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Hospitality & Tourism Management

Impact Of Compensation And Reward On Employee Retention In The Hospitality Industry

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ABSTRACT

The study is on “impact of compensation and reward on employee retention in the hospitality industry”. The study has four objectives and four research questions. Cross sectional research design was used for the study. The population was 220 and the sample size was 137 respondents consisting of employees working at the front office, housekeeping, and service and food production of the sampled hotels domiciled in Owerri. Structured Questionnaire was used for collection of data while simple percentage and frequency counts table was used to analyze the research questions. Results from the data collected were analyzed using arithmetic mean, standard deviations and were presented in tables. The data collected was analyzed with the SPSS statistical methods version 21 using one way ANOVA involving P and T test for the level of significance (P= 0.05). The findings reveal that Employers in the hotel industry provide their staff with performance bonuses. Wages in their hotels were enough to meet employee needs. Employee feeling of recognition in hotels in Owerri municipal comes with increase in responsibility and their employers involve them in decision making. Job engagement opportunities and skills development opportunities were available in their hotel. Employers offer career development and advancement opportunities to all employees. Based on the findings, this study recommends that career development programs should be designed to assist staff in meeting new demands through a range of developmental and skill building activities. Organizations should also have a structured career development plan. Players in the hotel industry should develop a policy indicating when a person should be promoted. Also, the hotel industry utilizes a lot of the casual labor and hence the management of the players should consider promoting the casual laborers to short contracts or permanent positions. The management of the hotel industry in Owerri should ensure that they have a documented policy indicating the basic salaries and bonuses. The managements of the hotel industry should review their remuneration structure to consider the current high cost of living. The management of the hotels should enhance employee recognition through a monthly or yearly recognition. In addition, recognition should be accompanied by some financial rewards or job promotion and not just certificates and trophies.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The hospitality industry’s success and prosperity cannot be realized without support and contribution from its employees. From modern human resource perspective, human capital is the most valuable assets for the organizations (Mello, 2011). Human assets are difficult to duplicate, so they become the key competitive advantage for an organization in the intensive competition. Clearly, finding and hiring the right employees are initial to the establishment of hospitality industries, but maintaining the effective workforce will be more important for the organization’s development (Shaw, McNamar, Mathis and John 2008). Employee is a person who has agreed to provide service for employer in exchange for money ((Ladkin & Juhaweer, 2010). Many researchers studied on the topic of employee’s turnover (Gruber & Madrian, 2004) and they come up with the reasons why employees quit their job and choose another company or organization to work for, the fact such as unsatisfied pay, limited career development, work life conflict, change of residential and many other reasons lead an employee to resign from the organization. As a result, job-hopping becomes a serious and costly phenomenon in the labour market, when employees change from one job to other regard another searching for better alternatives.

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Employees are the organization’s key resource and the success or failure of organisations centre on the ability of the employers to attract, retain and reward appropriately talented and competent employee. Employee’s willingness to stay on the job largely depends on compensation packages of the organisation (Armstrong, 2003). In attempt to ensure employee optimal satisfaction and retention, organisations need to consider a variety of appropriate ways to reward the employee to get the desired result (Falola, 2014). It has been argued that the degree to which employee are satisfied with their job and their readiness to remain in an organisation is a function of compensation packages (Osibanjo, 2012). Hospitality industries that have goals to achieve would require satisfied and happy staff in her workforce. Importantly is the fact that for any hotel to take off and achieve its strategic goals, it would strongly depend on her capacity to attract, retain and maintain competent and satisfied staff into its employment (Oshagbemi, 2000).

Furthermore, available facts indicates that services sector workers leave their jobs usually as a result of unsatisfactory situations such as low motivation, low pay and poor conditions of service (Ologunde, Asaolu & Elumilade, 2006). The hospitality business, an aspect of tourism, is a labour-intensive and quality-driven service. The quality of personnel determines the quality of the product served to the customer and therefore the success of the industry. Also, the competitiveness and productivity of the industry depends primarily on the availability of skill levels and professionalism of its employees. Consequently, the constituents within the hospitality industry. The restaurant and catering sectors recognize that education, vocational training, and human resource development are necessary to ensure their future growth. In support of this, the World Economic Forum in its T &T Competitiveness Report (2006) sees good management of human resources as one of the key drivers for competitiveness across the industry. However, it has been recognized that the hotel, catering and tourism sector of the industry suffer from high levels of labour turnover. This provides a constant challenge for employers, limits the ability to maintain a skills workforce and results in enhanced costs.

Compensation and reward management is seen as largely about managing expectations, which is what employees expect from their employers in return for their contribution and what employers expect from their employees in return for their pay and the opportunity to work and develop their skills. In addition, it is the process of developing and implementing strategies, policies and systems which help the organization to achieve its objectives by obtaining and keeping the people it needs and by increasing their motivation and commitment, is of utmost importance to firms today because recent developments in the business world have seen to it that people have become a firm’s most valuable resource (Farell, 2001). This arises from the fact that competition has moved from the fixed resources to the human resources and specifically the intangible resources. As a result, employee retention has been of concern to organizations in the current competitive environment since it is now commonly accepted that employees create an important source of income advantage for firms, (Armstrong & Murlis, 2007).

Employee retention is a fundamental requirement for the hotel sector as it hires more people than any other sector within the private sector, both domestically and globally (Peric, Mujacevic, Simunic, 2011). Retention in the hospitality industry is a continuing and ever-evolving effort to retain the best available labor talent as hospitality managers face the challenge of managing a constantly changing workforce. The hotel industry is a dynamic service sector where optimal human resource management is required to ensure professionalism and efficiency in service delivery (Hanzaee & Mirvaisi, 2011). Employment and retention of the new talent has been significant in continuous growth of an organisation. The retention of employees has shown to be significant to the development and the accomplishment of the organisation’s goals and objectives, especially in building competitive advantage over other organisations in the phase of increased globalisation (Armstrong, 2001). And, also tourism and hospitality industry has continued to receive rigorous attention of academics, business tycoons and economic analysts because of its growing effect on the economy (Uddin, Das, & Rahman, 2008).

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Ogbonna and Lloyd (2002) recognise employee retention as vital for the hospitality sector, as it employs more people than any other industry within the private sector, both domestically and globally. Oster (2004) posits the process of retention as a gain for the organisation, as the cost of turnover increases a firm’s expenditure and reduces profits. However, huge problems exist in attracting and retaining a skilled workforce in this industry which has led to the investigation into the effects of compensation and rewards packages on employee retention in the hospitality industries in Nigeria.

1.2       Statement of Problem

Employee retention is a challenge that can affect the success of an industry. Employee retention and turnover crises have been emerging in the 21st century for many businesses, including hospitality. Retention in the hospitality industry is a continuing and ever-evolving effort to retain the best available labor talent (Han & Hyun, 2015; Karatepe, 2013) as hospitality managers face the challenge of managing a constantly changing workforce (Alexakis, 2011). Researchers noted that some managers have either not addressed the problem of employee retention or have attempted to address the problem with little success. Robinson, Kralj, Solnet, Goh, and Callan (2014) concluded that employees will stay with an organization if given a combination of retention strategies that can make leaving seem less than advantageous such as fair compensation.

A good reward management practice makes employees to feel recognized and valued by their organization and such recognition is one of the major efforts by organizations to keep their workers. Compensation is the most crucial issue in employee satisfaction or attracting and keeping talents. Moreso, fair renumeration causes employees to become satisfied with their organization and subsequently get more involved in their jobs. In view of this context and reality, the present study aims at exploring the impact of compensation and reward on employee retention in the hospitality industries.

1.3       Objective of the Study

The major objective of this study was to investigate the impact of compensation and reward on employee retention in the hospitality industry, while emphasizing on selected hotels in Owerri.

1.3.1    Other specific objectives were to

  1. determine the extent to which compensation and reward practices affect employee satisfaction in the hotel industries.
  2. Access the influence of compensation and retention on employee feeling of recognition in hotel firms
  • Ascertain the extent of relationship between compensation and retention and job engagement of employees in the hotels
  1. Examine the extent of relationship between compensation/reward and the attraction of talented skilled, knowledgeable and experienced staff to hotel firms.

1.4 Research Questions

This research study was guided by the following research questions

  1. To what extent does compensation and reward practices affect employee satisfaction in the hotel industries?
  2. What is the influence of compensation and retention on employee feeling of recognition in hotel firms?
  • To what extent is the level of relationship between compensation and retention and job engagement of employees in the hotels?
  1. To what extent is the level of relationship between compensation/reward and the attraction of talented skilled, knowledgeable and experienced staff to hotel firms?
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1.5       Statement of the Hypothesis

The study was guided by the following hypotheses;

Ho1: There is no significant relationship between compensation and reward practices and employee satisfaction in the selected hotels in Owerri municipal

Ho2: There is no significant relationship between compensation and retention on employee feeling of recognition in the selected hotels in Owerri municipal

Ho3: There is no significant relationship between compensation and retention and job engagement of employees in the selected hotels in Owerri municipal

Ho4: There is no relationship between compensation/reward and the attraction of talented skilled, knowledgeable and experienced staff in the selected hotels in Owerri municipal

1.6       Significance of the Study

This study will be of great importance to the management of medium and large hotels in Nigeria, employees, government of Nigeria and policy makers as well as academicians and researchers in the following ways;

Management of Hotels: To the management of hotels in Nigeria, the study provides information on how various reward practices influence employee behavior and how they can be used to reduce labor turnover. It is well known that hotel service industry is highly dependent on the “human factor” which has become a major part of the hospitality. It will enlighten the management on the consequences of unfair C&R such as high labor turnover and its effect on organizational performance and profitability.

Government of Nigeria and Policy makers: The study provides information on compensation reward practices and their role on employee retention in hotels in Nigeria. This information may be used to develop a policy framework to protect both the employees and the employer. To the policy makers, the findings will provide viable opportunities to review policies related to reward management practices and retention of employees in organizations in Nigeria.

Academicians and other Researchers: The study adds more information to the body of knowledge on the role of reward practices on employee retention especially in the hotel industry. The study also provides a base upon which further studies can be conducted on reward management practices and employee retention.

1.7       Scope of the Study

The study focused on five (5) hotels domiciled in Owerri namely; Protea Hotels & Suites (5-star), Onyx Royale Hotels (3-star), Mavis Hotels & Suites (3-star), Paris Heritage Hotels (3-star) and Fidrock hotels, all registered with the Corporate Affairs Commission in Owerri, Imo State, Nigeria between the year 2010 to 2020. The study was also limited in to the impact of compensation and reward on the following indicators of employee retention, namely; employee satisfaction, feeling of recognition, job engagement and attraction of talented staff.

1.8       Definition of Terms

Labor Turnover: refers to the ratio of a number of employees who leave a company to the total number of employees on the payroll in that period. It’s used for measuring employee retention.

Employee performance involves factors such as quality, quantity and effectiveness of work as well as the behaviors your employees show in the workplace.

Compensation refers to the remuneration that an employee receives in return for his/her services to the organization.

Remuneration: Reward for employment in the form of pay, salary, or wage, including allowances, benefits (such as company car, medical plan, pension plan), bonuses, cash incentives, and monetary value of the noncash incentives (Boam & Sparrow, 2012).

Employee Retention: This is an effort by a business to maintain a working environment which supports current staff in remaining with the company.


Pages:  73

Category: Project

Format:  Word & PDF         

Chapters: 1-5                                 

Source: Imsuinfo                            

Material contains Table of Content, Abstract and References.

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