The Problem of High Hotel Employee Turnover |
Posted: April 4, 2017 |
Employee turnover rates in the hospitality industry are typically very high, with the market benchmark in Dubai currently being somewhere around 30%. This is a huge problem for hotels and is something that needs to be addressed if a hotel wants to be successful over the long-term. But what is the real impact of a high hotel employee turnover rate, and what practical steps can be taken by hotel management to reduce it? The Monetary Impact of a 30% Staff Turnover Rate A recent study by TFG Asset Management looked closely at the impact staff turnover can have on a hotel’s income statement. Based on a hypothetical situation, the study took the 30% benchmark staff turnover rate and analysed what impact this might have in tangible financial terms. The research found that 30% staff turnover results in an AED 8 million loss on the top-line and an AED 6 million loss on the bottom-line, with other consequences including a 9% fall in the Average Daily Rate and a 14% decrease in room nights sold. Both of these factors lead to a significant drop in the room revenue that is generated by the hotel. Whichever way you look at it, one thing is clear: any hotel experiencing a high employee turnover rate must take steps to reduce it. What Causes Employees to Leave? A high hotel employee turnover rate is typically caused by a large number of staff members becoming dissatisfied in their job. Of course, there are many different reasons why a particular member of staff might choose to leave the hotel and seek employment elsewhere… Poor Relationships One of the most common issues is a poor relationship between managers and staff, which causes frustration and dissatisfaction amongst the workforce and leads to a lack of engagement in the organisation. Lack of Growth Opportunities Staff may feel that there are no opportunities to grow their career and progress within the organisation – or they may feel like their manager isn’t supporting them properly. Burnout Employees become overworked and eventually experience burnout, which ultimately causes them to leave. What Can Be Done to Decrease Hotel Employee Turnover? Any hotel that wants to reduce their employee turnover rate needs to take firm action to address underlying issues that exist within the hotel. TFG Asset Management’s white paper titled “The Impact of Staff Turnover on a Hotel’s Income Statement” identified four key strategies to combat voluntary staff turnover: 1. Correct Recruitment Strategy It is essential to ensure that the right people are recruited into the hotel. Selecting the wrong candidates for jobs may lead to increases in staff turnover, so it is critical that the HR department has effective recruitment strategies in place and that competitive benefits are offered to employees. 2. Improve Training, Learning & Development Programmes Some hotels may be reluctant to train and develop staff for fear that they will then leave, however it is actually a vital step in employee retention. Carefully planned training may help employees to do a better job and be more loyal to the hotel. 3. Rethink Organisational Structure Hotels should move away from top-down hierarchical structures and go to a decentralised structure that better serves to encourage communication and creativity. 4. Rethink the HR Management Role The HR department should provide a supportive environment that is proactive in motivating employees, developing people and capitalising on skills. High hotel employee turnover is a serious issue that greatly affects the financial performance of a hotel, but by taking positive steps, it is possible to increase staff loyalty and reduce staff turnover. More information can be found in TFG Asset Management’s recent white paper.
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