Industry Update
Opinion Article 7 March 2005

Knowledge Flight: The Challenge of Hotel Employee Turnover

A genuine love for the business of hospitality and the desire to excel as a hotelier are slowly giving way to aspirations for better work-life balance, faster career growth and the need for better pay

By Ambika Mehta

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The first thing that comes to my mind while trying to put this article together is the concept of fusion... fusion between organisational objectives and employee aspirations. Put another way, the fusion between “organisational processes and personal processes”. It is the inability to create fusion that leads to labour turnover.

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Through the ages we have learnt that the only way to put the customer first in the hospitality industry is by putting the employee first. The rationale may not be very obvious, but it is certainly compelling. Satisfied employees lead to satisfied customers, the only kind we can afford to have in a service business like ours. Just the word “hospitality”, which is derived from the word "hospice", having a Latin root in "hospitium", meaning “a philosophy; a style of care”, says it all. It implies a personal experience delivered by a human being. An architecturally perfect hotel building doesn’t form a part of fond memories of a guest as does a memorable direct experience he had involving a hotel employee! Jim Hartigan, Senior Vice President for Customer Quality and Performance for Hilton Hotels Corporation puts it aptly, "Quite frankly, whatever product we have, a competitor can copy. A certain kind of bed, a television, a shower head, all of this can be copied. What can’t be replicated is the genuine, personal service." Indeed it’s a truth no one can belie, a large part of what draws customers - especially repeat customers - is how well they are served.

Worldwide researches have suggested that employee turnover is among the highest in the hospitality industry. Studies have shown that the average turnover level among non-management hotel employees in the US is about 50%, and about 25% for management staff. Estimates of average annual employee turnover range from around 60 to 300 percent, according to research conducted by the American Hotel and Motel Association. Retention experts say hotels spend thousands every year for each new employee they must train to replace a seasoned worker who leaves. It is no longer a startling fact that the cost of losing an employee is between half and one-and-a-half times their annual salary!

My efforts to understand the reasons and motivations behind the decision for a job change - from one hotel to another or from the industry to another sector - highlight a well-known reality: that people are inherently driven to maximise benefits or satisfaction, and that they assume a lifetime perspective when making choices concerning job changes. The expected benefits or utility for the employee comes in the form of higher future earnings, increased job satisfaction and enrichment over one’s lifetime and a greater appreciation of his personal interests.

Many of those associated with the hotel industry maintain that hotel positions, do not, by and large, offer enough creative and intellectual development. Helmut Meckelburg, General Manager and Area Director - Goa, Taj Group of Hotels, is of the opinion that once people have understood the needs and demands of their particular job, their cultural learning and intellectual stimulation comes to an end quite quickly, causing people to lose interest in their job and look elsewhere. Moreover, the knowledge that people are being paid less than what they might in another industry, for a comparable position, adds to this sense of frustration. Also, according to Mr Meckelburg, the management style and HR practices that are used to stimulate, communicate, recognise, reward and incentivise personnel have, in many instances, not moved with the times.

There are studies that support the fact that employees leave an organisation for many reasons, but two common causes are the quality of the selection system and the quality of leadership. Our hiring processes do not ensure that the applicant would fit in well with the culture of a particular property, or even be well suited for hospitality as a profession! Moreover, conventionally, hotels support a culture that fosters dependence and relies on the traditional chain of command, and not all supervisors are good managers and good team leaders. It a well-known fact that the overwhelming majority of people who leave any hotel leave because of the way they are treated every day. Lack of appreciation, lack of teamwork and the perception that the company doesn't care about employees are consistently the highest-rated reasons for low job satisfaction.

A genuine love for the business of hospitality, and the desire to excel as a hotelier, are slowly giving way to aspirations for better work-life balance, faster career growth and the need for better pay. Increasingly, people are less willing to make compromises on a personal front to establish themselves in this profession, when more attractive options beckon from outside the industry. Interesting is the fact that 60-70% of Lausanne graduates decide to go into banking, insurance, and the customer care industry.

Once employed, a fifty percent chance exists that any given hotel employee will leave his job within one year. For the hotel, the cost is not only that of hiring and training a new employee and lower productivity during ramp-up time, but possibly even the loss of a valuable client. We have employee retention challenges specific to the hospitality industry, so how do we address these challenges and create and maintain sound teams that inspire creative ideas and work willingly towards a common goal of delivering the best customer service possible?

Selection System Quality

Before we start looking for people to hire, it's best to start by defining the need. To do this, we perform Job Analysis, which in turn would give us three components:
  • Evaluation of the organisational needs that justify filling the position
  • Defining of the position's specific functions, duties, and responsibilities
  • Defining of the characteristics a person would need to be successful in the position

Tools like Behaviour-Based Interviews, Ability Tests, and Motivational Fit inventories go a long way in ensuring fusion between organisational objectives and personal goals. HVS International has developed an internet-based assessment tool called 20 20 Skills™ that evaluates new hires and provides a base for identifying peak performers by assessing performance characteristics and cultural compatibility.

A number of hotels have evolved their own, often very effective, methods for assessing prospective new recruits. A good example is that of the Hilton Garden Inns, that maps its best employees’ most desirable qualities. Employees rated as top performers are given a written test designed to assess their aptitudes and preferences. The answers are used to produce a snapshot of the model employee. Prospective new hires have been given similar tests and evaluated according to how close they come to the model. The process has succeeded in pointing managers to service-oriented recruits.

Innovative Management and Invigorating HR Strategies

Innovative management has resulted in major organisational and individual improvements in other industries by recognising that potential employees are as interested in intangibles such as fairness, equity, well being and caring, as they are in competitive salaries, retirement plans, training, and recognition programs. In addition to traditional programs such as a 401(k) plan with company match, competitive wages and benefits, service recognition programs, property incentive plans and referral bonuses, management needs to offer employees a package of “non-traditional benefits” based on the traditional values of sharing and growth. There is a clear need for consistent and aligned human resource practices, programs and policies to help achieve the hotel’s strategic objectives. While many in the hospitality industry maintain that people are the key to customer satisfaction and competitive advantage, often human resource practices in hotels diminish the effectiveness of getting the most out of their people.

It is important to mention the efforts made by New Castle Hotels, a Shelton, CT-based hotel ownership and management company. The company's Open Door Policy enables, and encourages, its employees to call the Corporate Communication Hotline and voice their concerns. A neutral third party at the corporate level then addresses the issues raised. Another successful program has been Peer Review, which allows employees, still dissatisfied after going through normal dispute resolution channels, to take their concerns before a board of their peers. The employee Dispute Resolution board is made up of line-level and managerial staff. Its decisions are final and binding, superseding even the decision of a property's general manager.

Leadership Quality

Leadership should be such that it creates and mentors harmonious workplace relationships, ensuring that there is no lack - of trust, of communication, of relevant and timely feedback, of appreciation, of fair treatment and of information. We need leaders who are capable of “performance management”- creating a system of setting attainable goals, providing feedback and mentoring, reviewing progress and creating developmental plans and competitive compensation structure. Above all we need to curb manager turnover itself, because if it is frequent that indicates that solid teams cannot be properly trained and maintained.

Perhaps a good way to close this article is by sharing what my Organisational Development professor once casually remarked, “look after your employees well and they will look after everything very well!".


Ambika Mehta joined HVS International’s New Delhi office in the position of Research Associate on the 20th of May 2003. She is handling search assignments for a number of international positions, for which she works in close coordination with the four HVS Executive Search divisions across the globe. She also executes the Expatriate positions for the New Delhi office. She is additionally responsible for maintaining and updating Global Reach, for which she conducts research on hotel companies and properties across the world.

Prior to joining HVS, Ambika worked for about a year as Management Trainee with Omam Consultants, which counts among India’s top-notch recruitment and retained search firms. Her scope of work included scanning the profiles of senior management, developing and updating databases, mapping the client mandates, interacting with clients and candidates and closing search assignments. Some of the industries in which Ambika gained HR experience are fibre, steel and automobile.

Ambika holds a Bachelors of Arts Degree in Psychology (with Honours) from Lady Shriram College, Delhi University. In 2002, she earned an MBA degree with specialization in HR from Benares Hindu University. During her MBA course, Ambika took a summer internship with Reliance Industries Ltd., during which time she undertook several projects and studies focused on the HR function. More...

HVS International is a hospitality services firm providing industry skill and knowledge worldwide. The organization and its specialists possess a wide range of expertise and offer market feasibility studies, valuations, strategic analyses, development planning, and litigation support. Additionally, HVS International supplies unique knowledge in the areas of executive search, investment banking, environmental sustainability, timeshare consulting, food and beverage operations, interior design, gaming, technology strategies, organizational assessments, operational management, strategy development, convention facilities consulting, marketing communications, property tax appeals and investment consulting. Since 1980, HVS International has provided hospitality services to more than 10,000 hotels throughout the world. Principals and associates of the firm have authored textbooks and thousands of articles regarding all aspects of the hospitality industry. Click here for more...

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