Acta Universitatis Danubius. Œconomica, Vol 13, No 2 (2017)

Length of Service versus Employee Retention Factors: Hotels in Cape Town, South Africa

Ikechukwu O. Ezeuduji¹, Thandokazi Lulu Mbane²

Abstract: Employee retention can be measured quite accurately by the actual number of years that employees have worked in an organisation. This study investigates relationships between hotel employees’ length of service and responses to individual variables explaining employee retention factors. A structured questionnaire survey of 217 hotel employees in Cape Town, South Africa was used to obtain information that were subjected to bivariate and multivariate analyses. Key results show that the employees who have worked longer in the hotel have particular characteristics: they perceive that working hours in the hotel do not infringe on their personal quality time with friends; they perceive it will be difficult for them to leave the hotel; they want to remain in the hotel for a long time; and quite interestingly, they perceive they do not receive continuous training in the hotel. Further costs of hiring and developing new employees can be reduced if loyal and talented employees are retained for longer periods through continuous career development. This study is of particular interest to the hotel sector management, as it is focussed on retaining those staff who really want to build a career in the hospitality industry.

Keywords: employee turnover; loyal employees; long service; hotel sector; sub-Saharan Africa

JEL Classification: 055; R11; Z32

1. Introduction

High employee turnover within the hotel sector is well documented (Davidson & Wang, 2011; Mohsin, Lengler & Kumar, 2013; Pearlman & Schaffer, 2013). Employees have stated unfair compensation, long working hours, little growth opportunities, and poor working relationships as causes of problems related to employee retention (AlBattat, Som & Halalat, 2014; Davidson & Wang, 2011; Kuria, Alice & Wanderi, 2012; Mohanty & Mohanty, 2014). Hotel managers strive to reduce costs resulting from staff turnover. These costs are also said by previous researchers to be those of hiring and training new employees, inconsistent service quality as previous and new staff may perform differently, and loss of customer loyalty (Kuria et al., 2012; Mohanty & Mohanty, 2014; Yam & Raybould, 2011; Yang, Wan & Fu, 2012).

Yee, Yeung and Cheng (2011) reported that organisation can create programmes tailored to enhance employee satisfaction and loyalty. When there are high levels of work satisfaction and employee loyalty, these can lead to higher service quality delivery (Yee et al., 2011). Karatepe and Ngeche (2012) therefore posit that employees who are well-rooted in their jobs will have little or no intention to leave their organisations and will likely have higher work performance.

Much study has been done on hotel employee retention, but there remains little literature about this in sub-Saharan Africa. Mohsin et al. (2013) posit that high staff turnover in hotels is a problem that is not unique to a particular nation, but a worldwide issue. It seems from previous studies that employee satisfaction is directly linked to employee retention, hence exploring the working conditions that enhance employee satisfaction and retention is a desired study focus. This study will therefore investigate relationships between hotel employees’ length of service and responses to individual variables explaining employee retention factors. These employee retention factors can be seen as the working conditions that can cause employees to work for a short or long time in a hotel. The results of this study are of particular interest to the hotel sector management, as it is focussed on retaining those staff who really want to build a career in the hospitality industry. Cape Town, in South Africa, with its many hotels, is chosen as the study area, due to its importance as a world tourism destination. The survey was done in selected three, four and five star hotels, who are more likely to employ non-family members and are usually bigger in size than one or two star hotels.

2. Literature Review

The literature review will explore factors that have been reported in literature to have an influence on employee turnover or retention.

2.1. Compensation

Some authors (such as Ineson, Benke, & László, 2013; Jung & Yoon, 2015) posit that reasonable pay or reward is a significant factor contributing to job satisfaction. Nasurdin, Ahmad and Tan (2015) state that hotel compensation can be direct (salary and pay incentives) or indirect (health and unemployment insurance). It has been found that adequate information about pay differences has positive impact on satisfaction with pay level among employees (Till & Karren, 2011). Therefore understanding what employees expect of reasonable pay level and promotion opportunities will likely help to increase employees’ commitment towards a firm (Yang et al., 2012). Implementing proper pay levels and other employee rewards will show top management’s commitment to maintaining acceptable service quality and high level of employee satisfaction, as employees will perceive that their efforts are recognised and compensated (Karatepe & Karadas, 2012).

2.2. Employee Development

Human resource development in organisations involves combining training and development, career development and organization development to enhance individual employees’, teams/groups’ and organizational effectiveness (Stewart & Rigg, 2011). Therefore organisations try to use effective career support such as training and development, performance management and challenging jobs to increase employee career satisfaction (Kong, Cheung & Song, 2012). It is common knowledge that training supports organisational change management process, and employees are positively responsive to further training and the empowerment that it brings (Kong, Cheung & Song, 2011). Yang, Wan and Fu (2012) reported on the positive effects that training and development have on minimizing employee turnover. Kong et al. (2012) further posit that training and development programmes, co-learning among workers, internet training and career development help employees to remain viable and marketable with updated knowledge of the current developments taking place within the industry. They (Kong et al., 2012) asserted that career management and continuous learning opportunities are now being expected to be driven by employees themselves, but advised organisations to not neglect their responsibility towards the career management of their employees. Kong et al. (2011) reflect on the importance of career development towards enhancing employee career success. Therefore, Solnet, Kralj and Kandampully (2012) infer that when employees are given the opportunities for training and career development, they feel valued by their employers, thus increasing their level of confidence, up-selling willingness and service quality, which in turn leads to customer satisfaction and increased revenues. Nasurdin et al (2015) summarised the benefits of employee training to include higher employee satisfaction, improved productivity and commitment, and increased retention, depicting that it is a worthwhile investment.

2.3. Work Engagement

Organisations that share information and involve its employees in the decision making process empower their employees and win their loyalty (Zoipatis, Constanti & Theocharous, 2014). Karatepe and Ngeche (2012) posit that social support at work and job autonomy tend to increase staff work engagement. Yang et al. (2012) declare that when employees are trained to take on specific job responsibility and surmount job challenges, this will increase their sense of achievement, thus enhancing their commitment to the organisation. Karatepe and Ngeche (2012) therefore conclude that employee work engagement influence job performance and turnover intentions.

2.4. Work Relationships

High quality co-workers’ relationship exchanges can lead to better influence and co-ordination among teammates (Lee, Teng & Chen, 2015). Hon, Chan and Lu (2013) posit that team leaders’ or supervisors’ work relationship with employees influence employees’ job motivation and performance. This relationship needs to take place without invoking seniority in rank or position (Kim, Im & Wang, 2015). Lee et al. (2015) therefore conclude that Leader Member Exchange (LMX) has a positive influence on job satisfaction, job performance, organisational commitment and loyalty towards managers and the organisation. O’Neill and Davis (2011) further posit that employee-guest related tensions and stressors have much less effects on employees than employee-employee related tensions and stressors.

2.5. Working Hours

Long working hours have been attributed to hotel employment’s working conditions (Mohanty & Mohanty, 2014). Hence, Kim et al. (2015) posit that employee’s intention of leaving a hotel employment is mostly determined by long working hours, poor salary, low possibility of promotion, shift duties, etc. More so McNamara, Bohle and Quinlan (2011) asserted that in hotel employment, temporary staff have less control over their work timing, work methods, and assortment of tasks. Posting work schedules at most a week in advance allows employees limited opportunity to balance their work, family and social responsibilities.

3. Research Design and Method

Most tourism and hospitality research need quantitative data to get required information (Ezeuduji, 2013; Ezeuduji & de Jager, 2015; Veal, 2011). We used structured questionnaire survey to obtain data that were subsequently analysed to reach conclusions in this study. Variables in the questionnaire were mostly close-ended and ordinal. We used 5-point Likert scale variables (1 to 5; strongly agree to strongly disagree) to measure respondents’ level of agreement to variables explaining employee retention. Employee profile variables were mostly categorical in nature, and length of service item in the questionnaire was a ratio variable. Employee retention variables in the questionnaire originated from literature review done.

Our study used a non-probabilistic sampling approach - convenience sampling, to recruit hotel employees from three, four and five star hotels in Cape Town as the study respondents. We obtained permission from these hotels to conduct our research. 217 hotel employees were randomly surveyed, out of which 210 questionnaires were returned and found usable for data analysis.

We used IBM’s statistics software for data analysis (IBM Corporation, 2016). Descriptive analyses of all the variables in the questionnaire, reliability tests of grouped employee retention variables, and correlation tests of length of service versus employee retention variables were performed. Reliability tests checked for internal consistencies among grouped variables used to explain employee retention factors. Veal (2011) proposed the use of correlation test to explore relationships between ordinal and/or ratio variables. Our study accepted relationship between variables at 95% confidence interval, which is very common in social science research.

We used Cronbach’s Alpha score in the reliability tests to check for internal consistency among variables explaining each employee retention factor (Gliem & Gliem, 2003). The authors, Gliem and Gliem (2003) state that Cronbach Alpha’s reliability coefficient can take up any value between 0 to1. George and Mallery (2003) asserted that Cronbach’s Alpha score of between 0.5 and 0.7 can be used to explain adequate internal consistency among variables. Tavakol and Dennick (2011) however stated that low Cronbach’s Alpha coefficient may result when there are few variables that are being used to explain a particular factor or when there exist a weak inter-relationship among variables being used in the data analysis. We used a Cronbach Alpha cut-off score of 0.6 in our reliability analyses due to the relatively few variables that were used to explain each employee retention factor.

4. Results and Discussion

4.1. Profile of Respondents and Level of Satisfaction

The respondents’ profile results (Table 1) show that female employees dominate the hotel sector. Many (about 58%) of the employees are relatively young, less than 36 years of age. Employees from the Black and Coloured communities dominate the sample (about 71%), about 47% of the employees have no higher than high school education, and the majority (about 64%) have not worked in the hotel for more than 5 years. Most of the employees (about 66%) work in the rooms, and food and beverage sections; with first line staff dominating the entire sample (41%).

In as much as hotel employment has been widely portrayed to have dire working conditions (AlBattat, Som & Halalat, 2014; Davidson & Wang, 2011; Kuria, Alice & Wanderi, 2012; Mohanty & Mohanty, 2014), about 60% of the employees surveyed reported that they are either mostly or totally satisfied, while about 27% reported being neither satisfied nor dissatisfied, and about 14% are mostly or totally dissatisfied (Table 1). This is good news for the hotel sector as the majority of workers are satisfied with their employment. This result can be related to those in Table 2.

Table 1. Profile of the respondents and level of satisfaction (N = 210)

¹ Originally ratio variable that was recoded into categorical variable for simple presentation.

² “Other” here denotes managerial staff and staff in specialised units such as Spa and games.

³ “other” here denotes managerial staff and staff in specialised units such as Human Resource, Spa, Accounts, Kitchen, Maintenance, Housekeeping and Security.

4.2. Length of Service and Employee Retention Factors

Hotel employees who responded to the questionnaire responded mostly positively to the employee retention statements (Table 2), validating the favourable general level of satisfaction reported earlier (Table 1). Their general responses in Table 2 raise no major concerns.

Table 2. Employee statements compared with years of service in hotel (N = 210)

Notes: ^aQuestionnaire were itemised along a 5-point Likert-type scale ranging from 1, strongly agree; 2, tend to agree; 3, neutral; 4, tend to disagree; 5, strongly disagree

^bSpearman’s Rank correlation test significance. N.S., no significant results.*, p < 0.05; **, p < 0.01.

Hotel employees were asked to indicate the number of years they have worked in the hotel, and this variable was compared with the employee retention statements. Results reveal that the longer the employees have worked in the hotel; the more they perceive that working hours in the hotel do not infringe on their personal quality time with friends, the more they perceive it will be difficult for them to leave the hotel, the more they want to remain in the hotel for a long time, and interestingly, the more they perceive they do not receive continuous training in the hotel. This shows that employees who have worked longer time in hotels have adapted and accepted the hotels’ working conditions like long working hours and nature of compensation. However, training and career development of these loyal employees need to be taken seriously by management to support their retention in the hotel sector. Kong et al. (2012) asserted that career management and continuous learning opportunities are now being expected to be driven by employees themselves, but advised organisations to not neglect their responsibility towards the career management of their employees. Yang, Wan and Fu (2012) reported on the positive effects that training and development have on minimizing employee turnover, and Nasurdin et al (2015) depicted employee training and development as a worthwhile investment, pointing to the benefits of employee training to include higher employee satisfaction, improved productivity and commitment, and increased retention.

5. Conclusion

High employee turnover within the hotel sector has been blamed on hotel employees’ perception of factors such as unfair compensation, long working hours, little growth opportunities, and poor working relationships. This study however found continuous training and development, a major concern for hotel employees who have worked in the hotel for a long time. It has been reported that when employees are given continuous opportunities for training and career development, they feel valued by their employers, and this will increase their level of confidence, up-selling willingness and service quality, leading to customer satisfaction and increased revenues for the hotels. Hotel managers who want to retain their loyal and talented employees should therefore, among others, put in more effort towards their employees’ career development.

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