Employee turnover is a frustrating problem that's been bothering the hospitality industry for many years. Turnover is the rate at which an employer gains and loses employees. A simple way to describe it is "how long employees tend to stay" at a job position. Not only does it cost a fair amount of money to replace the employees lost, but it also comes with many inconveniences for the employer. For instance, turnover may compromise the consistency and quality of customer service, resulting in reduction of profitability. Employees who are already planning to leave their job position may not be as motivated to do their job, as well as the amount of time it requires for newly hired staff to acquire knowledge and learn skills.
Other than the inconveniences, the direct costs and indirect costs also become very bothersome for employers. They vary between hard costs, soft costs, and opportunity costs. Hard costs include paying for help-wanted advertisements. Soft costs include the time it takes to interview applicants. And opportunity costs includes the sales missed due to employee reduction (turnover).
Research has identified five major cost categories that contribute to the total cost of replacing an employee. Each being pre-departure, recruitment, selection, orientation and training, and lost productivity. Studies delivered several interesting results. Overall, the cost of lost productivity was the highest item among all of the costs associated with the turnover, and the least came upon the cost of orientation and training.
Employee turnover will continue to be a critical concern in the hospitality industry for the near future. To develop in the competitive hotel environment, it is necessary to understand the nature and consequences of employee turnover.
Group:
Linda Zheng
Nina Wong
Lucy Liu
Jenny Wong
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