Employee Turnover And Its Effect On Business Performance Essay

1323 Words Jun 2nd, 2016 null Page
Employee turnover is the rate at which employees enter and leave a company in a given year (SHRM, 2011). The industry with the highest turnover rates were services—accommodation, food and drinking places at 35%. The arts, entertainment, and recreation industry occupies second place with 27%. Across all industries, the average turnover was 15% (SHRM, 2011). Employee turnover in the hospitality industry is a well-documented problem and is reported to be “nearly twice the average rate for all other sectors” (Deloitte, 2010, p. 35). While the 2009 economic downturn temporarily slowed this high turnover rate, it is predicted to rise rapidly once the downturn improves (Davis, 2013; Deloitte, 2010).

Turnover is a concern for human resource managers and industry executives for three primary reasons; it has a negative effect on business performance, turnover causes businesses to incur high costs and turnover may become uncontrollable and result in the hiring of less skilled persons to fill vacancies (Allen, 2008; SHRM, 2011). Appropriate staff levels needed to achieve and maintain proper service levels cost, on average, 45 percent of operating expenses and uses 33 percent of unit revenue depending on hotel size, with larger hotels expending more (Deloitte, 2010).

The extant literature indicates many reasons that the hospitality industry is experiencing high turnover. Low salaries are suggested as a common reason to leave employers in the hospitality industry (Davis, 2013;…

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