Case Study – The Imperial Hotel, London; High staff turnover with 80% of the staff leaving within the year. The assessment is based on a business and management case study which requires a team-based approach to identifying and problem-solving a range of business and management challenges within the case. Within the individual report you will include a summary and key justifications for the resolution of one of the problems – in this case, it will be about:
Problem 2: High staff turnover with 80% of the staff leaving within the year
The report will be an individual 2,000 words report.
Suggested report format:
- Introduction – explain the background to your individual problem in the context of the case (250 words approx.).
- Analysis of the individual problem – Summarise and interpret the data from your secondary research into published literature and management theory. Describe and present your results for effective management of the problem. A summary and justification of key proposals for the resolution of the problem in the organisation (1500 words approx.)
- Conclusion – This should be a brief summary of findings of the analysis of the individual problem. (250 words)
The Imperial Hotel, London
The Imperial Hotel is a London 500 bedroom hotel, which is owned and managed part of a well-known international branded chain of hotels in the 4 star market – Star Hotels which operates 25 hotels in the UK. The Imperial Hotel, located in the heart of London’s West End, caters for mainly international business and tourists’ guests who have high expectation in terms of service standards.
The facilities at the hotel include the following:
- 500 bedrooms, all with en-suite facilities.
- Conference facilities for 1,000 people
- Leisure centre with swimming pool
- 3 Bars and 4 restaurants
- 12 conference rooms
- 6 Heads of Departments: Food and Beverage; Housekeeping; Guest Services & Concierge; Front of House & Reception; and Human Resources & training.
- 450 staff in total (300 full-time and part-time)
- Outside contractors (for specialist cleaning; laundry services; management of the leisure centre;)
A new General Manager, Peter Farnsworth, has recently taken over the management of the whole hotel. He is an experienced manager having worked in several of the other Star city centre hotels outside London. The previous General Manager, who had just retired, had been experiencing a range of problems in managing the hotel, namely that: there was a very high turnover of staff in all the departments running around 80% a year mainly due to poor staff morale; the hotel was graded the lowest in the whole Star chain in terms of overall guest satisfaction running at a rate of 65% in the company’s benchmark grading system; the overall sales in the hotel are improving, and although the hotel occupancy (the ratio of rooms sold against the total number of rooms available) was running at 90% for the year, the actual average room rate (ARR) achieved, currently running at £95 per room per night was relatively low compared to the local competition. This poor performance is having a direct negative effect on the costs of the hotel and the hotel’s overall profitability.
The Imperial is an old hotel having been in operation for nearly 100 years. The hotel was last fully refurbished some 8 years ago but is now in need of some restoration and redecoration. There is a programme of staged refurbishment in place which means each floor of the hotel is being closed for building work to be undertaken. The consequence of this is that, at any one time for the next two years, 60 rooms will be out of action. This is putting the hotel under budgetary pressure due to the ongoing building costs as well as the loss of income from the 60 rooms out of action at any one time.
Planned Strategy for Resolving the Problems in the Hotel
Peter Farnsworth is under no illusion as to the challenges ahead and has decided to plan a strategy for resolving the operational, management and business-related problems in the hotel. The first part of the plan is to identify the top six problems for the hotel for the coming year. He identifies the problems as follows and Peter has put forward some initial suggestions for resolving each of the problems:
- Problem 1: Poor guest satisfaction
- Problem 2: High staff turnover with 80% of the staff leaving within the year
- Problem 3: A negative work culture amongst the staff with high levels of sick leave and poor attendance
- Problem 4: Ineffective leadership and management by previous Heads of Department and supervisory staff including poor monitoring and control procedures
- Problem 5: Front of house staff (Reception, Conference & Banqueting, and Restaurant & Bars)
- Problem 6: Back of house staff (Housekeeping, Kitchen, Maintenance)
The Problem in detail
High staff turnover with 80% of the staff leaving within the year
Staff turnover in the hotel sector is generally high due to the temporary nature of employment of, for example: students; foreign nationals from the European Union wanting to work for short periods in London; and generally low pay (on average just at the living wage rate). The turnover of staff is particularly high in the Imperial hotel for front-line staff.
The exit interviews with leaving staff have identified a number of issues around: poor perception of the work culture within the hotel with sometimes aggressive supervisory and management styles in evidence: the unsociable working hours; a lack of proper and regular training; poor pay levels compared to working for example food retailing; little opportunity for promotion or bonuses; the high cost of travelling to work in central London and difficulties in getting transport home at night; A number of young and talented supervisory staff have also left the hotel to work at competitor hotel companies who offer better pay, working conditions and benefits.
The high level of staff turnover puts direct pressure on the staffing budget with staff costs currently running at around 35% of sales for the hotel which is a particularly high for this type of hotel. The need to continuously employ new staff has considerably increased induction training costs as well as had a negative impact of the overall quality of the service to guests, particularly the regular guests who are now reducing in number and appear to be using other hotels.
There appears to be a cycle emerging which may be linked to the high level of staff turnover which subsequently affecting the whole organisation. In terms of individual members of staff there appears to be decreased job satisfaction and a lack of commitment to the hotel with an intent to leave. This shows itself in attendance problems, decreased work performance, and sometimes stress. As a consequence, there is an increased pressure on colleagues to pick up the slack which contributes to routine system problems and a ‘culture of turnover’. This operational staff as well as management as well as this often results in a decreased pool of promotable staff and managers. The result of this for the hotel is that there are managerial succession problems. Other consequences include operational bureaucracy.
Initial suggestions by Peter Farnsworth to manage the problem:
- Attract and retain staff to key supervisory positions
- Offer pay packages and bonuses that encourage staying with the company through a robust reward strategy
- Benchmark pay scales against the competitor hotels
- Offer regular training and performance appraisals and encourage the promotion of talented staff
- Manage the staff more effectively and supportively through ‘hard and soft’ HR practices
As an independent consultant, you have been asked by Peter Farnsworth to take responsibility for analysing the problem, commenting on Peter Farnsworth’s initial suggestions, and putting forward a joint set of resolutions for the listed problems. You are therefore to put forward and prioritise proposals for the resolution of the problem. The expectation is that within 12 months there should be dramatic improvement and change in performance in all six areas. You have asked to write a 2,000 word report addressing your single problem topic to attempt to resolve that problem in the hotel.
Staff Incentive Schemes
There are currently a number of incentive schemes to encourage staff to meet excellent standards of work, and to improve productivity. These include: Employee of the Month (for the whole hotel – £200) and employee of the month for each department (£50); staff (including agency staff) consistently meeting individual and performance targets in three consecutive months within the department (£200 vouchers towards staying in any one of Star Hotels); department, end-of-year parties (funded by the hotel); college fees being paid (NVQ levels 2-4).
Questions you should asking yourself when analysing the problem:
- Which style of management would be appropriate to resolve these problems in the short and longer term?
- How do you get the staff to change their attitude and practices and take ownership? (e.g. which incentives are needed? Participation of staff? Training? Inspiration? Trust? Proper supervision? Allow creativity/flexibility in their work?)
- Are these just about poor operations or is there a broader issue about negative work cultures?
- Does the hotel industry have a collective culture (e.g. London) which restricts the way Peter can effect change? (e.g. London is expensive, extremely competitive, traditional work culture which is process and results driven).
- What are the advantages and disadvantages of Peter Farnsworth’s suggestions for managing the problem?
- How does your problem relate to the other 5 problems? Is success in resolving this problem conditional on any one of the other problems being resolved as well?
- Which operational procedures (and SOPs) do the staff need to focus on within any of the problems? What monitoring and control procedures are important and why?
- How can Peter get HR involved in resolving the problems?
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