain the freedom the managers have in achieving their personal objectives while Longitude of objectives is the range of strategic options available to the managers to achieve the organizations objectives. Both these actions interact to affect the causes and the performance consequences of involuntary executive turnover, as well as which executives will be forced to depart. Involuntary Executive turnover in different Scenarios of Managerial Discretion have been mentioned. Scenario I states low latitude of objectives and low latitude of actions. Scenario II states High Latitude of Objectives and low Latitude of Actions. Scenario III states Low latitude of Objectives and high latitude of actions. Finally, Scenario four states High latitude of objectives and high latitude of actions. According to the findings, involuntary turnover occurs due to poor organizational performance or environmental change in situation of low latitude of objectives and high latitude of actions. In situations where there is high latitude of objectives and high latitude of actions, involuntary Research Thesis 18
executive turnover under achieved organizational performance occurs among the executives who are on the lower level of hierarchy. It is because their values and perspectives differ from top- management or executives. Finally, it can be concluded that the involuntary turnover is caused by various factors which are an amalgamation of latitude of actions and objectives.
Lee, T. et al. (1999) did a research on the Voluntary turnover of the employees. The main aim of this research was to identify and understand different psychological paths that employees take when they are deciding on quitting the organization. Different hypotheses were created and tested. The sample of 229 employees was selected. The BIG 6 accounting firm had listed 6000 employees who were leaving the organization and out of those, 245 employees were randomly selected and were asked to give some information. Questionnaires and surveys were used mainly. The results obtained were graphed and different psychological paths were identified. The results showed that different occupational groups choose different patterns for leaving their jobs. So, hypothesis 1 was proved. To test the second hypothesis (The time between the first thoughts of quitting and the decision to leave is not much), logistic regression models were used to make a comparison of the decision paths durations. The second hypothesis was upheld but the last hypothesis was sustained and proved to be true. Cottini, Kato and Nielsen (2011) conducted a research on adverse workplace conditions, high-involvement work practices and labor turnover. The fundamental reason behind this research was to identify and analyze the consequences of exposing the worker to physical hazards. It also outlines the effect of late working hours on the voluntary turnover. Moreover, the results of unsupportive boss have also been mentioned. The methodology used in this study is that the researchers have relied mostly on the secondary data. The data was collected from the Research Thesis 19
Denmark Integrated Labor Market Database and The Danish Work Environment Cohort Study. Different statistical and economic models have been applied on the data. After the application and analysis, the researchers reached to the conclusion that those workers who are more exposed to the hazardous conditions are likely to leave the job more. However, if there is a strong communication between the labor and management, then this kind of voluntary turnover can be reduced.
Ton and Huckman (2008) did a research on Managing the impact of employee turnover on Turnover. Their objective behind carrying out this research was to examine the impact of employee turnover in operating performance. For this study, the data that they collected was from the U.S retail stores. The time period of the data was 48 months. Again, the data is secondary. But, the primary research has also been used to collect the data. Some mystery shoppers were hired to shop in some of the stores and they marked the stores according to the level of service and employee conformance. After collecting the primary and secondary data, different statistical models were applied to analyze it. For example, finding the correlation between two variables and regression analysis has also been done. Findings of the study were that the turnover has more effect in those stores where there is less emphasis on the discipline. In other words, settings where performance depends on the repetition of known tasks, managers can reduce turnovers effect by imposing process discipline through standard operating procedures.
Sousa and Poza (2007) did their research work on the effects of job satisfaction on labor turnover by gender. The objective of this research was that the whether there is any influence of gender in job satisfaction and ultimately in labor turnover. The methodology used in this Research Thesis 20
research is that the secondary data has been collected and different models have been run on them. The researchers have also analyzed various longitudinal surveys. The models that have been used include Job Satisfaction Model, Job Turnover Model and the relationship between the labor turnover and job satisfaction has been determined. The results of the study show that the Job Satisfaction is one of the main indicators of whether the employee is going to remain in the organization or going to quit. Another major achievement of this research was that it was able to conclude that there is no apparent difference between men and women in the job quitting and job satisfaction behavior.
Goodwin, Groth and Frenkel (2010) researched the relationship between emotional labor, job performance and turnover. The main aim of this research was to find out what are the main factors that employees consider while leaving the job. The methodology used in this research was that the data from the employees from the call centers of two large financial companies was collected online. The employees filled the online surveys. The subject of the survey was the employees use of surface and deep acting. Their responses were Matched with supervisors' ratings of overall job performance and organizational turnover records obtained 9 months later. Statistical models were applied to the data collected from primary and secondary sources. Results indicate that surface acting is directly related to employee turnover and emotional exhaustion and that the relationship between surface acting and job performance is indirect via employee affective delivery. Deep acting was not linked to these outcomes. Theoretical and practical implications are discussed from the perspective of emotional labor theories.
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Davidson, Timo and Wang (2009) carried out a research on the labor turnover cost. The purpose of this research was that the authors were of the view that the human resource management department has to face a lot of difficulties when the labor turnover increases. This study is aimed at providing the insights to HRM by studying extensive literature from the Australian accommodation sector. The methodology used was that an online survey was designed and conducted in four major five-star hotels in Australia. 64 human resource managers participated in the research. The results of this study concluded that the majority of the costs faced by these managers are related to the labor turnover. These costs are substantial and impact the profitability of hotels. That is the reason that these costs should be examined and the root cause of these costs should be resolved. Moreover, the level of service might get affected due to the increased turnover which carries the risk of loss of customers and so puts the company and the society as a whole, in danger.
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Chapter 3 METHODOLOGY Research Type The type of the research being conducted is qualitative in nature. This type of research is about exploring various issues, understanding the phenomena and answering questions. The objective of the study is to find out the relationship between the dependent variable and several independent variables. The study is based on measuring the sample on research area topic which is Labour Turnover issue faced by Serena hotels. This study would apply various statistical models on the data and identify the major causes and the solutions of labour turnover.
Data and Research Period Data collected is both primary and secondary. For primary data, questionnaires would be given out and interviews of employees of Serena Hotels would be conducted. The sample size for the Questionnaire is 100 employees. Secondary data has been collected from the literature of the labour turnover from around the world. However, main emphasis would be put on the primary data as it would be more accurate. It is because the secondary data collected includes the data from around the world and not just Pakistan, but the primary data is collected from the sample directly concerning the research. So, it is more effective and more emphasis would be put on it. The research Period is from the year 2011 to 2012.
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Sources of Data For the research, data was obtained from several sources. These included the literatures from Jstor, Science Direct and the annual reports of Serena Hotels as well as the questionnaires and interviews.
Population, Working population and Planned Sample Population is the total number of employees working in the accommodation/ Hotel industry in Pakistan. The working population includes only the employees of Serena Hotels. Planned sample is 100 employees of Serena Hotels.
Research Hypothesis 1. Ho: There is significance relationship between job satisfaction and the employee/labour turnover H1: There is no significant relationship between job satisfaction and employee/labour turnover. 2. Ho: There is significant relationship between job rewards and employee/labour turnover. H1: There is no significant relationship between job rewards and employee/labour turnover. 3. Ho: There is direct relationship between high job expectations and employee/ labour turnover. H1: There is indirect relationship between high job satisfaction and employee/ labour turnover. Research Thesis 24
4. Ho: There is positive relationship between communication deficiency and employee/ labour turnover. H1: There is negative relationship between communication deficiency and employee/labour turnover. 5. Ho: With the increase in workload, number of employees leaving the organization increases H1: With the decrease in workload, number of employees leaving the organization increases 6. Ho: There is a significant relationship between socialization difficulties and employee/labour turnover H1: There is no significant relationship between socialization difficulties and employee/ labour turnover. 7. Ho: There is a positive relationship between organizational stability and employee/ labour turnover. H1: There is a negative relationship between organizational stability and employee/ labour turnover.
Techniques After collecting the entire data through questionnaires and other means, cross tabulation test will be conducted to on the data. Then the results obtained by applying it would be analyzed to find out about the dependent and independent variables and how much are they related and whether they are significant or not. Research Thesis 25
Data Analysis To analyze the data, SPSS software would be used. In this, Cross-Tabulation would be used to find out the relationship between the dependent and several independent variables. Besides this, the various graphical methods would also be applied for the analysis purposes. Data Interpretation The results obtained from SSPS will be compiled. To find out the trend over a period of time, different graphs and tables would be utilized.
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THEORETICAL FRAMEWORK
Unequal Racial Distribution Organizational Stability
Job Satisfaction
Development of Skills
Workload Socialisation difficulties Age
Profit margins Job Rewards
Job Expectations
Organizational Commitment
EMPLOYEE/ LABOR TURNOVER Employee Theft
Resource/communication deficiency Tenure
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OPERATIONAL DEFINITIONS
Unequal Racial Distribution Unequal racial distribution means that the ration of employees from different races is not the same in any measurable aspect, such as extent or quantity. (Christopher D. Zatzick, Marta M. Elvira and Lisa E. Cohen. 2003.When Is Better? The Effects of Racial Composition on Voluntary Turnover, Organization Science, Vol. 14, No. 5 pp. 483- 496.)
Job Satisfaction It describes how content an individual is with his /her job. The happier people are within their job, the more satisfied they are said to be. (Margaret A. Deery and Robin N. Shaw .1997. An exploratory analysis of turnover culture in the hotel industry in Australia, Int. J. Hospitality Management, Vol. 16 No. 4, pp. 375-392)
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Job Expectations Job expectation is the prediction or hope of a new employee with the new job that he/she has got. If the new job is according to the expectation of the employee, then he/she would be satisfied, otherwise, problems would occur and so productivity would fall which would lead to voluntary or involuntary turnover. ( Harriett Davidson, Patricia H. Folcarelli, Sybil Crawford, Laura J. Duprat and Joyce C. Clifford. 1997. The Effects of Health Care Reforms on Job Satisfaction and Voluntary Turnover among Hospital-Based Nurses, Medical Care, Vol. 35, pp. 634-645.)
Job Rewards Job rewards are the returns that employees get in return to doing a job. Rewards can be monetary and non-monetary. When high performers are insufficiently rewarded, they quit. If jobs provide adequate financial incentives the more likely employees remain with organization and vice versa.
(Henry Ongori 2007. A review of the literature on employee turnover, African Journal of Business Management, pp. 049-054.)
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Communication Deficiency Not enough information provided to the employees. Those Organizations where the problems of communication exist need to take corrective steps. Peg Thoms, Paula Wolper, Kimberly S. Scott and Dave Jones 2001. The Relationship between Immediate Turnover and Employee Theft in the Restaurant Industry, Journal of Business and Psychology, Vol. 15, pp. 561-577.
Workload Amount of work that the employee is expected to complete within a given time period. Multivariate analysis indicated that the most important determinants of low satisfaction were poor instrumental communication within the organization and too great a workload. (Henry Ongori 2007. A review of the literature on employee turnover, African Journal of Business Management, pp. 049-054)
Profit Margin It is calculated by taking the percentage of net income against sales. It is expressed in percentage. The higher it is the better. Research Thesis 30
(Terry Lam, Hanqin Zhang and Tom Baum 2000. An investigation of employees' job satisfaction: the case of hotels in Hong Kong, Tourism Management, Vol. 22, pp. 157-165.) Employee Theft Employee theft is a common and serious problem in business and, particularly, in the restaurant industry (Hawkins, 1984). Estimates of employee theft range as high as $200 billion annually. Employee theft can range from petty theft, or pilfering, to grand theft, stealing items over $250 (Smigei & Ross, 1970). Pilferage is more prevalent and its impact can be devastating (Lipman & McGraw, 1988). Slora (1989) found that 62% of fast-food restaurant employees admitted to cash or property theft. ( Peg Thoms, Paula Wolper, Kimberly S. Scott and Dave Jones 2001. The Relationship between Immediate Turnover and Employee Theft in the Restaurant Industry, Journal of Business and Psychology, Vol. 15, pp. 561-577. )
Development of Skills Development of Skills is referred to as improvement in the skill level of employees as they become more experienced. Bowey argues that the mobility facilitates skill acquisition for employees. Riley (1980) argues that labor mobility is an important factor in the development of skills and that turnover is encouraged by the presence of external labor and product markets.
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( Wim van Breukelen, Ren van der Vlist and Herman Steensma 2004. Voluntary Employee Turnover: Combining Variables from the 'Traditional' Turnover Literature with the Theory of Planned Behavior, Journal of Organizational Behavior, Vol. 25, No. 7 ,pp. 893-914. )
Socialization Difficulties Socialization difficulties refer to the problems faced by the employees in an organization to meet and become friends with the other new and existing employees. There are hurdles in the process of inheriting and disseminating norms, customs and ideologies of an organization. (Wei Shen and Theresa S. Cho. 2005. Exploring Involuntary Executive Turnover through a Managerial Discretion Framework, The Academy of Management Review, Vol. 30, pp. 843- 854.)
Organizational Stability It consists of two factors, driving forces and restraining factors. Organizational instability has been shown to have a high degree of high turnover. Indications are that employees are more likely to stay when there is a predictable work environment and vice versa Good local labor market conditions improve organizational stability.
( Thomas W. Lee, Terence R. Mitchell, Brooks C. Holtom, Linda S. McDaniel and John W. Hill 1999. The Unfolding Model of Voluntary Turnover: A Replication and Extension, The Academy of Management Journal, Vol. 42, pp. 450-462.) Research Thesis 32
Tenure Tenure is the time-period that an employee holds a job. Thomas W. Lee, Terence R. Mitchell, Brooks C. Holtom, Linda S. McDaniel and John W. Hill 1999. The Unfolding Model of Voluntary Turnover: A Replication and Extension, The Academy of Management Journal, Vol. 42, pp. 450-462.
Organizational Commitment It means that how sincere and how committed an employee is to the organization. Margaret A. Deery and Robin N. Shaw .1997. An exploratory analysis of turnover culture in the hotel industry in Australia, Int. J. Hospitality Management, Vol. 16 No. 4, pp. 375-392
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Chapter 4 RESULTS CROSS-TABULATIONS
Table 1: Cross Tabulation of Job Satisfaction and Employee turnover. Do you think that lack of Job Satisfaction is the major reason of employee turnover?*Job satisfaction is the only objective that the employees want to achieve. Do you agree?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Job Satisfaction 50 100.0% 0 .0% 50 100.0%
Ho: There is significant relationship between job satisfaction and the employee/labor turnover H1: There is no significant relationship between job satisfaction and employee/labor turnover. According to the cross tabulation results, 27 respondents agree to both the statements/questions that lack of Job Satisfaction is the major reason of employee turnover and Job satisfaction is the only objective that the employees want to achieve. 4 of them strongly agree with the fact that job satisfaction is the only objective that employees want to achieve but only agree that job satisfaction is the major reason of employee turnover. The total results are such that 35 respondents agree that job satisfaction is the major reason of employee turnover while 34 agree to the second statement which reflects that we accept our null hypothesis which is that there is a significant relationship between our dependent (Employee Turnover) and independent variable (Job Satisfaction) while we reject our alternate hypothesis.
Table 2: Jobs Rewards and Employee turnover cross-tabulation analysis Do you think that higher job rewards lowers the employee turnover?* Job rewards should not only be confined to monetary rewards, but these should also include non-monetary rewards. Do you agree?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Employee Turnover * Job Rewards 50 100.0% 0 .0% 50 100.0%
1. Ho: There is significant relationship between job rewards and employee/labour turnover. H1: There is no significant relationship between job rewards and employee/labour turnover. There are 13 respondents who strongly agree that higher job rewards lower employee turnover and these same respondents also agree that Job rewards should not only be confined to monetary rewards, but these should also include non-monetary rewards. In Total, the trend is more towards the agreeing side; therefore, we accept the null hypothesis and reject the alternate. It reveals that there is a significant relationship between employee/labor turnover and job rewards.
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Table 3: Job Expectations and Employee turnover cross-tabulation analysis Employee/ Labor turnover is high because many employees expect much more from the job and in reality, their expectations are not met. Do you agree?* Is it true that job expectations of those individuals are high who have studied in good universities and think that it is the time to get back the money spent on expensive education?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Job Expectation 50 100.0% 0 .0% 50 100.0%
Ho: There is direct relationship between high job expectations and employee/ labor turnover. H1: There is indirect relationship between high job satisfaction and employee/ labor turnover. Research Thesis 37
According to the cross-tab analysis, 20 respondents agree to both the questions and 4 people strongly agree to the statements. Therefore, the trend is more towards the agreeing side. In aggregate, 27 respondents agree that Employee/ Labor turnover is high because many employees expect much more from the job and in reality, their expectations are not met. On the other hand, 37 people agree that job expectations of those individuals are high who have studied in good universities and think that it is the time to get back the money spent on expensive education. The results lead to the conclusion that we accept our null hypothesis which means that there is a direct relationship between job expectations and employee turnover. Hence, we reject our alternate hypothesis.
Table 4: Communication Deficiency and Employee turnover cross-tabulation analysis
Do you agree that many employees leave the organization because the top management does not communicate with them more often?* Do you feel that employers are solely responsible for developing a good communication structure in the organization?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Communication Deficiency 50 100.0% 0 .0% 50 100.0%
Research Thesis 38
Employee Turnover * Communication Deficiency Cross tabulation
Ho: There is positive relationship between communication deficiency and employee/ labor turnover. H1: There is negative relationship between communication deficiency and employee/labor turnover. The answers that respondents gave to this question varied from disagree to strongly agree. Out of all the respondents, 12 people strongly agreed that employees leave the organization because the top management does not communicate with them more often. These same people only agreed to the fact that employers are solely responsible for developing a good communication structure in the organization. On the other hand, 9 people agreed to both the statements. In total, 18 people strongly agreed with the dependent variable statement while 28 people agreed to the independent variable (communication deficiency) statement. Therefore, we accept our null hypothesis and reject out alternate hypothesis. It proves that there is a positive relationship between communication deficiency and employee/ labor turnover. Research Thesis 39
Table 5: Work Load and Employee turnover cross-tabulation analysis
Do you agree that high workload causes the employees to leave the job and find employment somewhere else?* Less workload gives workers free time. So, it makes the workers engage in other unproductive activities that adversely affect the whole organization. Is it true?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Work Load 50 100.0% 0 .0% 50 100.0%
Ho: With the increase in workload, number of employees leaving the organization increases H1: With the decrease in workload, number of employees leaving the organization increases
According to the cross-tab analysis, the highest frequency of an answer is 10. These 10 respondents disagree that less workload gives workers free time and makes the workers engage Research Thesis 40
in other unproductive activities that adversely affect the whole organization. While these same 10 people are neutral on the statement that high workload causes the employees to leave the job and find employment somewhere else. Out of the total respondents, 21 agree that high workload causes employee turnover while 20 disagree the independent variable statement. Therefore, we accept the null hypothesis which states that when the workload increases, the number of employees leaving the organisation also increases.
Table 6: Socialization Difficulties and Employee turnover cross-tabulation analysis
Do you feel that many employees leave the job because they are unable to make friends and their esteem needs are not fulfilled?* Do you think that the main reason of socialization difficulties that employees face is that different employees of different races or religions are not treated properly?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Socialization Difficulties 50 100.0% 0 .0% 50 100.0%
Ho: There is a significant relationship between socialization difficulties and employee/labour turnover H1: There is no significant relationship between socialization difficulties and employee/ labour turnover.
The results of the cross-tabulation of the two variables are such that 13 respondents agree that many employees leave the job because they are unable to make friends and their esteem needs are not fulfilled and these same people are neutral on the statement that the main reason of socialization difficulties that employees face is that different employees of different races or religions are not treated properly. In total, 16 people agree to the turnover statement while 28 people are neutral on the socialization difficulties statement. Therefore, it proves that the employees who have filled out the questionnaires feel that socialization difficulties cause employee turnover. Therefore, it proves that our null hypothesis is true. There is a significant relationship between socialization difficulties and employee/labor turnover.
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Table 7: Organizational Stability and Employee turnover cross-tabulation analysis
Employees like to work in organizations which are stable. Otherwise employees/ Labor turnover increases. Do you agree?* Do you agree that organizational stability increases Organizational Commitment?
Case Processing Summary
Cases Valid Missing Total N Percent N Percent N Percent Turnover * Organizational Stability 50 100.0% 0 .0% 50 100.0%
Ho: There is a positive relationship between organizational stability and employee/ labour turnover. H1: There is a negative relationship between organizational stability and employee/ labour turnover. Research Thesis 43
The cross-tabulation analysis shows that there are 21 respondents who agree with the statement that Employees like to work in organizations which are stable. Otherwise employees/ Labor turnover increases. These same employees are neutral on the statement that organizational stability increases Organizational Commitment. In aggregate, 25 respondents agree that turnover in increased when organizations suffer while 21 respondents disagree that organizational stability increases Organizational Commitment. So, it proves that our null hypothesis is true I-e there is a positive relationship between organizational stability and employee/ labor turnover. CONCLUSION The aim of the study was to find out the causes and major factors affecting the labor/employee turnover of Serena Hotels. Labor turnover is an important issue faced by many companies recently. Serena is also facing this problem, so this research is directed towards the Accommodation industry on a wider scale. However, the analysis has been done only on one hotel. The variables were selected by reviewing the literature on the similar topics. The literature was obtained from various sources and by studying the literature, various factors were highlighted. These factors pointed out were Development of skills, Unequal racial distribution, Job satisfaction, Organizational stability, Organizational commitment, Socialization difficulties, Age, Profit margins of the hotel, Workload, tenure, Communication deficiency, Job rewards, Employee theft and Job Expectations. After the identification of the factors, these variables were short-listed and only the most important ones were selected for further analysis. To carry out the research, both Primary and Secondary research was carried out. The variables that were extracted from the Secondary research were then used to design the Research Thesis 44
questionnaires. The Questionnaire was designed such that there were three questions regarding one variable. The rationale behind this was that three questions regarding one variable would give a clear picture of the respondents point of view. The sample size selected was 50 and all of the respondents were the employees of the Serena Hotel, Faisalabad. Hence, the methodology used included questionnaires which were filled out from the employees of Serena Hotel. After the questionnaires were filled, the coding of the questionnaires was completed and then the answers were analyzed by using the SPSS software. The cross- tabulations were run for all the questions that were included in the questionnaires. The hypotheses were created for every section. The cross-tab analysis showed that almost all the factors were important while job rewards and job satisfaction were most important ones. The answers to other variables varied a great deal. Therefore, the entire hypotheses were accepted. The hypotheses created were of the factors enumerated in the following lines, Job satisfaction, Job rewards, and Job expectations, Communication Deficiency, Work Load, Socialization Difficulties and Organizational Difficulties. The results showed that all these factors had a significant relationship with the employee/ labor turnover of the Serena hotels.
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BIBLIOGRAPHY
Deery, M. A & Shaw, R. N. (2000). An exploratory analysis of turnover culture in the hotel Industry in Australia. Int. J. Hospitality Management, 16, 375-392. Zatzick, C. D., Elvira, M. M., & Cohen L. E. (2003). When Is Better? The Effects of Racial Composition on Voluntary Turnover. Organization Science, 14, 483-496.
Davidson, H., Folcarelli, P. H, Crawford, S., Duprat, L. J., & Clifford, J. C. (1997). The Effects of Health Care Reforms on Job Satisfaction and Voluntary Turnover among Hospital-Based Nurses, Medical Care, 35. 634-645.
Ongori, H. (2007). A review of the literature on employee turnover. African Journal of Business Management, 3, 049-054.
Thoms, P., Wolper, P., Kimberly, S., & Jones, D. (2001). The Relationship between Immediate Turnover and Employee Theft in the Restaurant Industry. Journal of Business and Psychology, 15, 561-577.
Lam, T., Zhang, H., & Baum, T. (2000). An investigation of employees' job satisfaction: the case of hotels in Hong Kong. Tourism Management, 22, 157-165.
Breukelen, W. V., Vlist, R. V., & Steensma, H. (2004). Voluntary Employee Turnover: Combining Variables from the 'Traditional' Turnover Literature with the Theory of Planned Behavior. Journal of Organizational Behavior, 25, 893-914.
Shen, W., & Cho, T. S., (2005). Exploring Involuntary Executive Turnover through a Managerial Discretion Framework. The Academy of Management Review, 30, 843-854.
Lee, T. W., Mitchell, T. R., Holtom, B. C, McDanie, l L. S & Hill, J. W (1999). The Unfolding Model of Voluntary Turnover: A Replication and Extension. The Academy of Management Journal, 42, 450-462.
Hom, P. W., & Kinicki, A. J. (2001). Towards a Greater Understanding of How Dissatisfaction Drives Employee Turnover. The Academy of Management Journal, 44, 975-987.
Cottini, E., Kato, T., & Nielsen, N. W. (2011). Adverse workplace conditions, high-involvement work practices and labor turnover: Evidence from Danish linked employeremployee data. Canadian Journal of Economics, 29, 126S129.
Ton, Z., & Huckman, R. S. (2008). Managing the Impact of Employee Turnover on Performance: The Role of Process Conformance. Organization Science, 19, 56-68.
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Poza, A. S., & Poza, A. A. S. (2007). The effect of job satisfaction on labor turnover By gender: An analysis for Switzerland. Socio-Economics, 36, 895913.
Goodwin, R. E., Groth, M., & Frenkel, S. J. (2010). Relationships between emotional labor, job performance, and turnover. Vocational Behavior, 79, 538-548.
Davidson, M. C. G., Timo, N., & Wang, Y. (2009). How much does labor turnover Cost? International Journal of Contemporary Hospitality Management, 22, 451-466.
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APPENDICES
Questionnaire Name: Age: City: Position in the Organisation:
Section 1: Job Satisfaction Q1) Do you think that lack of Job Satisfaction is the major reason of employee turnover? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q2) Job satisfaction is the only objective that the employees want to achieve. Do you agree? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q3). If given a choice between high salary and Job Satisfaction, employees would choose high salary. 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 2: Job Rewards Q4) Do you think that higher job rewards lowers the employee turnover? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q5) Job rewards should not only be confined to monetary rewards, but these should also include non-monetary rewards. Do you agree? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Research Thesis 48
Q6). Do you feel that job rewards structure of Serena Hotels needs improvement as many undeserving employees are getting high salaries? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 3: Job Expectations Q7). Employee/ Labour turnover is high because many employees expect much more from the job and in reality, their expectations are not met. Do you agree? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q8). Is it true that job expectations of those individuals are high who have studied in good universities and think that it is the time to get back the money spent on expensive education? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q9). Those with low Job Expectations become more successful than those with higher job expectations. Is it true? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 4: Communication Deficiency Q10). Do you agree that many employees leave the organisation because the top management does not communicate with them more often? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q11). Do you feel that employers are solely responsible for developing a good communication structure in the organisation? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
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Q12). Good communication increases motivation and job satisfaction, do you agree? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 5: Work Load Q13). Do you agree that high workload causes the employees to leave the job and find employment somewhere else? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q14). Less workload gives workers free time. So, it makes the workers engage in other unproductive activities that adversely affect the whole organisation. It is true? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q15). Workload enables the employees to manage things more effectively and handle the pressure. Do you agree that all employees like to learn new behaviours or they are content with the routine tasks? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 6: Socialization Difficulties Q16). Do you feel that many employees leave the job because they are unable to make friends and their esteem needs are not fulfilled? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q17). Do you think that the main reason of socialization difficulties that employees face is that different employees of different races or religions are not treated properly? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
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Q18). Employees with powerful references are given a special treatment which enables them to make friends and socialize easily? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree
Section 7: Organizational Stability Q19). Employees like to work in organizations which are stable. Otherwise employees/ Labour turnover increases. Do you agree? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q20). Do you agree that organizational stability increases Organizational Commitment? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree Q21). Do you feel that employees are more likely to stay when there is a predictable work environment? 1 2 3 4 5 strongly disagree dis-agree neutral agree strongly agree