HRM strategies and labour turnover in the hotel industry Essay
HRM strategies and labour turnover in the hotel industry
The International Journal of Human Resource Management 9:1 February 1998
HRM strategies and labour turnover in
the hotel industry: A comparative study
of Australia and Singapore
Angeline Cheng and Alan Brown
Abstract This study explores the perceptions of HR managers on the strategic management of labour tumover in a selection of large hotels in Australia and Singapore, The main argument is that the effects of labour tumover can be mitigated with strategically managed human resources through the four key HR activities.
The hotel industries in both Singapore and Australia revealed a comparable range of HR policies and practices being adopted, with an explicit recognition of the contribution an organization’s human resources have on the bottom-line. There was a clear convergence towards minimizing tumover primarily through the recruitment, selection and induction processes. This was despite fundamental social, economic and labour differences between Singapore and Australia,
Human resources, HR functions, labour tumover, hotel industry
In recent years, there has been widening recognition that human resource management (HRM) strategies impact on an organization’s perfomiance and bottom-line results, contributing to overall effectiveness (Nankervis and Debrah, 1995). Particularly in the service industry, the effective utilization of human resources can give an organization its competitive edge (Schneider and Bowen, 1993). This has led to an increased interdependency of corporate strategy with human resource management (HRM), By effectively linking HRM with organizational objectives and needs, human resources can be recruited, developed, motivated and retained towards gaining a competitive advantage, i.e. strategic HRM.
In this unique industry, that essentially comprises both a production and a service aspect, both the creation and the rendering of services from the hotel to the customer are primarily achieved through the employee, i.e. the hotel’s representative. Therefore, the people essentially represent the industry (Lewis, 1989; Thompson and Abbott, 1990; Schneider and Bowen, 1993).
The success of this industry is therefore dependent on the calibre of its employees and how effectively they are managed in order that they help the organization achieve its objectives (Nankervis and Debrah, 1995; Berger and Ghei, 1995). It is essential that the hotel industry develop efficient HRM practices and policies that enable them to recruit, select and retain competent employees who contribute to the achievement of their objectives.
However, the hotel industry is constantly plagued with high staff tumover levels, resulting in high personnel costs incurred because of recruiting and training new replacements (Hom and Griffeth, 1995). With few staff staying longer than five years 0985-5192
© Routledge 1998
HRM strategies and labour turnover in the hotel industry 137 (BTR, 1990, cited in Nankervis, 1990), tumover contributes significantly to labour costs through high replacement costs (Riley, 1991a). With a skilled labour force needed in the trade and hotels increasingly providing the required training, premature tumover may waste a hotel’s sizeable investment in employee development (Beckert and Walsh, 1991; Hom and Griffeth, 1995).
Many tumover studies have focused on other industry causes and effects. To date, however, comprehensive and substantial studies have not been conducted to determine the direct and indirect causes of tumover in the hotel industry, although some hotels have undertaken individual tumover analyses to address this issue (Nankervis, 1991; Debrah, 1994). This could be attributed to the fact that, even though employee tumover has financial consequences, the problem is often ignored because the costs are indirect and hidden (Donelly, cited in Hiemstra, 1990). Furthermore, many hotels may
consider it simply part of ‘doing business’ in this industry.
This paper outlines some recent research which examined the impact of HR policies and practices in the respective hotel industries on labour tumover, specifically through the processes of (1) recruitment and selection, (2) orientation and socialization, (3) training and development, (4) performance management and (5) remuneration. The study focused on a selection of medium to large hotels in Singapore and Australia. Labour turnover and the hotel industry
Denvir and McMahon (1992: 143) defined labour tumover as ‘the movement of people into and out of employment within an organization’. It can be voluntary or involuntary. Correspondingly, on the basis that people leave an organization for a multitude of reasons that may not be management-related, Eade (1993) further categorizes tumover into controllable and unavoidable tumover. For the purpose of this study, the focus was on voluntary and controllable tumover.
Tumover in the hospitality industry has been shown to be unacceptably high (Kennedy and Berger, 1994), averaging up to 200 or 300 per cent per annum (Woods, 1992; Tanke, 1990; Boella, 1988; Wheelhouse, 1989), although substantial variations exist between different establishments. The literature has so far identified factors that impact on tumover rates as orientation and socialization processes (Kennedy and Berger, 1994; Woods, 1992); ad hoc recruitment and selection procedures (Bonn and Forbringer, 1992; Woods and Macaulay, 1989;
Wagner, 1991; Wheelhouse, 1989); discrimination at the workplace (Antolik, 1993); training and development opportunities (Hogan, 1992; Hiemstra, 1990; Conrade et al., 1994); management styles (LeeRoss, 1993; Boella, 1988; Wheelhouse, 1989; Rowden, 1995; Woods and Macaulay, 1989); organizational commitment (Denvir and McMahon, 1992); competition and organizational culture (Woods and Macaulay, 1989); labour shortage (Debrah, 1994; Woods, 1992); stress and bumout (Vallen, 1993; Woods, 1992; Hom and Griffeth, 1995); the seasonal nature of the industry (Boella, 1988; Denvir and McMahon, 1992); and job dissatisfaction (Bonn and Forbringer, 1992; Hom and Griffeth, 1995;
Relatedly, Denvir and McMahon suggested that labour tumover is not ‘an isolated occurrence’, where ‘multi-dimensional’ aspects include low staff morale, substandard work performance and absenteeism (1992: 143). Each incident of employee tumover is estimated to cost up to $2500 in direct costs and $1600 in indirect costs (Hogan, 1992). However, the pervasive impacts of labour tumover on a hotel’s bottom line can be classified into two categories: (1) direct expenditure and (2) intangible costs.
Angeline Cheng and Alan Brown
Direct impacts are essentially financial consequences that include administrative costs as a result of increased recruitment and training expenditure of new employees (Woods and Macaulay, 1989; Boelia, 1988; Woods, 1992; Riley, 1991a; Mullins, 1995; Mercer, 1988). The indirect consequences of tumover include productivity losses due to unfamiliarity of the workplace, poor service quality as a result of insufficient manpower (Denvir and McMahon, 1992; Riley, 1991a; Wheelhouse, 1989), compromised standards and low morale due to the constant departures of workmates; which are in tum integrally damaging to the hotel’s reputation (Woods and Macaulay, 1989; Riley, 1991a; Mullins, 1995) because dissatisfaction in the employee will ultimately lead to the dissatisfaction of the customer (Lewis, 1989; Boelia, 1988; Woods, 1992). Samuel (1969, cited in Denvir and McMahon, 1992: 144) summarized this when he stated that
discontinuity in employment discourages people from entering the industry and encourages others to leave i t . . . [preventing] continuing relationships between employers and employees and so inhibits the growth of mutual responsibility. It involves heavy administration costs and a substantial loss of productivity through the breaking up of teams who are used to working together.
However, Mount argues that labour tumover within an organization may not necessarily be detrimental. Rather, ‘an organization that’s choosing to thrive and grow must expect a higher tumover rate than companies that settle for the status quo . . . [where] more talented and experienced people replace those that are leaving, and the new workers take the organization to the next level’ (1995: 109). Price found that the hotel industry tended to ‘live with high levels of labour tumover and rely on the extemal labour market to fill vacancies’ (1994: 47). However, high labour tumover cannot be excused as an inherent characteristic feature of the hotel industry (Mullins, 1995). Mullins suggested that ‘an organization can theoretically influence tumover by various intervention processes’ (1995: 185) that include placement and orientation, job performance and training and development.
Denvir and McMahon (1992: 146) further argued that individual hotels experience different levels of labour tumover, thereby confirming the view that ‘tumover is partly within the control of management, and conflicts with the widespread impression that tumover is high and uniform throughout the industry’, and hence an uncontrollable characteristic of the trade. This might therefore suggest that tumover is, in effect, manageable through effective and strategic human resource practices. Based on a recent pilot study undertaken by one of the authors (Cheng, 1996), the hotel industries would be perceived to have recognized the adverse effects of labour tumover (Debrah, 1994; Nankervis, 1993b) through the adoption of strategic human resource management practices. Specifically, five variables that will be considered are: (1) recruitment and selection; (2) orientation and socialization; (3) training and development; (4) performance management; and (5) remuneration. ‘Central to all these processes [however,] is the critical activity of recmitment and selection practices’ (Mullins, 1995: 185).
There have been numerous studies conducted on labour tumover that have focused on other industries. These may not be applicable due to the unique features of the hotel industry, as discussed earlier. For example, the organizational structure of the hotel may be a major determinant in influencing labour tumover, as compared to other industries. Riley (1991a: 18, 1991b: 237) estimates that operative and unskilled staff comprise up to 64 per cent of the entire staff population. This might therefore indicate
HRM strategies and labour turnover in the hotel industry
promotional and developmental opportunities for lower-level employees, resulting in a movement of staff out of that organization to one that provides better career options.
Labour turnover in hotels in Singapore and Australia
Labour tumover in the Australian and Singaporean hotel industries has not been substantially researched and documented. This is despite the significant contributions made by the tourism industries in both countries to the respective economies. ‘Tourism is arguably the nation’s largest single export earner’ in Australia (EIU, 1994b), with Singapore’s tourism correspondingly generating a surplus on its balance of payments travel account of around S$5 billion per year in recent years (EIU, 1994a).
Employment growth in the hotel industry in both Singapore and Australia has been significant during the past decade (Table 1). A number of new large hotels have opened in both countries, creating significant job opportunities. In Singapore, this has been in a context of generally tight labour markets which has forced hotels into employing more part-time staff (Debrah, 1994). Correspondingly, in Australia, many of the jobs which have been created by the growth in the industry have also been part time, although not due to labour shortages.
A survey of the Australian industry in 1991 (KPMG Peat Marwick Management, 1991) indicated a relatively plentiful supply of employees to the industry, although it noted that a general economic downturn in the industry was apparent at the time. Comparatively, surveys of the Singapore labour situation indicated significant shortages of labour in the industry (Debrah, 1994)
The figures in Table 2 indicate that the hotel sector in Australia employs a much higher proportion of part timers than that in Singapore. Many jobs, such as waiting Table 1 Growth in employment in the hotel industry
No. of employees
No of employees
Source: Singapore, Department of Statistics, Economic Surveys Series, Hotels and Catering. ABS Cat No 8674
Table 2 Work-force composition
70% of employees 35% of employees
< 35 yrs
< 25 years
< 40 yrs
< 25 yrs
Source: ABS Labour Force Australia, May 1991, Cat No 6203.0, ABS Cat No 8674: STPB Singapore Tourism and Promotion Board 1992 Survey of Tourism Manpower Deployment in Singapore; Economic Surveys Series, Hotels and Catering 1993; Department of Statistics 1995
140 Angeline Cheng and Alan Brown
Table 3 Turnover rates in the hotel industry
Source: Callus et al, 1991; 1995 Singapore Yearbook of Labour Statistics, Ministry of Labour (1991 figures)
staff, kitchen hands and bar staff, are seen as transient jobs by young people such as students, due mainly to relatively few skill barriers and ease of entry. The data in Table 2 also show that the hotel labour force in both countries is relatively youthful. An implication of these statistics is that tumover in the hotel industry is partly due to the casual employment characteristics of the labour force, particularly in Australia. In Singapore, the relatively long period of buoyant labour market conditions may have led to ‘job hopping’.
The tumover rates for the hotel and recreation industries is generally three times greater than the average for other industry groups in Australia (Callus et al., 1991), while in Singapore it is about average among various occupational groups (Singapore Ministry of Labour, 1995). However, these industry figures do disguise tumover rates at individual establishments which can vary considerably, as shown in the sample of hotels for this study.
For Australia, the highest tumover rates are for front-line and service employees where the rate averages 43 per cent. Tumover is lower in larger hotels (KPMG Peat Marwick Management, 1991) and varies slightly according to gender, with annual tumover rates averaging 45 per cent for males and 38 per cent for females. The paucity of documented research and studies is evident through the limited amount and quality of material in this area. Studies on labour tumaround and retention have primarily focused on the UK and US hospitality industries (Woods and Macaulay, 1989; Bonn and Forbringer, 1992; Hogan, 1992; Alfus, 1992; Feiertag, 1993; Kennedy and Berger, 1994; Denvir and McMahon, 1992). The exception is Debrah’s (1994) study of operative staff in Singapore’s hotel industry in view of environmental influences.
The study adopted a qualitative approach, employing a comparative case-study methodology towards researching the Australian and Singaporean hotel industries’ HR programmes on tumover. Commonly, qualitative research is where the study is done in its natural settings in an attempt to interpret phenomena through the meanings associated with them. Correspondingly, this research focuses on the phenomenon of labour tumover in the hotel industry, interpreted through the perceptions of HR managers within that trade.
This qualitative approach also involves the studied use and collection of a variety of empirical materials, e.g. grounded theory procedure, surveys, observations, etc. (Denzin and Lincoln, 1994). Specifically, a personal interview, examination of relevant documents and multi-case study method were used for data collection and data analysis, respectively.
The sample size for the study was six hotels in each country. They were medium-tolarge hotels, managed either as part of a consortium, an intemational chain, or as
HRM strategies and labour turnover in the hotel industry
individual properties. An exploration of the views of HR managers, or managers responsible for the HR function, on the potential impact of HR strategies on managing labour turnover within their organizations was sought. In some cases follow-up telephone interviews were held with relevant HR personnel to clarify matters raised in the initial personal interviews.
The targeted respondents were considered suitable on the premise that the participants, all senior managers, were primarily responsible for the development, formulation and implementation of key HR processes and strategies in relation to managing labour tumover, and would therefore have the required knowledge of HRM practices and business strategies (Ragburam and Arvey, 1994). Consequently, this research basically reflects the perspectives and perceptions of these participants. The small sample size of twelve, typical of a study of this qualitative nature (Gay and Diehl, 1992), was considered appropriate, offering the opportunity to glimpse the complicated operations, character and culture of the hotel industry.
In qualitative research, the sample tends to be small and purposeful, where the purpose ‘lies in selecting information-rich cases for study in depth’ (Patton, 1990: 169). The subject population was pre-selected based on the primary criteria of size and rating of the hotel, i.e. at least 250 rooms and a minimum rating of four stars. However, the final sample was selected and determined on the basis of accessibility to the hotels and their targeted respondents. The sample for the Australian study came from the state of Westem Australia.
Tumover rates in individual hotels ranged from 26 to 47 per cent per annum for Australia. Corresponding data for Singapore ranged from 48 to 120 per cent, although the highest tumover rate was for a new property which had only recently opened. Findings
An equal sample size of six hotels was studied in each country. Although the properties in Singapore were generally larger in size and staff than in Australia – i.e. maximum staff and rooms at 1,300 and 1,200 respectively in the fomier country, compared with 440 and 417 respectively in the latter – human resource strategies employed in both cultures were largely similar. However, due to the different labour markets of the two industries, there were inherent differences in the importance and priorities placed on HR strategies, with regard to controlling and minimizing labour tumover. These are discussed below.
Recruitment and selection
Hiring practices employed by the hotels in both countries can be seen as having progressed from the adoption of purely traditional (advertising, walk-ins, selection interviews, reference checking, etc.) to more strategic approaches (networking, intemal labour market, behavioural interviewing, targeted selection, etc.) (Nankervis and Debrah, 1995; Nankervis, 1993b).
This has primarily been influenced by changing labour markets, as well as the clear recognition that mitigating labour tumover begins with the hiring function, specifically the selection process. This is consistent with current literature that highlights selection as the predominant variable impacting on eventual tumover rates (Hom and Griffeth, 1995; Boles et al., 1995; Mercer, 1988; Dunn, 1995; Woods and Macauley, 1989), albeit recmitment and selection is generally considered an integrated function (MuUins, 1995; Croney, 1988; Nankervis, 1993b).
142 Angeline Cheng and Alan Brown
This progress seems to be in part due to the general realization that people ultimately represent the crux of the industry, where they are the product and the providers of service (Nankervis and Debrah, 1995; Mullins, 1995; Thompson and Abbott, 1990; Lewis, 1989; Schneider and Bowen, 1993; Berger and Ghei, 1995). Hence, the ability to hire and retain the ‘right kind’ of people to fit the organization, and give the organization a competitive edge (Schneider and Bowen, 1993) begins primarily with the selection process (Hom and Griffeth, 1995; Boles et al. 1995; Eade, 1993; Mercer, 1988; Dunn, 1995).
There is evidence that hotels in both countries draw from a wide range of recruitment sources both intemal and extemal. Hotels in Australia and Singapore tend to place greater reliance on recmiting from an intemal labour market of current employees within the establishment and from other hotels which are part of the chain within the same ownership. Although this was perceived to be more evident in the Australian environment, this was inclusive of promotions as well as transfers of casual and parttime staff. There was also the consideration that Singapore had a more stable labour force of full and part-time employees, while the Australian hotel industry tends to rely on a higher proportion of casuals in employment, thereby implicitly contributing to tumover levels to a greater degree.
However, in both instances, the use of this intemal labour source was predominantly restricted to supervisory positions and above, usually associated with a career development plan. Such efforts to develop career paths would assist in overcoming a major reason given for tumover in the industry in Australia as identified in a survey (KPMG Peat Marwick Management, 1991). None the less, this effort has resulted in the per centage of managerial promotions, in at least one hotel each, as high as 85 per cent in Singapore and 95 per cent in Australia. Intemal allocative strategies are therefore encouraged where extemal recmiting costs can be reduced because, for example, current staff do not require re-training or acculturation into the organization; i.e. the direct costs of tumover (Woods and Macauley, 1989; Boella, 1988; Woods, 1992; Mullins, 1995; Mercer, 1988). As such, this can be perceived directly to drive staff tumover levels down (Simms et al. 1988; Debrah, 1994) through increased promotional and career opportunities (Woods and Macauley, 1989).
Extemal sources of new recmits included: databases of previous applicants, unsolicited applicants, newspaper advertising, employee referrals, recmitment consultants, industrial attachments and networks with associates in the industry. Hotels in Singapore seem to be more resourceful in attracting new people with employee referrals becoming increasingly popular, where current employees are usually offered incentives for a new staff member employed on their recommendation. Although there is no scientific evidence to support this theory, hoteliers argue the general principle on the basis that ‘birds of a feather flock together’; that is, referred potential candidates would be expected to be of similar calibre, personality and behavioural qualities to the ‘referrer’ since they are friends or family. This reduces the cost of extemal sourcing, as well as a diminished probability of tumover occurring through the yielding of more reliable and committed employees (Debrah, 1994).
Networking is also more prevalent in Singapore than in Australia. Despite it being regarded as a form of ‘people-poaching’, it is considered common practice in Singapore. Hoteliers in Australia, on the other hand, generally do not support this mode of recmitment as it is considered there, to some degree, unethical and generally ‘not very nice’. Both countries, however, attributed their respective stances to the small but close-knit fratemity of the hotel trade.
HRM strategies and labour turnover in the hotel industry
To combat the potential difficulties of building a full-time committed work-force in Singapore, Debrah (1994) in his earlier research, pointed to the use of part-time staff. Benefits that accme through employing regular part timers include increased flexibility in scheduling, thereby reducing the impact of tumover (Greengard, 1995), as well as lower wage outlays (Inman and Enz, 1995). Although this practice is prevalent in the Australian hotel industry, where sometimes up to half of the total employee population are part timers or casuals, part timers are usually hired on a needs basis and predominantly in the food and beverage (F&B) or banqueting departments in Singapore (Debrah, 1994). Hotels in Australia are typically seen by young people as a source of casual employment due to ease of entry.
A problem increasingly faced by Singaporean hotels due to rising educational standards and employee expectations is the shortage of applicants for the less desirable shift-work positions mainly at the operative level. One hotel, at least, has attempted to combat this through the hiring of foreign labour, mainly from Malaysia. While interviews remain a core selection device, there is an increased emphasis placed on the behavioural aspects of a potential candidate in both countries, where selection tools are used to assist in determining a person’s personality, attitude and character in relation to the specifications that a position may require.
It was felt that experience and expertise, although valuable, could be gained from training and development while attitude and personality were more important in new recmits in attempting to fit employees into a particular organizational culture. Singapore, however, has a more dominant use of the behavioural interview than Australia, where attitude is perceived to be more important than experience. This is assessed essentially through structured, oral employment tests given to potential candidates in the course of the interview. Berger and Ghei (1995) further argue that this method is more effective in the selection of new hires than more commonly practised approaches, e.g. reference checking, which the Australian hotel industry utilizes extensively, biodata through weighted application blanks, etc. However, a sample of employment tests from a couple of respondents suggests that the behavioural interviews conducted in the Singapore hotel industry have a primary focus on the biodata of a potential candidate. Current literature also supports a higher correlation between biodata and the eventual retention of that person (Dickenson and Ineson, 1993; Mitchell, 1989; Ineson and Brown, 1992) according to the past behaviours and reactions, attitudes, interests, etc.
Reference checking was advocated by Dunn (1995) as a proactive and aggressive way of reducing tumover and maintaining a higher work-force quality. Despite obvious disadvantages like potential litigation consequences, e.g. defamation, negligent hiring suits (Dunn, 1995), the Australian lodging trade diligently adopts this approach when employing. There was significantly less importance placed on this method of selection, as apparent through its lack of use, by Singaporean hoteliers. Industrial placement, however, is a common practice in both countries. Although generally regarded as a labour source, industrial placement (referred to as work attachment in Singapore) has not been maximally utilized as a selection tool in either Australia or Singapore. Despite some evidence of it occurring, the potential benefits of effectively utilizing this practice as a selection tool are not being fully realized; for example, that ‘applicants’ would ah-eady be familiar with the organization (Leslie, 1991), thus having ‘a realistic preview’ (Woods and Macauley, 1989), thereby increasing the retention probability for that person (Hom and Griffeth, 1995). At the
144 Angeline Cheng and Alan Brown
same time, the ‘applicant’ would already be trained in their area of operations, thereby directly and positively impacting on recmitment and training costs. The labour-scarce situation afflicting the Singapore hotel trade is, to a large extent, attributed as the major factor influencing modifications in local hiring practices, which supports earlier research (Debrah, 1994: Nankervis and Debrah, 1995). This is especially so in relation to the recmitment sources the industry approaches in seeking new hires. However, some of these approaches may seem to exacerbate, rather than mitigate, labour tumover despite an acknowledgement of their detrimental effects. For example, networking as a labour source would probably indicate recmiting a new hire from another hotel. This would inevitably mean filling a position in one property at the expense of increased tumover in another.
On the other hand, Australia has been comparatively slow in adopting more innovative methods of recmitment and selection, although there is an indication of a move towards a more strategic direction. Although acknowledged as an issue, tumover is not given priority consideration when hiring even though there is a recognized need for a match between the organization’s values and the potential employee. Rather, a reduction in labour tumover is essentially considered an incidental benefit to the meeting of organizational and operational objectives.
In summary, hotels in both countries are placing more emphasis on recmitment and selection practices in an effort to reduce the potential for labour tumover. Variations exist where Singapore places more emphasis on behavioural interviews, employee referrals and networking, while Australian hotels emphasize reference checks and assessing attitudes in the employment interview. Australian hotels also tend to use more casual employees than their Singaporean counterparts.
Orientation and socialization
Induction sessions in hotels of both countries were conducted regularly upon the employment of a new recmit, consistent with Mullin’s (1995) suggestion that orientation is basically a natural extension of the recmitment and selection function. Hotels in both Singapore and Australia were seen to conduct both general and departmental orientation (St. John, 1980; Kennedy and Berger, 1994; Eade, 1993) in order to provide overall hotel information, as well as specific job details. General orientation for new employees in Singaporean hotels ranges from two hours to 90 days, while in Australia between two hours and one and a half days is the norm. The content of these sessions is comparable and includes hotel cultures, employee handbook, mles and regulations, health and safety procedures, salary details and so on.
More specific orientation is the responsibility of the employing department. The importance of this function in facilitating and sustaining the long-term retention of employees was perceived to be recognized by all respondents. It was basically a matter of familiarizing new employees with the daily operational requirements and culture of the organization (Mullins, 1995; Eade, 1993; Thompson and Abbott, 1990); that is, acculturating them into the organization in order to align their individual goals with that of the hotel.
To encourage this assimilation, Singapore hoteliers tend to be more systematic in the orientation process and usually conduct interim and follow-up sessions to provide employees an opportunity for feedback (Eade, 1993) as well as to evaluate their progress (Day, 1988). These sessions were usually related to a probationary employment condition to which newcomers are subjected (Thompson and Abbott, 1990) in an
HRM strategies and labour turnover in the hotel industry
effort to further ensure a person-position match for both the organization and employee. This practice, however, was more evident in Singapore (Nankervis and Debrah, 1995), since only two hotels in Australia had this system in place. For purposes of inducting and eventually training new employees, some hotels in Singapore have in place a ‘buddy system’ where new employees are matched with seasoned, experienced staff members who are responsible for their training. This concept has been supported as providing new hires with the guidance that may be needed in training and providing answers (Eade, 1993; Day, 1988), particularly where there is a case of information overload, that is, too much information being disseminated within that short span of time. Despite the potential benefits of this practice, however, only one Australian hotel explicitly suggested the availability of such a system, but for specified lower-level positions only.
Some of the available literature suggests that existing employees could, in effect, also reap positive experiences through an organization’s induction of new employees. This is based on the assumption that current staff would also have to adjust to changes within an organization, as, for example, to a new colleague (Sutton and Reis Louis, 1987; Day, 1988). Perhaps this lack of consideration of current staff might, to some extent, account for labour tumover that occurs, not within the confines of the ‘induction [or] recruitment crisis’ (Thompson and Abbott, 1990; Mullins, 1995), but among seasoned employees who may have been conveniently overlooked in relation to organizational modifications.
One way of potentially combating this problem is to conduct re-orientation programmes for staff. Deemed important by both the Singapore and Australian hotel industry, these sessions take into account ‘old’ employees, e.g. people who have been with the hotel since its founding, sometimes up to twenty five years. The primary rationale is to reiterate organizational philosophies and values or to communicate recent or planned changes in a hotel’s culture or structure (Martin and Van Eck Peluchette, 1989). Despite the potential benefits, such sessions are only conducted by all Australian hoteliers, with only one hotel in Singapore administering annual corporate reorientations for seasoned employees.
This is notwithstanding the age of some of the Singapore hotels, whose history may go as far back as twenty five years. Generally, induction is still regarded as exerting a significant and direct impact on the successful retention of employees. This relates to the consistency of products and services provided by the hotel industry primarily through its human resources (Denvir and McMahon, 1992). Therefore, orientation and socialization essentially serve the hotel industries by apprising newcomers of, acculturating and gelling them into to the organization, thereby minimizing the probability, and eliminating a potentially major cause, of labour tumover such that there is a stable foundation from which the hotel can operate.
Training and development
There is a clear recognition in both countries of the strategic contribution made by training to the retention of staff – that the willingness to invest in an organization’s people leads to an increase in their commitment and job satisfaction, leading to a reduction in staff tumover (Woods and Macaulay, 1989; Conrade et al., 1994). Training needs analyses are generally carried out by the hotels in both countries, although Singaporean hoteliers were perceived to be more systematic in establishing potential training requirements. There is a greater emphasis on analysing guest
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comment cards in the Australian hotel trade, whereas only two Singaporean properties explicitly take customer comments into account when determining training needs. One Australian hotel, on the other hand, basically depends on consultation sessions among staff to gain infonnation and feedback on potential gaps in employee training and development.
Despite these systems of determination, only one hotel in each country had a training directory, with the remaining properties generally having a list that employees could be referred to. To some degree, this may reflect Conrade et al.’s (1994) suggestion that, despite the importance and significance training is accorded within the industry, the reality of the availability of such planned, quality training programmes within hotels is limited.
The content of training and development programmes was relatively similar in Singapore and Australia and included: language courses, quality management, health, stress handling and telephone etiquette. Job-related skills were also an important component of training. Much of this training is done in-house, although for managerial and supervisory employees extemal sources are usually utilized. None the less, there was an emphasis on the involvement of line employees in the administration of the training function. The Singapore lodging trade expressed this delegation of responsibility through the constant interaction between supervisor and employee (St. John, 1980; Day, 1988), whereas the Australian hotels validated this practice based on the training requirements of the industry, e.g. on-the-job training and as a control mechanism in training effectiveness (Day, 1988). This argument also aligns itself with Tyson’s (1995) suggestion that the HRM function will become more functional through its integration with line management.
Developmental opportunities were perceived to be linked to the training function in the industries of both countries. Employees are primarily trained to the requirements of their job, with a secondary focus on fulfilling their individual needs that is usually required to be in alignment with the operational needs of the hotel (Tracey and Tews, 1995; Walker, 1992; Mabey and Salaman, 1995). This again relates, to a degree, to the earlier argument, put forward with regard to the willingness to invest in people, that a worker’s need for growth and leaming can be met with a sense of morale and commitment (Mullins, 1995).
Hotels in both cultures provide developmental opportunities for employees, generally incorporating an ‘open-door’ policy, i.e. staff can approach and discuss with the HR department or person-in-charge their leaming directions and career aspirations. Most hotels adopt a more systematic and regular approach to involving employee feedback through the perfonnance management process; this will be discussed in greater detail in the next section.
There was, nevertheless, a more methodical approach to career development in the Australian industry. Four hotels, compared to only two in Singapore, had adopted a formal targeted development programme for staff at all levels. This response does not take into account any future plans to formalize developmental opponunities in the hotels, is more evident in Singapore, where the ‘youthful age’ of some of the hotels may have accounted for the cunent lack of systematic developmental practices. The presence of formal career paths may, in effect, reflect the progress Australian hoteliers have experienced in their attempts to modify a short-term employment perception (Timo, cited in Nankervis, 1993b), contrary to the recent findings of Nankervis and Debrah that suggested casual and transient employment was ‘endemic’ (1995: 33) and a lack of formal career paths in the hotel industry.
HRM strategies and labour turnover in the hotel industry
None the less, the existence of developmental opportunities were evidence of the hotel industries’ attempts to minimize voluntary staff tumover through long-term career opportunities in the trade (Nankervis and Debrah, 1995; Nankervis, 1993b). This consequently acts to offset the perception that labour tumover is an inherent and acceptable facet of the hotel industry (Mullins, 1995; Riley, 1991a; Woods, 1994; Meier, 1991), supporting the argument that it is manageable through effective HR practices.
Mabey and Salaman (1995: 130) further argue that an ‘investment [in an organization’s people] will allow them to respond more effectively in a changing environment’. This is especially tme considering the dynamic nature of the hotel trade, where consistency in service through an organization’s people is considered most important (Denvir and McMahon, 1992; Anastassova and Purcell, 1995; Berger and Ghei, 1995). This may therefore be achieved through the use of training and development as an ‘agent of change’ (Mabey and Salaman, 1995), where employees may be constantly informed and updated about, as well as strategically equipped for, the changing requirements of the hotel.
Evaluating an employee’s performance is viewed as being very much related to employee development within the hotel trades of both countries. The prevalent adoption of this function in Australia reflects a significant improvement where earlier research (Nankervis, 1991, 1993a) showed a comparatively low usage of performance appraisal.
A management-by-objectives (MBO) approach (Oberg, 1972; Kramar, 1994) to perfonnance management is used by all but one of the hotels in each country. This usually involves both supervisors and employees completing separate evaluation forms and conferring on the final report. Employee feedback and input are considered significant parts of the performance appraisal process, which is essentially modelled after the performance development plan (PDP) adopted by Harvey Hotels (Beckert and Walsh, 1991). The exceptions were primarily attributed to the fact that employee appraisal may not be as effective as a ‘democratic process’, for example where supervisors may not want to create undue conflict and many attempt to be ‘nice’ about the assessment. This would essentially introduce inaccuracy and prejudice into the procedure and would therefore reduce its effectiveness.
Hotels in both countries distinguished between managerial and operative staff for performance management processes, with some hotels also having different appraisal standards among the particular levels of management, e.g. supervisory, middle management, etc. However, there was a general consensus on the criteria against which managerial and operative employees were evaluated: behavioural aspects were stressed for the fomier, with the latter being assessed on the more generic aspects of performance (Eade, 1993).
In spite of the various appraisal methods available (Eade, 1993; Walker, 1992) (peer evaluation, subordinate appraisal, etc. all the hotels interviewed adopted a supervisor subordinate approach to assessing an employee’s performance and determining potential developmental requirements. However, half the sample in Australia adopted a combination of appraisal techniques, i.e. self-appraisal in conjunction with supervisor subordinate evaluation. This could be perceived to provide increased employee input, as well as a more balanced assessment of that staff member. The employee input was often
Angeline Cheng and Alan Brown
viewed as an important mechanism for them to express issues relating to their developmental needs. One Singaporean hotel, however, was more rigorous in its appraisal process with the secondary supervisor also required to appraise the employee. This could be perceived to lessen any potential bias on the part of the immediate supervisor, and provide a more impartial and accurate evaluation of the worker. In Singapore, apart from assessing the overall performance of an employee through identifying and evaluating weaknesses and strengths, performance management was often used as a means of justifying remuneration adjustments. This was less common in Australia
where award rates of payment rather than individual contracts govem pay rates.
The frequency of conducting the performance management interview is also consistent between the two countries, i.e. either semi-annually or annually. In instances where probationary periods are required for newcomers, the first performance assessment occurs at the end of that period. Since probationary periods are more prevalent in Singapore, the early occurrence of this process also serves to diminish, somewhat, the incidence of staff tumover as a result of the ‘recruitment [or] induction crisis’ (Mullins, 1995; and Thompson and Abbott, 1990), acting as an opportunity for feedback, clarification and identification of any necessary training needs. There was, none the less, an emphasis on determining an employee’s potential developmental needs through the identification of discrepancies in meeting performance objectives (Walker, 1992; Riley, 1991a).
Exit interviews as a final evaluation process were a more commonly used among Singaporean hoteliers, even though there was one hotel in each country that did not see the need to undertake this practice. Despite the evidence that formal exit interviews are conducted with departing Australian employees, the ability to utilize the information derived effectively in identifying and isolating possible causes of tumover (Mok and Luk, 1995; Eade, 1993; Vetula, 1991; Kiechel, 1992), and consequently to propose necessary corrective action (Woods and Macauley, 1987), is more apparent in the Singapore hotel industry. Exit interviews in Australia are predominantly conducted as a routine process to ensure that final administrative matters are resolved before the employee leaves.
Overall, although considered to be significant and contributory to the bottom-line, the performance management function is generally viewed as having an indirect effect on labour tumover in both countries, primarily through its determination of an employee’s training requirements, developmental opportunities and remuneration issues. Remuneration
The role of remuneration was similarly perceived, in both industries, to be a secondary factor through which labour tumover can be mitigated, especially monetary compensation. Generally incongruous with the limited literature that argues that remuneration is a major contributing factor in labour tumover (Hom and Griffeth, 1995; Woods and Macauley, 1989), the role compensation plays in the hiring and retention of staff was, however, acknowledged to primarily be through the concept of equity, value and satisfaction (Walker, 1992; Riley, 1991a).
According to the expectancy theory (Mullins, 1995), there would be an increased tendency for people to leave an organization if a discrepancy existed between their expected and associated value, evident through the remuneration received. For example, if employees feel they are not compensated in accordance with the service provided to
HRM strategies and labour turnover in the hotei industry
the organization, they would be inclined to feel unappreciated and undervalued, thereby contributing to their decision to leave the company.
This diminished significance attributed to remuneration, however, does not discount the contributory role that compensation plays in a hotel’s tumover statistics, and associated consequences like labour shortage, hiring expenses, etc. (Woods and Macauley, 1989; Boella, 1988; Woods, 1992; Mullins, 1995; Denvir and McMahon, 1992; Riley, 1991a; Lewis, 1989). There is also a direct impact on an organization’s bottom-line essentially through a potential reduction in employee start-up costs, which include orientation, socialization, training, etc.
However, remuneration has a comparatively large influence on tumover in Singapore. Unlike the Australian hotel industry that pays award rates for operative staff, different hotels in Singapore pay different rates according to their individual collective agreements (Debrah, 1994). Because of the tight labour market (Debrah, 1994; Goh et al., 1995), potential employees are ‘allowed’ to choose their employers and work environments, a process which may include job-hopping to hotels that can afford to pay higher wages (Debrah, 1994).
However, the differences in the impact of compensation policies on supervisory and managerial staff in Australia and Singapore were comparatively negligible. The remuneration received by these salarial staff is not performance-based, but positionbased, thereby hardly affecting decisions of tumover and retention. Remuneration in Singapore, however, refers to a total compensation package, unlike in Australia where it refers primarily to monetary compensation, i.e. basic pay. The ‘package’ is generally inclusive of the basic wage or salary, insurance coverage and fringe benefits, e.g. discount rates at sister-hotels (Walker, 1992). Employees at this level tended to remain with their employer for factors other than money.
The impact of remuneration on labour tumover can therefore be perceived to be secondary, although more direct in Singapore, under conditions of labour scarcity and a potentially competitive wage market. Even so, in Australia, where particular categories of employees, such as chefs, are in relatively short supply, remuneration packages may play a role in attracting and retaining them. However, the function of remuneration has not been ignored, particularly in relation to the concepts of expectancy and equity. In summary, people would leave if they are not compensated according to their expectations, suggesting therefore a direct, albeit minimal, influence on labour tumover.
This research suggests that hoteliers in Singapore and Australia are adopting a more strategic perspective to HRM in tackling labour tumover. In both countries the greatest emphasis was placed on recruitment, selection, induction, socialization and training and development practices as mechanisms for minimizing tumover. Performance management and remuneration strategies were seen as having a more indirect impact through the strategies listed above.
The broad range of strategies adopted by Singapore hoteliers to combat the initial difficulties in recruitment (Nankervis and Debrah, 1995) reflect a longer-term approach to HRM. This could be attributed to the correspondingly higher tumover rates in the hotels and the country’s low unemployment rate, and hence the industry’s concened effort to attract and retain committed employees. However, it needs to be recognized
150 Angeline Cheng and Alan Brown
Table 4 Key differences in HR activities between Singapore and Australia HR practices and policies
• Employee referrals
• Reliance on part-time staff
• Structured interviews behavioural emphasis
• Skills tests
• Person-job specifications
• Structured interviews
• Reference checking
Orientation & socialization
• Follow up & feedback
• Buddy system
• Guest comments analysis
• Employee consultation
• Targeted development, e.g.
• Impact on remuneration
policies – operative levels
• Exit interviews
• Limited impact on
• Annual remuneration
review – position &
• Individual collective
agreements for operative
• Package remuneration
• Annual remuneration
review – position-based
• Award rates for operative
• Monetary compensation
that the attention given to recmitment and selection is as much an operational matter as it is a strategic approach attempting to reduce tumover.
Orientation and socialization processes were emphasized similarly in Singapore and Australia, although there was comparatively more utilization of probationary periods (Eade, 1993; Thompson and Abbott, 1990; Day, 1988) and a ‘buddy system’ (Eade, 1993: Day, 1988) to ensure an employee’s effective assimilation into the hotel in Singapore.
Training in both countries has been closely associated with the induction process, with the latter seeming to be considered a subset of the former. Because orientation involves the basic operational instmction of staff, it is perceived to be part of the overall training function. Nonetheless, tumover is perceived to be significantly influenced by willingness to invest in this function, and therefore in an organization’s human resources, such that there may be an increased sense of job satisfaction and morale; thereby retaining staff (Woods and Macauley, 1989; Conrade et al., 1994). Although developmental opportunities are present in both Singapore and Australia, they are concentrated in the supervisory and managerial, and therefore skilled (Riley, 1991), levels of the organization. None the less, the correlation between developmental paths and an organization’s tumover rates were apparent, that is the opportunity to grow and advance within an organization would offset a perception of hotel employment as
HRM strategies and labour turnover in the hotel industry
transient and casual (Nankervis, 1993b; Woods, 1992; Riley, 1991a; Mullins, 1995; Denvir and McMahon, 1992) through the availability of true career paths. Performance appraisal and remuneration policies have minimal impact on labour tumover, except on the operative staff in Singapore where wages are negotiable and individually determined according to the collective agreements of each property. To summarize, the impact of the five variables on labour tumover has been comparable in both countries, although the primary distinction lies in the recruitment and selection processes adopted in view of the differing labour situations and employment levels (Nankervis and Debrah, 1995). As such, the results of this study indicate that hotels in Singapore may be more proactive than their Australian contemporaries in their use of HR strategies to mitigate labour tumover, despite a higher and more developed HR profile in Australia. The labour market situation in each country also exerts considerable impact on the strategies employed. Further research might examine the casualization of employment in the industry in each country. Angeline Cheng and Alan Brown
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