Impact of Employee Attrition on Consumer Satisfaction in Hospitality Industry

Running head: INDEPENDENT RESEARCH CRITICAL ANALYSIS
Independent research critical analysis
Name of the Student
Name of the University
Author note

1INDEPENDENT RESEARCH CRITICAL ANALYSIS
Table of Contents
1. Background and Introduction.....................................................................................................2
1.1. Background Context.............................................................................................................2
1.2. Research Problem, Research Purpose, Aims & Objectives..................................................2
1.3. The significance of the Research..........................................................................................3
1.4. The scope of Report..............................................................................................................3
2. Literature Review........................................................................................................................3
Causes of Employee turnover in Hospitality Industry.................................................................3
Job satisfaction of employees in the Hospitality industry...........................................................5
Employee retention methods in the Hospitality industry............................................................6
3. Methodology................................................................................................................................7
4. Discussion:...............................................................................................................................9
Findings and Analysis:................................................................................................................9
Analysis.....................................................................................................................................14
5. Recommendation and Implementation...................................................................................17
6. Conclusion..............................................................................................................................20

2INDEPENDENT RESEARCH CRITICAL ANALYSIS
1. Background and Introduction
1.1. Background Context
With the enhancement of globalization and international competition, it has become highly
crucial for the organizations to recruit, retain, as well as manage resources in order to increase
the competitive advantages of the organization. Among the various resources available in the
hospitality industry, human resource can be considered as the most valuable one that requires
special attention. The X hotel is a multicultural hotel situated at Sydney, Australia. The
mentioned hotel has gained a good reputation in both local and global hospitality industry due to
its high quality of services offered to the consumers. However, in the past 1 year, the
organization had experienced high employee turnover. The turnover rate of the X hotel got
increased from 12 percent to 47.5 percent within a time span of 6 months. As a result of this
massive turnover, the quality of service of the hotel had deteriorated and this, in turn, had
reduced the consumer base of the hotel.
1.2. Research Problem, Research Purpose, Aims & Objectives
The excessive employee turnover of the X Hotel has imposed a highly negative impact on the
quality of service provided by the hotel staff of the organization to the consumers. As a result of
this, the number of loyal consumers of the organization has got reduced. The purpose of the
research is to find out the impact of employee attrition on the consumer satisfaction of Hotel X.
The objectives of the research are as follows:
To find out the reason behind excessive employee attrition in the organization

3INDEPENDENT RESEARCH CRITICAL ANALYSIS
To find out the degree to which employee turnover has imposed an impact on the employee
satisfaction of X hotel.
To find out effective strategies by with the management of X hotel will be able to reduce the
employee turnover rate.
1.3. The significance of the Research
Considering the fact that consumer satisfaction is the chief concern of the hospitality industry,
this research will help the organizations associated with the global hospitality industry to
understand the potential reason of employee turnover and how employee turnover can impose an
impact on the satisfaction of consumers.
1.4. Scope of Report
In this research, a literature review has been carried out for secondary data collection. The
literature review is followed by the methodology of the research. Art from that, the research
paper also contains discussion on the findings of the research. Finally, a recommendation has
been provided in this research paper so that X Hotel can minimize its turnover rate and regain its
lost consumer loyalty.
2. Literature Review
Causes of Employee turnover in Hospitality Industry
According to AlBattat & Som, (2013), low remunerations, lack of appropriate training and
performance appraisal are three chief reasons behind employee attrition in the Australian Hotel
industry. Employees are found to exhibit lack of commitment towards the organization where the
remuneration rate is low. The author has opined that commitment of employees to an

4INDEPENDENT RESEARCH CRITICAL ANALYSIS
organization can be ensured by implementing a suitable HR System that can help the
organization to improve its labour relation as well as the quality of services. () argued that,
discrimination on the basis of age, sex, gender and sexual orientation can be considered as
another major reason for employee attrition in the hospitality industry. In a good number of
Hotels in Australia, there prevails a difference between male and female staff voices in the
organization. The number of male employees in the Hospitality industry is much more compared
to the number of female employees. As a result of this, sexual discriminations in the workplace
are frequent in the mentioned industry. Discrimination in the workplace often leads to conflicts
which in turn results in employee turnover. According to Bharwani & Butt, (2012), the
difference in job types is a major determinant of employee retention in the mentioned industry.
Front office employees are found to be more intrinsically motivated compared to the back office
employees. The need for achievement and the need for affiliation is found to be higher in the
from office employees. Hence, the turnover rate of front office employees is found to be less
compared to that of the back office employees.
AlBattat & Som, (2013) argued that excessive work stress is directly proportional to labour
turnover in the hospitality industry. Researchers have asserted that there are direct and indirect
costs of work stress which could lead to the crucial problems of labor, employers, and the
community. Some of the chief reasons behind work stress are role ambiguity, lack of power and
conflict within the organization. However, Zopiatis, Constanti & Theocharous, (2014) argued
that role ambiguity and lack of leadership skills in the leaders are two major reasons behind
employee turnover. The term role ambiguity can be defined as the lack of knowledge of the
employees about their own job role and requirements. In cases where employees lack knowledge
about their own job roles, it gets difficult for them to pursue the job and gain job satisfaction. In

5INDEPENDENT RESEARCH CRITICAL ANALYSIS
such cases, employee turnover is an unavoidable phenomenon. Lack of leadership skills among
the managers often leads to favoritism as well as conflict among the employees. In cases where
employees are dominated by the leaders and lack the power to communicate and execute their
duties keeping accordance to their own understanding, job satisfaction of the employees are
hampered. Moreover, overly dominating leadership and partiality in the workplace also result in
deterioration of the workplace environment. The demotivating workplace environment is a major
reason for employee attrition in the hospitality industry.
Job satisfaction of employees in the Hospitality industry
Job satisfaction can be considered as a major factor that determines the stability of an employee
in an organization. When it comes to the hotel industry, research suggests that job satisfaction is
higher among part-time employees compared to that of the full-time employees (Bharwani &
Butt, 2012). Part-time employees are referred to those employees whose working time comprised
of fewer hours per day, week, month or year than the full-time employees. The author argues that
considering the fact a good number of employees in the hotel industry belongs to the age
arranges of 18 to 25 years, part-time contracts permit the employees to invest more time on their
education and thus ensures job satisfaction.
However, Ghosh et al., (2013) argued that permanent contracts have a positive impact on the job
satisfaction of the employees. Unlike a temporary contract, permanent contract offers job
stability and permits the employees to plan their personal as well as professional life in order to
ensure a secure future. Moreover, employees with permanent contracts are found to develop
emotional attachment with their workplace which in turn has reduces the chance of employee
attrition in the organization. 62.3 percent of employees working in the Canadian Hospitality
industry prefers fulltime job over part-time jobs.

6INDEPENDENT RESEARCH CRITICAL ANALYSIS
Mehta, Kurbetti & Dhankhar, (2014) stated that job satisfaction among the employees is directly
proportional to the degree of family dependence and the amount of remuneration provided to the
employees. The amount of wages received by an individual determines his social status and
source of recognition and security to a great extent. More is the number of wages received by an
employee more will be his job satisfaction and commitment towards the organization. High
remuneration not only enhances the lifestyle of the employees but also provides him or her with
freedom and means to acquire other values and services. When it comes to the length of service
of an employee there are two opposing opinions among the researchers associated with Job
satisfaction. According to a group of researchers, Job satisfaction is inversely proportional to the
length of service (Sengupta & Dev, 2013). This is because pursuing a similar kind of job for a
prolonged period of time can make the service monotonous and boring to the employees and this
in turn often erode a worker's interest and hence decrease job satisfaction. On the contrary,
Employees with less length of service are found to be highly enthusiastic about their job profile
and hence are more satisfied with their job role. However, according to another group of
researchers, prolonged service makes the employees more committed to the organization
(Zopiatis, Constanti & Theocharous, 2014). With prolonged service, the job role of the employee
gets clearer and thus the efficiency of the employee also gets increased. The enhanced amount of
efficiency leads to performance appraisal and thus enhance the job satisfaction of the employees.
According to a survey conducted in an Australian Hotel, 74.3 percent of the employees are found
to prefer providing service to the organization where they have been working for more than 10
years (Wu et al., 2013).

7INDEPENDENT RESEARCH CRITICAL ANALYSIS
Employee retention methods in the Hospitality industry
With the enhancement in global competition, employee retention is still a serious issue in the
Hospitality and food service sector. According to the Bureau of Labor Statistics, the sector has
an annual turnover rate of 73.8%, with over 6% of staff leaving every month (Liang, 2012). One
of the best ways to retain employees in the hospitality industry includes incentivizing long-term
benefits for the employees. For instance, according to a survey, 75 percent of the employees
determine to continue in their current institution depending upon whether retirement benefits are
provided to them or not (Jang & George, 2012). Hence it can be understood that retirement
benefits are crucial drivers of recruitment and employee retention. Several hotels, restaurants as
well as other sectors of the hospitality industry have implemented retirement benefit schedules in
order to retain employees and secure their financial future.
Another cost-effective way of retaining employees in the organization is by creating a work-
friendly environment in the workplace. The survey states that employees perform 20% better and
are 87% less likely to leave than employees who are disengaged. Not only that, organizations
with high employee engagement enjoyed a rise in revenue by 2.5 percent compared to
organizations with lower employee engagement.
3. Methodology
The research paper is conducted to analyze the impact of employee attrition on consumer
satisfaction at the X Hotel located in Sydney and to develop effective strategies for employee
retention. The researcher had used a qualitative approach to conduct the research. Both primary,
as well as secondary data collection method, is used for collecting the data for the research paper.
The chief reason behind selecting the qualitative approach over quantitative approach for this