A study on impact of human resource practices on employee retention in hotel industry

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International Journal of Management (IJM)
Volume 11, Issue 8, August 2020, pp. 1350-1360, Article ID: IJM_11_08_123
Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=8
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.11.8.2020.123
© IAEME Publication Scopus Indexed
A STUDY ON IMPACT OF HUMAN RESOURCE
PRACTICES ON EMPLOYEE RETENTION IN
HOTEL INDUSTRY
Kiran Mayi Immaneni
Research Scholar, Koneru Lakshmaiah Education Foundation, Guntur, Andhra Pradesh, India
Dr. Vedala Naga Sailaja
Professor, Koneru Lakshmaiah Education Foundation, Guntur, Andhra Pradesh, India
ABSTRACT
In today's competitive business climate, retention of employees is one of the most
discussed issues, and it can be critical to recognize the causes of employee attrition
and to implement appropriate strategies for the maintenance of employees. Both
organizations therefore require workers to have a lower turnover at the highest
possible stage. The aim of this research is therefore to analyze the impact of human
resource management practices on the retention of employees in the hotel sector in
Hyderabad. The hotel industry is considered to be a developing sector in Hyderabad
and the sector is well established as an under-researched region. This study is
important because such research initiatives have been rare in the sense of Hyderabad
and, in order to fill this vacuum, this analysis has been carried out for two categories
of hotel segments, i.e. 5 and 4 Star hotels. The study examined the impact of four
human resource practices on employee retention. The study examined the relationship
between key practices and the Bivariate Correlation and the result showed that
Recruitment & Selection, Training and Development, Salary and Monetary Benefits
and Work Environment have a significant relationship with Employee Retention. The
study measured the impact of HR practices on the retention of staff in the hotel
industry. The study applied the structural equation model and the result stated that
Recruitment & Selection had a significantly high effect on employee retention. This
paper is useful for the hotel industry, the service sector, human resource management
personnel, consultancy service providers and research scholars.
Key words: Attrition, Employee Retention, Human Resource, Recruitment, Selection,
Training and development, Salary benefits and Work Environment
Cite this Article: Kiran Mayi Immaneni and Vedala Naga Sailaja, A Study on Impact
of Human Resource Practices on Employee Retention in Hotel Industry, International
Journal of Management, 11(8), 2020, pp. 1350-1360.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=8

A Study on Impact of Human Resource Practices on Employee Retention in Hotel Industry
1. INTRODUCTION
Today’s Organizations struggle continuously with revolutionary trends such as accelerating
products and technological changes, global competitiveness, deregulation and demographic
change, while simultaneously pursuing services and information society trends. Because of
this turbulent business environment, the retention of employees is one of the challenges that
many organisations face. Loss of employees is a disturbing occurrence. Replacement of
employees in both recruitment and training can be expensive. High levels of employee
turnover may hinder the quality, coherence, and stability of services offered by organizations
to customers and customers (Trevor & Nyberg, 2008). As such, companies have become
knowledge-based, where human capital is clearly considered a vital resource for their
survival. A study on hospital employees revealed that HR practices of rewards and
recognition, career enhancement, performance appraisal directly influence retention of
employees. (Dr. K.S.Sekhara Rao , Ch. Sahyaja , P.Akhil , N.Lakshmi Narasimha, 2018)
The retention of employees shall be the number of existing employees who keep or
remain employed for a fixed period of time. The retention policy should focus on retaining or
losing the losers and retainers of high-performance and talented workers (Blake, 2009).
Retention of employees is crucial to the long-term health and success of your business.
Managers readily agree that the retention of your best staff ensures satisfaction, product sales,
satisfactory staff, succession planning, and deeply integrated organizational knowledge and
learning.
One of the main challenges today of the dynamic hotel industry is to maintain core
employees. Employees are aware of the breakdown of the conventional psychological
relationship between the employer and employee. The best prospects are provided by the high
quality employees who switch from one organization to another. Organizations will
increasingly have to compete for the best skills. As a result, recruiting and selection, training
and development, performance management, retrenchment programs and performance
management are greatly affected.
Successful human resources practices provide a supportive environment for development
and growth. The business benefits in exchange from the standards of service delivered by
professional and loyal employees. These positive results are based on the premise that people
are an asset, and that by investing in them the whole enterprise will achieve greater benefits.
According to Hytter (2007), while this severe situation can lead to a crisis, many
organisations wish to provide long-term tenure to their personnel. Employees with greater
stress will have low job satisfaction and commitment, more likely to quit job and less likely to
adjust to work environment (Dr.G. Sureshkrishna & Dr. Simanchala Das, 2018). Effective
retention management concentrates primarily on those staff groups which, from the point of
view of the company, are the most problem-based.
2. REVIEW OF LITERATURE
Kavitha. C (2013): The investigation concerned the technique used by the leader to retain
employees. The objective of the survey was to learn how retention management works in
practice. The findings of the research showed leaders and their ability to build a culture of
retention, which was a key factor in why workers leave, which ones remains in the business,
and what usually keeps them away from the organization. It is the leader who has a key
influence on people's decision to stay or leave. Research has demonstrated the qualities of a
successful leader and how he plays a key role in the management of retention.
David McMillin, Staff Writer (2013): The study examined that employees in many areas
could enter and leave, but the hospitality industry is taking a much faster turn. The turnover
rate is approximately 20 times higher of hospitality employee. According to new research

Kiran Mayi Immaneni and Vedala Naga Sailaja
enhancing retention of employees in the hospitality field, credibility begins with a basic
management attribute. According to the study, there is a clear association between true
leadership and the engagement of an employee and concluded that, this connection interprets
possible retention of employees.
John Walton, Claire Valentin (2013): The creation argue that human resources brings
together a world-renowned community to provide a comprehensive review of contemporary
human resource growth principles , strategies and orthodoxies. It focuses on four main fields
of HRD thought, training concepts, development actions, professional development practices
and team improvement practices and also describes the theoretical and empirical points of
divergence outlining the context, history and current usage.
Yaduveer Singh Chauhan and N. K. Patel (2014): The study revealed the effect on job
satisfaction from different dimensions of HRM practices. Three major factors reflecting the
plurality of HRM activities adopted by different hotels were considered. The study shows that
all HRM measurements of hotels in Udaipur are not equally fulfilled by workers. The
recruiting and selection and working conditions are fulfilled and the development of the
company is unsatisfactory. It is evident that HRM practice in the Udaipur Division hotel
industry has not been fully developed and that it is urgently important, in order to shape and
implement new directives to ensure successful human resources practice, to employ the
services of HRM experts, consultants and researchers.
Dr. Rabiya T.S. Sange (2015): In times of diminishing loyalty, employee engagement is
a powerful retention strategy, making it an essential tool in managing human capital. The
study addresses the need to put recruitment selection, development and succession planning in
place. It has been found that lack of investment in employee engagement, career progression
and meaningful work were found to be the top most reasons for employee quits. Failure to
address the career growth concerns of talented employees will result in losing them at all
times.
Margaret Deery and Leo Jago, (2015): Work life balance has been identified as an
essential variable to retaining staff. Employee attitudes such as job and pay satisfaction or
work overload will impact work-life balance as will personal dimensions such as stress and
substance abuse. The author suggests implementing workplace policies that are strongly
endorsed by staff if retention rates are to be increased. With varying employee needs across
organisations, each organisation must engage with their staff to identify the policies that are
likely to have the most traction.
Kiran Mayi Immaneni and Dr. Vedala Naga Sailaja (2017): The study on industrial
exposure training and factors that contribute to dissatisfaction of students showed content
related causes, personal aspects and external factors as reasons for dissatisfaction. The study
highlights the need to create good first impressions among students of the hospitality industry
motivating them to build careers within the industry.
Arhan Sthapit and Bikash Shrestha (2018): The research explores practices and
strategies for HR retention. The paper discusses the effects of human resources management
on retention and the moderating effect on retention factors of HR in the hospitality industry in
Nepal of the management hierarchy, age group and gender. It found that incentives and
compensation help keep employees at entry level, while branding is a good retention tool for
those at higher ranks. Equal work life and branding of employers help keep workers of the
older age groups while job development is the best and most healthy workplace in Nepal.
K. Hymavathi and Dr. A.B. Saraswathi (2018): Work environment is one of the most
important domains in people’s lives; it contains many components of quality of life. Every
organisation is focused on acquiring and retaining the workforce to sustain the competition.
To analyse the quality of work life, organisations should scrutinize the work environment,

compensation and rewards, training and development, freedom at work, job satisfaction and
work life balance.
B. Srilakshmi and Dr. Sundari Dadhabai (2018): Organisations have to focus on
effective designing and implementation of HRM practices to gain benefit in multi dimensions.
The key functions of HR department are to attract and retain talented employees, and the
culture they promote affects these functions. The role of HR practices is to assure the needs of
employees through the practices of training, rewards systems, equality of treatment, and
benefits, among others, have a positive influence on employee commitment and reduce the
rate of employee turnover.
Kiran Mayi Immaneni and Dr. Vedala Naga Sailaja (2019): Study on attrition in 4 & 5
star hotels of Hyderabad revealed salary and wages, long working hours, nature of work ,
poor work life balance, Improper employment policies, low job profile and competition as
major factors affecting attrition.
3. OBJECTIVES OF THE STUDY
 To understand the relationship between the HRM practices and Employee retention
 To identify the factors of HRM practices impact on Employee retention
4. HYPOTHESES OF THE STUDY
H0: There is no relationship between HRM practices and retention of employees.
H0: There is no Impact of HRM practice on retention of employees.
5. SCOPE OF THE STUDY
The present study has considered 4 and 5 Star rated hotels located in Hyderabad district of
Telangana state. The study collected the primary data with support of human resource
department. The study mainly focused on the four key HR practices implemented for the
retention of employees. The following are the practices
 Recruitment & selection
 Training and Development
 Salary and Monetary benefits
 Work Environment
6. RESEARCH METHODOLOGY
6.1. Research Design
The study developed a research design based on primary data and attempted to define Human
Resource Practices impact on the Employee Retention.
Data Collection: The study framed the questionnaire in likert scale structure to take the
opinion from the respondents i.e., employees.
Sample Size: The sample considered the opinions of the employees who are working in 5 and
4 star rated hotels located in Hyderabad district of Telangana state.
Sample Method: The study considered the convenient sampling method. The study has
collected Ninety respondents’ opinion through the drafted questionnaire.
Initially unorganised and complex data collected from several aspects of the study were in
their raw state. By using the reliability test cronebach’s Alpha has been applied on the likert
scale questions and observed cronebach’s Alpha value is greater than the base value (0.842 <
0.7). The following statistical techniques have been used to analyze the data:

 Bivariate Correlation: The study applied the bivariate Correlation to measure the HR
practices relationship with the Employee Retention.
 Structural Equation Model: The study has considered the SEM through the AMOS
software to know the impact of multiple independent variables (HR Practices) on one
dependent variable (Employee Retention).
7. TABULATION OF DATA ANALYSIS
7.1. Objectives -1: To understand the relationship between the HRM practices
and Employee retention
The study aims to investigate the relationship between HRM practices and the retention of
employees in the hotel industry and to gather data from 5-star and 4-star hotel staff. The study
considered the response of employees with at least 1 year of experience in the industry.
Bivariate correlation is the statistical tool is applied on the data collected and the following is
the hypothesis.
7.2. Objective Hypothesis
H0: There is no relationship between HRM practices and retention of employees.
H1: There is relationship between HRM practices and retention of employees.
The table shows the bivariate correlation of HRM practices and employee retention in the
5 and 4 star hotel industry
Table 1 Relationship between HRM Practices and Retention of Employees
Employee
Retention
Recruitment
& selection
Training and
Development
Salary and
Monetary
benefits
Work
Environment
Employee
Retention
Pearson
Correlation
1
Sig. (2-tailed)
N 90
Recruitment &
selection
Pearson
Correlation
.761 1
Sig. (2-tailed) .031
N 90 90
Training and
Development
Pearson
Correlation
.606 .578 1
Sig. (2-tailed) .021 .038
N 90 90 90
Salary and
Monetary benefits
Pearson
Correlation
.783 .607 .751 1
Sig. (2-tailed) .037 .023 .034
N 90 90 90 90
Work
Environment
Pearson
Correlation
.549 .398 .617 .454*
1
Sig. (2-tailed) .646 .041 .027 .016
N 90 90 90 90 90
* Correlation is significant at the 0.05 level (2-tailed).
Source: Compiled on Primary data

Here, four HRM practices were considered, namely Recruitment & Selection, Training &
Development, Salary & Monetary Benefits and Work Environment Practices. As a result,
HRM practices are positively correlated with employee retention and have found that
practices related to recruitment & selection (0.761) and salary & monetary benefits (0.783)
are strongly correlated. Training & development is related to 0.606. Whereas the working
environment value of correlation is 0.546, the working environment is moderately correlated.
The P-value of the practices is found to be less than 0.05, indicating the rejection of the Null
Hypothesis and acceptance of the Alternative Hypothesis i.e., a significant relationship exists
between HRM practices and Retention of employee in hotel industry.
7.3. Objective 2: To identify the factors of HRM practices impact on Employee
retention
This objective made an attempt to determine the effect of HRM practices on the retention of
employees working in a 5-star and 4-star hotels. Here, considering four parameters, each is
coded and combined and interlinked at the same time to create a hypothesized model. For this
purpose, first, the model estimated fitness index, followed by the model consistency, which
indicates that the model is significant. Finally, the hypothesized model (SEM model) was
framed to identify the estimated results of the model.
Table 2 Goodness of Fit test Results
Fit statistic
Recommended
Value
Obtained
Value
Chi square 284.25
Df 41
Chi square significance p < = 0.05 0.024
Goodness Fit Index >0.90 0.913
Adj. Goodness Fit Index >0.90 0.922
Normed Fit indexes >0.90 0.941
Relative Fit Index >0.90 0.921
Comparative Fit Index >0.90 0.931
Tucker Lewis Index >0.90 0.906
RMSEA <0.05 0.021
Further, Goodness of fit index indicates the fitness of hypothesized model. The result
indicates that GFI (“Goodness Fit Index”) is 0.913 and “Adjusted Goodness of fit Index” is
0.922 which are observed to be above the recommended level. “Normed fit Index” seems to
be greater than 0.90 and “Relative fit index” is 0.921. Goodness index like “Comparative Fit
index” (0.931) and “Tucker Lewis Index” (0.906) are observed to be above the cutoff level.
Root mean Square is 0.021 which implies the significance of the model. Hence goodness of
fit index concluded that the model is satisfactory. The study has framed the following
hypothesis to test with the statistical method of structural equation model.
H0: There is no Impact of HRM practice on retention of employees in Hotel Industry.
H1: There is an Impact of HRM practice on retention of employees in Hotel Industry.

Figure 1 Path Diagram
Table 3 HRM Practices Impact on Retention of Employees
Parameters Estimate S.E C.R Sig.
Recruitment & selection
Selection procedure is fair and equitable <-----
Recruitment &
selection 0.517 0.241 2.145228 0.007
Selection systems are highly scientific and
rigorous. <-----
Recruitment &
selection 0.289 0.143 2.020979 0.041
Selection based on the knowledge, abilities
and attitudes desired <-----
Recruitment &
selection 0.671 0.287 2.337979 ***
At recruitment and selection, adopt valid and
standardized tests. <-----
Recruitment &
selection 0.406 0.187 2.171123 0.032
Training and Development
Managers participate in the identification of
employee training needs <-----
Training and
Development 0.423 0.176 2.403409 0.024
The Faculty of Training process rich potential
from its operational fields <-----
Training and
Development 0.331 0.141 2.347518 0.019
After training, employees can experience
what they have learned <-----
Training and
Development 0.488 0.219 2.228311 0.02
Provides Performance based feedback and
advice to employees <-----
Training and
Development 0.573 0.248 2.310484 ***
Salary and Monetary benefits
The compensation in your organization is
based on the employee's competence or skills <-----
Salary and
Monetary
benefits 0.472 0.222 2.126126 0.026
Provides health protection schemes <-----
Salary and
Monetary
benefits 0.411 0.196 2.096939 0.032
Salaries and other benefits in your hotel are
similar to the market. <-----
Salary and
Monetary
benefits 0.606 0.271 2.236162 ***
As required by statutory requirements, your
organization provides benefits such as EPF,
ESI etc. <-----
Salary and
Monetary
benefits 0.664 0.266 2.496241 ***
Work Environment
Existence of Good working relationships <-----
Work
Environment 0.522 0.187 2.791444 0.018
Effective Communication with Manager. <----- Work 0.326 0.162 2.012346 0.031

Environment
Follows a bias free performance appraisal
system <-----
Work
Environment 0.481 0.214 2.247664 0.028
Offered adequate guidance related to their
employment issues <-----
Work
Environment 0.291 0.109 2.669725 0.035
HR Practices
Recruitment & selection <-----
Employee
Retention 0.709 0.317 2.236593 ***
Training and Development <-----
Employee
Retention 0.541 0.214 2.528037 0.014
Salary and Monetary benefits <-----
Employee
Retention 0.622 0.274 2.270073 ***
Work Environment <-----
Employee
Retention 0.456 0.198 2.30303 0.031
The table shows the factors of HRM practices affecting the retention of staff in the hotel
industry. The study used the Structural Equation model to determine the regression weight
with respect to HRM retention practices, following are the results of HRM practices.
7.4. Recruitment & Selection
"Recruitment & Selection is an important HRM operation designed to maximize employee
strength in order to meet the strategic objectives and objectives of the employees." Four
Recruitment & Selection Practices were considered in which "Selection based on the
knowledge, skills & attitudes desired" and "Selection procedure is fair and equitable" are
strongly influenced by employee retention, implying that the majority of employees in the
Star Hotel strongly agree that selection procedure is based on the knowledge, skills & attitude
of the employee and are fair and Equitable. The remaining practices are found to have a
significant impact but are moderately affected on employee retention rate.
7.5. Training and Development
The table shows that training and development practices have a significant impact on
employee retention. The study considered four practices related to training and development
in the hotel industry. Among the four practices, "Performance-based feedback & advice" and
"providing opportunities to experience what they learn" are two practices that have a
significant impact on employee retention, which means that the effectiveness of these
practices will help employees develop their ability to learn how to adapt to new work. There
are some practices under training & development that had a significant impact on employee
retention, namely "participation of the manager in identifying employee training needs" and
"providing a rich potential faculty training process from its operational field."
7.6. Salary and Monetary Benefits
Salary and monetary benefits play a predominant role in industrial HRM practices. Here, the
study considered four practices related to salary and monetary benefits provided by the star
hotel in Hyderabad District. "Maintaining salary, similar to the market" and "Providing
statutory benefits" are practices that are found to have a significant impact on employee
retention, implying efficiency in these practices will boost employee retention and the study
stated that employees are satisfied with the basic pay and statutory benefits provided to them.
Provide health claims schemes are other practices that have a significant effect on the
retention of employees.

7.7. Work Environment
"Good working relationship" and "free performance assessment system" are two work
environment practices that boost employee retention rate and the study stated that employees
are neither satisfied nor dissatisfied (neutral) with the working environment practices
provided by the star hotels. It also found that "Effective communication with managers" and
"Adequate guidance on their employment issues" are other key practices of Work
Environment that enhance the retention rate. Improved quality of work life leads to higher
levels of job satisfaction which in turn reduces the employee turnover rate associated with job
satisfaction. (Dr. K.S.Sekhara Rao, Ch. Sahyaja, P.Akhil and N.Lakshmi Narasimha, 2018).
Proper health, safety and welfare measures motivates the employee and minimizes employee
turnover.(Aishwarya Jaju, J.Susan & Ravikanth, 2018).
In addition, the study estimated that the four HRM practices Recruitment & Development
and Salary & Monetary Benefit have a significant impact on the retention rate. However, the
remaining two practices, namely training & development and the working environment, are
moderately affected. It concluded that any change to HRM practices would have a direct and
indirect effect on retention and attrition rates.
Therefore, null hypothesis has been rejected and the alternative hypothesis has been
accepted i.e., selected key four HR practices have a significant impact on the employee
retention in the Hotel industry. The following findings have been derived.
 The study found that recruitment and selection practices (0.761) and salary and
monetary benefits (0.783) were strongly correlated. Training & development is related
to 0.606, while the working environment is moderately correlated. It stated that star
hotels maintain an efficient relationship between HRM practices and retention rate of
employees which will be one of the reasons for reduction of the attrition rate in the
hotel industry.
 Majority of employees at Star Hotel strongly agree that the selection procedure is
based on the knowledge, skills and attitude of the employee and is fairly conducted so
that these practices have a significant impact on the retention rate.
 Performance-based feedback & advice and "providing opportunities to experience
what they learn" are practices that will encourage employees to develop their ability to
learn how to adapt to new work.
 Employees are satisfied with the basic pay and statutory benefits provided to hotel
industry and study synchronized that "Maintaining salary, similar to the market" and
"Providing statutory benefits" will boost employee retention.
 It is estimated that employees are neither satisfied nor dissatisfied (neutral) with the
working environment practices provided by these star hotels.
8. CONCLUSION OF THE STUDY
Owing to the uncertainty of the economic environment, hotel industry is witnessing
significant shifts in demand for the goods and services they deliver and are under pressure to
increase efficiency in order to meet operational goals and priorities. This has increased the
need for organizations not only to improve their way of delivering services, but also to review
their practices, organizational objectives, vision, performance goals, and performance actions.
In today's corporate climate, retention of employees is one of the most argued challenges, and
it can be important to recognize the causes for workforce attrition and to enforce the
appropriate strategies to maintain workers. The presence of a significant number of skilled
workers within the organization would be an essential source of competitive advantage for an
enterprise. The present study has focused on the employee retention in 5 and 4 star rated

hotels located in Hyderabad city. The considered four key Human resource management
practices measured the relationship with employee retention which revealed a significant
relation with all the selected four factors with employee retention. The structural equation
model has been applied to know the multiple independent variables (HR practices) on the
dependent variable (employee retention). The study result stated Recruitment and Selection
having a higher impact on the employee retention in Hotel industry. Hence, there is a need to
do further research in this area by focusing on the employer perception on the attrition of
employee in Hotel industry.
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