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Mr. Kwok

Human Resources, Recruitment & Training

Where Are the Innovative Ideas for Retention Management?

By Linchi Kwok, Assistant Professor of Hospitality Management, Syracuse University

According to a recent report in The New York Times, the U.S. continued to add 157,000 payroll positions in January 2013. Yet, the unemployment rate rose to 7.9% for the month. When a high unemployment rate remains, many people feel they are fortunate to have a job. In turn, companies may not make retention management a priority and depend, instead, on a steady stream of unemployed individuals who are able to easily fill open positions. Is that right?

The recession has been challenging companies to run a leaner operation. Employers eliminate redundant jobs and set higher expectations for current employees to fill in any gaps. Companies are no longer rushing to fill the empty positions. When a position must be filled, however, some may prefer to hire candidates who are currently holding a similar position in the field and, thus, save the training and development expenses on new hires, while the others may add new requirements and responsibilities to the job, making it almost impossible to find a qualified candidate to fill the position. In the end, if a position is not filled, the work will be completed by existing employees, which in turn can save companies even more on labor costs.

Such job enlargement tactics (i.e., employers adding additional but similar tasks to employees' work), if planned out carefully, can benefit both employers and employees. For instance, Chili's Restaurants eliminated bussers and asked servers to work in pairs to clean their zones in 2011, as reported in The Wall Street Journal. Servers at Chili's no longer need to share tips with bussers and have incentive to turn over tables faster. They are motivated to provide efficient service by turning tables around faster. At the same time, the restaurants can save wage and health insurance costs for the bussers --- under the new law that will take effect in 2014, employers with 50 or more full time employees need to provide affordable health insurance to those who work 30+ hours a week. Despite lower store traffic and smaller sales for the quarter, this job enlargement tactic as well as other operational changes allowed Chili's mother company (Brinker) to double its earnings.

Unfortunately, not every employee favors the job enlargement idea. Oftentimes, employees feel they are asked to do more without additional compensation. Resentment increases among employees, and some employees leave the organization for better opportunities. Others may stay, but become less productive. When the economy turns around and more companies start hiring, unhappy employees will very likely end up leaving their organization for a better job. Companies must now take retention management seriously because when the economy finally recovers, it might be too late to address this issue. No company can afford to lose its top talent to the competitors.

I see retention management as a system-wide approach to encourage valuable employees to stay with the employer. Money certainly plays an important role, but is not the only reason why people want to commit to their employers. Companies must review every aspect of human resource management before a system-wide retention management strategy is developed. The questions therefore arise: Which areas should hospitality companies visit? What innovative ideas are there for managing retention? And finally, what lessons can be learned? This paper provides a review of several important human resource functions that affect retention management, followed by several examples where companies have adopted innovative strategies in managing retention. In the end, suggestions are made to hospitality companies by outlining the lessons learned from those innovative ideas.

Job Analysis and Job Design

To make a retention management program work, management must start from job analysis and job design. Job analysis addresses what must to be done to meet the stakeholders' needs; job design answers how things can be done to achieve the organizational objectives. Many hospitality companies have noticed that customers today are more demanding than before. They want better service, but they do not want to pay more to get it. Stockholders also want companies to squeeze every penny possible in operations. Often, the burden from the customers and stockholders is passed on to employees, which could cause a higher turnover rate.

To address this issue, companies must ask themselves the following questions: In what way(s) have customers' expectations changed? Are we meeting their expectations? If not, what changes must be made to ensure customer satisfactions? Are there job responsibilities no longer needed that can be eliminated? Is it possible to run an operation with fewer employees? Do we know what our employees want? Do they find their jobs challenging enough to maintain a high level of morale? If they have found their jobs over-challenging, what assistance can be provided to ease the burden and offer support? Will flexible hours and/or new gadgets help ease the burden? Also, how may a new organizational structure help lower the challenges? If they are not showing genuine interest at work, will it help by adding new challenges and/or new job responsibilities to the employees' duties?

Recruitment and Selection

After jobs are analyzed and designed, companies start recruiting and selecting the qualified candidates to fill the positions. Recruitment and selection plays a vital role in retention management because if the "right" people are selected, they not only have a better chance of success at work, they are also more likely to stay within the organization long term. The key here is to select the "right" people, not necessarily the best candidates in the market. According to the Theory of Personality Fit (Kristof-Brown et al., 2005) and the ASA (Attraction-Selection-Attrition) Theory by Schneider et al. (1995), the candidates who "fit" in the organization, the job, the group, and the supervisors are more likely to stay. On the contrary, those who do not "fit" will probably end up leaving the organization either voluntarily or involuntarily.

Management, therefore, should visit the following questions: How is the company viewed in the market as an employer? What is the company's employment brand? If the employment brand is unknown, how can a company establish an employment brand? Is the company attracting the candidates who can help strengthen the its employment brand? Do the company's selection methods allow the management to choose the candidates who fit in the company's employment brand and philosophy? Do the top performers in the company tend to stay within the organization for a long time?

Training and Development

Training programs teach employees KSA (knowledge, skills, and ability) and ensure the company provides adequate service to customers. Development programs help employees advance their careers. These programs can be very expensive, but they are crucial for retention management and cannot be ignored. Companies are probably aware of the importance of training and development programs to their top talent, but not every company includes training and development as part of the organization's retention management strategies.

In order to tie retention management with a company's training and development programs, management must visit the following questions: How do a company's training and development programs motivate employees to stay? Are the purposes of these programs clearly communicated with employees? Are those programs helping employees to achieve their career goals within the company? In other words, how do the training and development programs help employees move up the ladder within the organization?

The Overall Compensation Package

Salary is important, but not the only determining factor for employees to stay with an organization. When structuring a compensation plan, companies should look at the "big picture" for the employees because other factors may also play an important role in retention management.

Companies must ask: Besides wages and salaries, what other benefits are there available for employees? Do they appreciate the benefits offered? What additional benefits are needed? Does the company provide sufficient support for the employees to succeed in their jobs and ultimately advance their career? How may the budget for employee compensation be allocated according to employees' interest? Does the overall compensation package seem attractive to employees in the long term? Does the overall compensation package motivate employees to remain in service for the long term?

Performance Appraisals and Discipline

A good retention management plan need not motivate every employee to stay with the organization. Rather, retention management should focus on the middle and top performers within the organizations, like what Applebee Restaurants are doing. As suggested by the 20/80 rule, it is likely that the top 20% performers generate 80% of total revenue for a company. Therefore, it is all right for a hospitality company to weed out the low performers.

To achieve the goal of retaining middle and top performers within the organization, a company should visit the following areas: Are expectations and guidelines for employee performance clearly documented? Are the expectations and guidelines clearly communicated with the employees? Are the procedures of performance appraisals fair to every employee and consistent over time? Are the evaluation methods effective in measuring the actual performance of employees? Can the results from the performance appraisals help management make informed decisions in promoting the top performers and terminating the low performers?

Innovative Ideas in Retention Management

By reviewing the questions raised above under a variety of HR functions, I hope more companies will feel inspired and come up with effective strategies in retention management. I also believe that companies should think outside the box, rather than limiting themselves to "conventional" approaches.

Google, for instance, sets a great example for its innovative approach of managing employee retention. Google offers many perks to employees and is considered the most desirable employer by many college students. One of Google's innovative initiatives is the "20 Percent Time" Program, in which employees are allowed to allocate 20% of their work time to do whatever they like, according to an ABC News Report. Employees can literally use 20% of their work time to do things like jogging, playing pools, and even sleeping. It turns out that many employees use the 20% time to explore new ideas without any pressures, many of which address the issues that would have been neglected otherwise. This program has helped Google develop many new products and services. Fortune Magazine ranked Google the No. 1 company to work for in 2013 and recorded a very low turnover rate (List of 100 Best Companies to Work for 2013). Similar innovative ideas/perks provided by other companies include: providing housekeeping services to employees' home so that they can focus on their work, setting up a "nap-pot" in the work place so that employees will have enough sleep, offering concierge service and on-site massages, taking employees' cars to regular maintenance, etc.

Lessons Learned for Hospitality Companies and Conclusions

It would be ideal for hospitality companies to borrow one of the innovative ideas mentioned above and plug it in to their organizations. Unfortunately, there is no such "one-size-fits-all" approach in retention management. Hospitality companies must listen to and show genuine interest in their employees. Lastly, they also need revisit their current HR procedures before an effective approach of retention management can be developed.

References:

- 100 best companies to work for. (2013, Feb 6). *Fortune Magazine.
- Hayes, Erin. (2008, May 12). Google's 20 percent factor. ABC News. Retrieved on February 14, 2013 via http://abcn.ws/15gPPtr.
- Jargon, Julie. (2011, January 28). Chili's feels heat to pare costs: Restaurant chain looks for savings in kitchens ahead of expected change from health overhaul. The Wall Street Journal, B8. Online access via: http://on.wsj.com/e21sHk.
- Kristof-Brown, A.L., Zimmerman, R.D., & Johnson, E.C. (2005). Consequences of individuals' fit at work: A meta-analysis of person-job, person-organization, person-group, and person supervisor fit. Personnel Psychology, 58, 281-342.
- Rampell, Catherine. (2013, February 2). Job growth steady, but unemployment rises to 7.9%. The New York Times, pp. B1. Also available online via http://nyti.ms/XxVsxP.
- Schneider, B., Goldstein, H.W., & Smith, D.B. (1995). The ASA framework: An update. Personnel Psychology, 48, 747-773.*

Linchi Kwok is an Assistant Professor of Hospitality Management at Syracuse University (SU) in Syracuse, New York, where he developed and teaches several hospitality and management courses, such as Managing Service Organizations in Social Media, Hospitality Human Resource Management, Hotel and Resort Operations, and Leadership and Career Management. In 2011, Mr. Kwok was named a Kauffman Professor in Entrepreneurship and Innovation at SU to support the university’s initiatives in teaching and research excellence in entrepreneurship and innovation. Mr. Kwok holds a Ph.D. degree in Hospitality Administration and a Master of Science degree in Restaurant, Hotel, and Institutional Management from Texas Tech University. Mr. Kwok’s professional portfolio also includes several years of managerial and hands-on experience in the hospitality industry in the U.S. and mainland China. Mr. Kwok can be contacted at 315-443-2162 or lkwok@syr.edu Extended Bio...

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