Employees are the most important factor in the success and failure of any organization. In service industry, employees are in direct contact with the customer, hence they should be motivated. Firstly, this paper focuses on importance of employee motivation on Staff retention, by studying the concepts of staff retention, employee turnover and employee motivation. Further discussing about the major motivational theories, followed by the factors which help to increase motivation and backed up with some latest examples. Secondly, it takes a case study of Heathrow Windsor Marriott, a leading 4 star Airport Hotel, it reflects my observations about the good and bad practises followed by the management of hotel. And at the end, this paper tries to give some recommendations for future practice.
1. Introduction Managing Human Resource has become an inescapable and prominent approach to the management in service industries (Watson 2003).In simple terms, Human means labour/employee, Resource points out employees are valued assets and Management refers to managing personnel of an organization. The objective of Human resources is short term and it mainly focuses on employee relations. However, due to globalization, this approach was fruitless, hence its focus adopted the aspect of strategy.
Strategic Human Resource Management means combing Human resources with strategic goals and objectives to improve and develop organization (Regis 2008). According to Banfield and Kay (2012), Human resource management is the ‘glue’ which ensures business success through consistent practises and adapting local conditions. In an organization, employees are the primal force, whose never ending efforts converts the organization’s decision into action with the aim of achieving common goal. Hence, employees should be motivated (Hossain and Hossain 2012). The fast changing competitive business environment has presented challenges for Human Resource professionals for adopting new methods of production and organizing of work.
This situation has accelerated the rate of employee turnover. Employee resourcing, employee development, employee relations, productivity are the emerging issues faced by management (Banfield and Kay 2012).The problem of Employee Motivation has become inseparable from Human Resource Management because, employees acts as a major source of organization. This paper is divided into two major parts, literature and reflection. The aim of this paper is on how employee motivation contributes to staff retention. The first part on literature covers topics like Staff retention, turnover & motivation and demonstrate a relationship between employee motivation and staff retention. The second part reflects the practises carried out Heathrow Windsor Marriott Hotel, followed by recommendations for future.
2. Staff Retention Staff retention refers to the techniques employed by the management to help the employees stay with the organization for a longer period of time (Management Study Guide 2013). Every organization puts efforts to transform a raw material to corporate ready material by giving necessary trainings at regular interval to achieve the common goal. Job satisfaction is a vital component of staff retention which can be achieved by making the employee feel comfortable physically and psychologically.
Staff retention is crucial for many reasons such as, longer time spent by the employees have an opportunity to perform better, it increases their loyalty towards organization, on the other hand, recruiting the right candidate for the right position is not easy, when an employee leaves an organization, he may join competitors and may share some confidential information. When a trained employee leaves their job, the organization is at a complete loss, as a loyal, efficient and stable staff is one of the keys to competitive success (Taylor and Walsh 2005). This loss of staff has to be replaced which is termed as Employee turnover. This is one of the greatest challenges faced by management. Retention is not only important to reduce the turnover costs but to retain talented employees. According to Ramlall (2004), when every 10 managerial level employee leaves an organization, a company experiences approximately loss of $ 1 million.
2.1. Employee Turnover Rotation of workers around the labour market between the status of employment and unemployment is called as Employee turnover (Abassi and Hollman 2000). Labour turnover has become a critical problem for service industries as it depends on human factor. Employees do not leave the organization without any significant reason. Taris et al. (2004), divided two motives for turnover i.e. the push and pull factors. The pull factors include inequity in compensation, availability of opportunities for future development over the external market and the employees who would resign to go into private business.
The push factors have relationship with the dissatisfaction of work situation, lack of democratic managerial pattern and job stress. On the other hand, Griffieth (2000), viewed remuneration and remuneration related variables have intense effect on turnover. Griffieth demonstrated a relationship between remuneration, employee’s performance and turnover and concluded that when an employee performs extremely well expects a high pay and when they are paid low they quit. There are various costs associated with turnover, according to Society for Human Resource Management, it costs 30-50% of the annual salary of entry level employees, 150% of middle level employees and up to 400% costs of the high level employees (Blake 2004).
The various costs includes, exist costs, recruiting, interviewing, hiring, orientation, benefits while training, lost productivity, administrative costs, customer dissatisfaction etc (Susan 2011). Considering the case of Oberoi Hotels. The Oberoi group is one of Asia’s leading multinational companies, the Oberoi hotel named Windsor Hotel in Melbourne, had witnessed an average annual employee turnover rate of approximately 40 percent. The Human resource professionals were under pressure due to increasing costs, hence they decided to an employee attitude survey for three consecutive years and analysed the issues faced by the staff.
The most common reasons for attrition were job profile and personal profile does not match, least growth opportunities, lack of appreciation, lack of trust, lack of co-ordination between the colleagues, stress from work, imbalance between personal and professional life. The Hotel executive group and the managers improved the retention programmes and motivated their employees by engagement which helped them to reduce their turnover rate to 20 per cent (Watson et al. 2002). Hence it can be said that, employee turnover can be controlled by proper employee motivation which would help the companies to reduce costs associated with turnover.
3. Employee Motivation According to Butkus and Green, ‘motivation is derived from the word ‘motivate’ which means to move, push or influence to proceed for fulfilling a want’ (Kamalian et al. 2010). One of the important functions of management is to create willingness among the employees to perform. Motivation can be termed as a process in which a person stimulates an individual to full fill some want or expectation (Mullins 2007). Motivation is complex because of human behaviour as it changes from an individual to individual, resulting different motives for motivation (Kressler 2003).
Employee motivation influences productivity, because company’s performance depends on employee performance. Hence it is very important for managers to realize what propels employees to reach the peak performance. Through employee motivation, the employer can encourage the employees by enhancing their skills and by improving their morale. Motivation is important for both individual and business. In case of individual, motivation helps to achieve personal goals, job satisfaction, self development and in case of business, motivation helps to achieve the organizational goals, to build a friendly relationship and the most important it bring stability in workforce. Overall, it cans help to achieve competitive advantage in competition by retaining talented employees (Hiltrop 1996).
3.1. Motivation Theories Motivation theories are based upon the understanding of employees and work. There are two main approaches to motivation theories, i.e. Content Theory and Process Theory. Content Theories of motivation explains what causes individuals to act in a definite way based on the general agreement that all human beings have needs, which engage them to satisfy these needs lead to motivation. Process Theories of motivation explains on how employee’s needs influence their own behaviour (Hossain and Hossain 2012).
3.1.1. Maslow’s Hierarchy of Needs
In 1943, Abraham Maslow presented need based theory. His theory was based upon the assumption of hierarchy of needs. He categoriesed needs into five types, i.e. Physiological needs ( basic needs of life, example, air water, food etc.), Safety needs (physical and environmental safety), Social needs (need for love, affection), Esteem needs (needs for self-respect or recognition and Self-actualization (based on grwoth and self-contentment). Maslow assumed that motivation decreases as one level of need is met and motivation increases as another need comes in. He potraid that lower level of needs should met before the higher level needs. Maslow felt that if these needs were not met then a person would fail to develop into a heathly individual (Hellreigel 2004).
Implications by Britannic Assurance Britannic Assurance is a financial services company, facing issues of employee motivation and retention. Hence, their management adopted the Maslow’s theory to overcome their issue. The management motivated their employees by considering each level of needs: Physiological Needs – Management gave their employees suitable salary, in odrer to meet the basic needs of life and at workplace they gave proper meal breaks, so that phsciological needs are meet.
Safety Needs – Management provided clean and hygienic workplace, safety, job security and beniftis program with a purpose of retention. Social Needs – Management supported their employees by encouraing team work, and developing a friendly relationship. Esteem Needs – In order to acheive esteem needs, management put extra efforts by rewarding and recognizing employees at every level. Self-Actualization Needs – Management gave their employees challenging jobs so that they can use and develo their knowledge and skills, and grow big, by benefiting the company (The Time 100 Business Case Studies, 2013).
Criticisms According to Lazarus (1971), the hieraracy suggested by Maslow not valid if cross-cultural differences are taken into consideration. McLeod (2012) said, it is difficult to predcit when a need will arise, as ther is no relationship between needs and behaviour and different individual may be pushed by differnet needs at same time. He also states that maslow’s theory lacks empirical support. While Rilley (2012) came with a view that this model aviod the usual behaviour of employees who tolerate low wages for future benefits and mentioned that maslow research was based on middle class workers in UK and USA. Inspite of having some critics, Maslow’s thinking remains inflential to management deliberations in respect of job design, pay and reward structres and helps to motivate employees and retain them (Huczynski and Buchanan 2001).
3.1.2. Expectancy Theory Victor Vroom in 1964, came up with expectancy theory which was based upon Valence, Instrumentality and Expectancy. The Individual perfrence for a precise end result is termed as Valence (V), Instrumentality (I), is the anticipation of good performance will lead to valued benfit and Expectancy (E), is the anticipation of effort will lead to good performance. The Force (F) or want of your motivation to take action will result the product of three variables through multiplication. If any one of the variable is zero the final product will be zero, as it is co-related (Fudge and Schlacter 1999). F = Vx I x E
In orther words, Efforts, Performance and Rewards have a direct relationship. Vroom said that employee’s deliberately decide whether to perform or not, their decision is entirely depended on level of motivation. This theory expalins individual differences in motivation and behaviour, it measures the force of the motivation to behave, it assumes that behaviour is rational and emphasis on rewards and pay offs (Sanders and Pritchard 1973).
Implications by Management The management should try to link effort, performance and rewards through their support. Suport in terms of adequate trainings, availability of resources and clear rewards to have desired motivational effect (Fudge and Schlacter 1999). Clear rewards should have value in the eyes of emloyees so that they can be influenced. Performance standards should be clearly instructed. Finally, the motivation level should be continousuly assessed which results can inidicate problems and changes required. This will help to retain employees (Virgil et al. 2008)
Criticisms The application of this theory is limited as reward is not direclty related to performance, it has ignored the parameters such as education, position etc. It concentrated majorly on financial rewards and ignore other intrinsic and extrinsic rewards. According to Latham (2007), it also lacked the principle of equality with relation to rewards. This theory predicts the choice of efffort, it does not give specific meaning of efforts, it also lacks to specify the outcomes relevent to a particular individual (Management Study Guide 2013).
3.2. Types of Motivation There are two types of Motivation, developed by Herzberg, i.e. Intrinsic and Extrinsic Motivation. The factors which are intrinsic to the job such as recognition, work itself, growth is called as Intrinsic Motivation and the factors which are extrinsic to the job such as pay, company policy, security etc. are called as Extrinsic Motivation (Armstrong 2007). Intrinsic factors create satisfaction and extrinsic factors do not create satisfaction but if preventive action is not taken then it may lead to dissatisfaction(Ryan and Deci 2000). Intrinsic factors are likely to have deeper and long term effect while extrinsic factors are likely to have immediate and powerful effect but it won’t last long. Both Intrinsic and Extrinsic factors concentrate more on satisfaction and not on productivity (ibid).
3.3. Motivation Factors All employees are motivated when their needs or desire are satisfied, these needs vary from person to person, situation, experiences, etc. These factors affects the motivation level in employees. Let us understand the practical implications of various factors:
3.3.1. Motivation through Rewards Employees who work hard to achieve the business goals, expect to receive rewards for their contribution. According to Perry (2009), rewards play a crucial role in motivating employees to work harder. He categorised rewards into two types: Extrinsic and Intrinsic. Extrinsic rewards are provided by the organisation group such as money, benefits, promotions etc. while Intrinsic rewards come from individual such as self-esteem, personal development and feeling of competency.
The most critical thing for this approach that rewards must be equal, it should be partial (ibid). Let us take a case study of Royal Bank of Scotland, The employees at RBS are not only motivated through money but also through Total reward benefits. Total reward benefits includes not just money, but it includes motivational motives such as personal choice in working hours, security, health and benefits package, shopping vouchers personal loans at special price etc., This kind of extra benefits will help a company to retain an employee (The Time 100 Business Case Studies 2013).
3.3.2. Motivation through Job Deign When a potential employee looks for job, he has basic two attractions, i.e. money and feeling of pursuing a challenging and interesting job. Job Design is an internal approach of motivating employees. There are two ways in which a manager motivates its employees i.e. fitting people to jobs and fitting jobs to people (Hackman and Oldham 1975). Considering the first aspect of fitting people to jobs, managers can strengthen motivation by Job Rotation, Job Rotation helps to bring a change in daily routine, it helps to increase the area of expertise at work by moving from one specialization to another, this would not only lead to personal development but also will develop a team with wide range of skills (Perry 2009).
Considering the second aspect of fitting jobs to people, managers can energise motivation by Job Enlargement and Job Enrichment. Job Enlargement is a process in which an employees are indulged with more challenging task, this will reduce the humdrum of work and increase the skills of employees. However, Job Enlargement has one criticism, if an employee is working on two or more challenging tasks and paid for only one task, then there will be a barrier of not being paid well (Saleem et al. 2012). Job Enrichment is a process in which an employees is given more control over the work by giving more authority and responsibility, which would increase the productivity. However, this was also criticised with a point of that an employee should possess certain skill in order to perform at high level, if the employee lacks necessary skill, then it would decrease productivity (Janson et al. 1975)
3.3.3. Motivation through Work Environment Work environment nearly cause 27% of job satisfaction (Tyilana 2005), Management should create a type of work environment in which the employees are respected and treated equally. Management should provide job security and proper logistic support and create a friendly environment. If any one of them is lacking, then the motivation level would not stand still. However, Lin (2007) said that good working conditions can determine employees performance and productivity but cannot motivate them directly.
Considering case of An Enterprise Rent-A- Car, management accented on creating an affirmative work environment. In which they concentrated on six points, i.e. good relationship between all the employees, follow clear communication so that each individual can understand and act as per their role, provision of adequate resources to perform the necessary tasks, encourage employees to get things right, if any frustration is experienced then acknowledged and try to keep their focus on achieving goals and last but not the least, try to recognise the effort of individual and reward the good performance. Along with the points discussed above Enterprise Rent-A-Car used Herzberg theory of motivation to motivate and retain their employees (The Time 100 Business Case Studies 2013).
3.3.4. Motivation through Training and Development Training and Development is one of the most effectual factor of motivation (Lai 2009). Training can be termed as a process in which an individual get a chance to develop their knowledge, qualities, skills and personality (Khan 2012). Training and development helps to increase morale of employees, better interpersonal relationships, better position to adapt changes and finally improved productivity and efficiency (Seward 2011).
As rightly said by Marcus Tait, the Director of Human Resources of IHG Australia, training and nurturing talent shares an equal weight age along operational performance, guest experience and corporate responsibility. He trained his employees to be multi-focused, empathetic and preventive of guest needs (Eime). Whenever, an employee is recruited, he should empowered with all kinds of basic training, his performance has to be measured and accordingly he should be trained by considering his skills and ability. Concentrating Training at McDonald’s Restaurant Limited, The success of McDonald’s business is high standards of quality and service delivered to customers, Well-trained staff and line managers are the first step towards achieving these standards. Welcome Meeting, was the first step taken by the company to inform the standards and expectations, followed by structured development programme which provides training in all areas of business.
McDonald’s concentrated on floor based training and expected that their employee would perform any task with relation to operations. After the practical training, McDonald’s used to do classroom-based training where they can concentrate on quality, service and cleanliness. After this training, employees are marked as per the check list and if they qualify then they can get promotion by clearing an entrance exam. In this way McDonald’s used to train their staff (The Time 100 Business Case Studies 2013).