Employee Training and Turnover: A Correlation?

Training and development (T&D) in the hotel industry is often viewed as costly.  Choi and Dickson (2009) found that hospitality companies do not value training and as a result, hotel companies do not invest in T&D.  Moreover, Choi and Dickson (2009) argued that well-executed management training programs could reduce turnover and increase job satisfaction.  The long-term benefit to a hotel in developing and executing a consistent training program for hotel employees’ can significantly decrease turnover.  More specifically, the Society for Human Resource Management’s (SHRM) 2011-2012 Human Capital Benchmarking Database reported the average annual turnover rate was 35 percent for the accommodation and food sectors (Jacobs, 2011).  The Bureau of Labor Statistics (2011) indicates that annual turnover for the hospitality industry is 74.6%.

Cost of Turnover.  The costs associated with employee turnover are detrimental to a hotel’s profitability.  Tracey and Hinkin (2008) found turnover costs in the economy, midmarket, upscale, and luxury hotels to range between $5,700 (low complex jobs) to $9,932 (high complex jobs) per employee.  In their study, Tracey and Hinkin (2008) also found the financial implication of employee turnover was a loss of productivity due to a lack of training and skill acquisition of hiring a new employee.  Various positions in the hotel have different turnover costs associated with them.  For example, the costs of turnover for a front desk agent will be less than a managerial position.  Davidson, Timo, and Wang (2009) identified turnover rates between $9,591 for operational employees and $109,909 for managerial employees.

Training benefits.  Benefits of T&D include employee satisfaction, lower turnover, improved morale, higher retention, and value for the shareholders.  For T&D to be effective, top manager and executive support is essential to obtain the benefits of training.  Enz, Canina, and Walsh’s (2006) study affirmed that hotels should invest in management training in order to provide the greatest return on investment.  Several large hotel organizations offer a wide variety of T&D opportunities for employees.  For example, Taj Hotels and Resorts offer continuous training both on-the-job and in formal classroom-style training—including programs on Taj’s service culture, food and beverage, finance, and other areas of specialization (Tracey & Way, 2011, p. 451).

Choi and Dickson (2010) investigated employees’ turnover and its impact on satisfaction levels at northeastern United States lodging company.  The authors developed a training program and implemented mandatory training for current and new managers company-wide.  Furthermore, the author’s delivered training that would help managers deliver annual appraisals to their subordinates.  Choi and Dickson (2010) found that the managerial workforce significantly increased employee satisfaction levels and consequently reduced turnover (p. 113); thus, demonstrating the benefits to T&D.

Clearly, there is a correlation between the delivery of training programs and employee turnover.  Although T&D may be viewed as costly, the return on investment is substantial when providing training programs to hotel employees’.  Training programs will not only decrease turnover but can enhance employee job satisfaction and morale; therefore, increasing the likelihood of an employees’ intent to stay with your hotel.

INOSPIRE GLOBAL, INC. is a human resources consultancy agency serving the small/mid-market businesses. A variety of human resource services are offered that enhance organization operations by identifying and implementing solutions. With over 20 years’ experience in service, hotel, restaurant, and academic roles, Dr. Ryan Giffen is an expert in human relations and people. Providing advanced-leadership, organizational culture, and human resources consulting strategies, Dr. Giffen understands the complexities of the dynamic workforce of today.