International Journal of Contemporary Hospitality Management

Employee turnover: a study of private clubs in the USA

Catherine M. Gustafson

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Catherine M. Gustafson, (2002),"Employee turnover: a study of private clubs in the USA", International Journal of
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Employee turnover: a study of private clubs in the

USA

Catherine M. Gustafson
School of Hotel, Restaurant and Tourism Management, University of South Carolina,
Columbia, South Carolina, USA

Downloaded by Universiti Kebangsaan Malaysia At 18:07 14 November 2015 (PT)

Keywords

Staff turnover, Retention,

Hospitality

Abstract

High employee turnover in hourly

positions has been widely
accepted, and documented, in the
hospitality industry. This study
examined annual turnover rates in
private clubs and the reasons that
employees left their jobs, as
perceived by management.
Members of the Club Managers
Association of America were
randomly selected and surveyed.
The analysis compared turnover
and managers' perceptions of
reasons for turnover with:
manager's years of experience in
current position; years of
experience in the industry; club
type; club size; and whether or not
the manager had a hospitality
management degree. Concludes
that it is crucial for team
managers to develop a team
environment in the workplace to
increase club loyalty, ultimately
reducing employee turnover.
Highlights factors within a
manager's control which are
strongly limited to employee
turnover in private clubs.

International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113
# MCB UP Limited
[ISSN 0959-6119]
[DOI 10.1108/09596110210424385]

[ 106 ]

Introduction
The hospitality industry in the USA and
elsewhere is experiencing a labor shortage.
Changing demographics are affecting the
labor pool, and there are fewer people from
which to hire. Societal norms are also
changing, where loyalty to one employer is
no longer the status quo. Managers across
industries are faced with the increasing need
to retain current employees and position
their establishment to be more attractive to
potential applicants. Private clubs offer a
high level of service to their members,
creating the need for a large number of staff.
High industry turnover rates, increasing
costs, and the tight labor market make the
study of turnover in private clubs relevant to
educators and managers.
The hospitality industry's employment
base is the largest of any industry in the
private sector in the USA. It surpasses the
agriculture sector and the auto, electronics,
steel, and textile industries combined in
number of people employed (Riegel, 1995).
The hospitality industry worldwide employs
over 255 million people. Within the USA, the
hospitality industry employs over 13.9
million people, or 11 per cent of the working
population.
National unemployment continues to
remain low, with less then 4 per cent of the
working population unemployed in 2000 (US
Bureau of Labor Statistics). Many economists
suggest that anyone who wants a job already
has one. A true hiring challenge exists for all
businesses. Private clubs are no exception.
In the current study, the researcher
conducted interviews with leaders in the
private club industry. They consistently
identified human resources as a critical
component of operations (personal
communication: Perdue, 1998; Montgomery,
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0959-6119.htm

1998; Welch, 1998; Schulz, 1998; Spitzig, 1998;

McDeson, 1998). Managers and educators
alike referred to the shifting demographics
that were effectively shrinking the labor
pool, creating a gap in supply and demand of
appropriately skilled hourly hospitality
employees. This study was designed to
measure turnover rates, which provided a
definable, measurable, common factor that
could be calculated without bias, and applied
to all clubs being studied.

Background and literature review

Clubs

The private club segment of the hospitality

industry is characterized by the high degree
of service offered to its members. There are
over 12,000 clubs in the USA. Facilities
managed by Club Managers Association of
America (CMAA) members employ over
268,000 people, and serve over 2.03 million
members. In 1996, the average club belonging
to CMAA generated $3.5 million annually, for
a collective impact on the national economy
of $9.44 billion (CMAA, 1997a).
James B. Singerling, executive vice
president of CMAA, has stated that a critical
component of club service is the relationship
that develops between long-term employees
and members. The atmosphere in clubs is
based on familiarity and providing the
ultimate in member service.
Focusing specifically on the club industry,
Embody (1999, p. 6) states:

. . . a culture of service is incompatible with an

unstable internal operating environment . . .
The service paradigm views [employees] as
internal customers, whose needs must be met
in order to better serve the members.

Creating a service culture is critical to a

manager's success in private clubs. He or she
must be well trained in the characteristics of
a service culture, as well as methods for
development in the operation. In order to
better meet the educational needs of its
members, CMAA conducted a Delphi study in

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA

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International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

1992 to determine the competencies needed

by successful club managers.
The Delphi study surveyed practitioners in
the field and was later reviewed by educators
in the industry (Joe Perdue, personal
conversation, February 1999). These traits
and abilities were grouped into seven broad
areas of competency:
1 private clubs;
2 food and beverage operations;
3 management and marketing;
4 human and professional resources;
5 accounting and financial management;
6 external and government influences; and
7 building and facilities management.
A career hallmark for many club managers is
the attainment of the CMAA Certified Club
Manager (CCM) designation. This process
takes managers approximately six years to
complete the requirements, and then
culminates with a comprehensive
examination. One of the seven major areas of
competencies in the certification process is
devoted to ``human and professional
resources,'' which includes five learning
objectives related directly to turnover.
Turnover is repeatedly identified by
managers as being a critical human resource
issue.
A follow-up study was conducted in by
Perdue et al. (2000) to update the
competencies needed for the CMAA club
management certification program. Over 100
tasks and skills were rated to determine the
relative level of value each constituted to
being a successful club manager. There were
some notable differences with the 1992 study.
Financial management occupied three of the
top ten issues managers said were critical to
their job performance. The area of
housekeeping rated twelfth highest out of the
100 factors measured (Perdue et al., 2000).
Housekeeping has historically been a
position of high turnover.

Turnover

The term ``turnover'' is defined by Price

(1977, p. 15) as:

. . . the ratio of the number of organizational

members who have left during the period
being considered divided by the average
number of people in that organization during
the period.

Frequently, managers refer to turnover as

the entire process associated with filling a
vacancy:

Each time a position is vacated, either

voluntarily or involuntarily, a new employee
must be hired and trained. This replacement
cycle is known as turnover (Woods, 1995,
p. 345).

This term is also often utilized in efforts to

measure relationships of employees in an
organization as they leave, regardless of
reason.

Turnover research

Organizational stability has been shown to

have a high degree of correlation with low
turnover. Indications are that employees are
more likely to stay when there is a
predictable work environment (Zuber, 2001).
Likewise, the inverse of this relationship has
also been found to be true. In organizations
where there was a high level of inefficiency
there was also a high level of staff turnover
(Alexander et al., 1994).
There is a strong positive correlation
between increased levels of employee
training and decreased turnover. Much
training literature states that increased
training promotes a high degree of job
satisfaction, which in turn leads to retention
(Royalty, 1996). It is also logical that lower
turnover of staff was strongly correlated with
high customer returns and investor interest
(Loeb, 1996). All things being equal,
managers who train their staff enjoy lower
turnover.
Employees have a strong need to be
informed. Businesses with strong
communication systems enjoyed lower
turnover of staff (Labov, 1997). This concept
parallels the employee's desire for a stable
work environment, discussed above. In
addition, employees have been shown to
react favorably, and therefore stay longer, in
positions where they are involved in some
level of the decision-making process. Again,
this emphasizes that the employees need to
be knowledgeable about issues that affect
their working atmosphere (Magner et al.,
1996).
In contrast, there is a strong negative
correlation between turnover rates and
unemployment rates. As unemployment
decreases, employee turnover increases. This
is well documented, with several studies
tracking employment periods up to 31 years
(Price, 1977; Bureau of Labor Statistics, 1980;
Mobley, 1982).

Turnover research in the hospitality

industry

The industry's reported national annual

turnover rates range from 154 percent
(Fortino and Ninemeier, 1996), to 240 percent
(Woods and Macaulay, 1989). This compares
unfavorably with the 12 percent annual
turnover rates for all US businesses in 2000,
as reported by the US Bureau of Labor
Statistics.

[ 107 ]

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA

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International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

Burch (1999) conducted a gap analysis on

labor supply and demand in hospitality
establishments in Myrtle Beach, South
Carolina, just prior to the height of the
summer season. Employers were
consistently and drastically understaffed,
and in some cases had been able to employ
only less than half the number of people they
needed to run the business.
Woods and Macaulay (1989) conducted an
extensive study to try and determine the
reasons why hospitality employees most
frequently severed employment with the
organization. The eight reasons most
frequently cited were:
1 Quality of supervision.
2 Ineffective communication.
3 Working conditions.
4 Quality of co-workers.
5 Inappropriate ``fit'' with company culture.
6 Low pay and few benefits.
7 Lack of clear definition of responsibilities.
8 No direction on what to do (Woods, 1995,
p. 351).
Woods et al. (1998) conducted a study of
turnover and diversity in the lodging
industry, surveying almost 5,000 general
managers of hotel properties. These
researchers concluded that the five most
cited internal causes of turnover were:
1 rate of pay;
2 communication problems;
3 lack of advancement opportunities;
4 lack of recognition for a job well done; and
5 conflict with management.
The five most cited external causes of
turnover were:
1 better pay elsewhere;
2 increases of pay in other industries;
3 low unemployment;
4 a strong local or regional economy; and
5 low quality of employees overall (Woods et
al., 1998, p. 11).

The cost of turnover

Much debate exists regarding the most

appropriate way to measure the costs of
turnover. The most conservative estimates
measure only those costs directly associated
with filling the vacated position. In this
scenario, Kaak et al. (1998) studied almost 300
food service employees of a large US hotel
management organization, examining 14
properties, and estimated the turnover costs
per employee to be $267.39. Compared to
numerous other hospitality studies, this
figure is low. Hospitality studies that have
chosen to include other costs, such as lost
productivity, lost sales, and management's
time, estimate the turnover costs of an hourly
employee to be $3,000 to $10,000 each. The

[ 108 ]

National Restaurant Association estimates

turnover costs per restaurant employee to be
$5,000 (Woods, 1995).
According to CMAA, the average club
employs 90 people. Using the modest annual
turnover rate cited above of 154 percent, and
the Kaak et al. (1998) estimate of turnover
costs per employee ($267.39), each club could
spend approximately $37,000 per year on
labor replacement issues. This figure,
extrapolated to include all clubs represented
by CMAA, soars to $111,501,630 spent on
turnover annually in private clubs. The costs
of turnover are especially significant in the
hospitality industry, which
characteristically operates within a small
profit margin.

The current turnover study

The exorbitant turnover rates that exist in
the hospitality industry warrant that
additional research be conducted, prompting
this study. This study is significant because
numerous researchers believe there is a need
for further study, specifically on private
clubs (Longstreet and Jaffeson, 1997; Tracey
and Cardenas, 1996; Hassmiller and Perdue,
1994). Only a minimal amount of research has
been conducted on club specific issues
(Barrows, 1994), and to date a study of this
nature has not been conducted.

Methodology
The population for this study was the 1999
membership of the CMAA. This is the
professional association for private club
managers. It was formed in 1927 and
currently has over 5,000 members,
representing more than 3,000 clubs (CMAA,
1997b).
The sample of 500 managers was randomly
selected from the membership database of the
CMAA. Random selection was used to avoid
any bias in club size, type or location. The
randomization process occurred by using a
statistical software program on the CMAA
database. CMAA does not make demographic
delineations in its membership database,
therefore stratified samples were not an
option.
Sample size is critical in many respects.
The reliability of the results increases with
the increased sample size. Inversely, the
sampling error decreases as the sample size
increases. Research has also shown that
``confidence intervals narrow sharply when
very small sample sizes (n = 30) are
increased, up to about 100 respondents''
(Alreck and Settle, 1995, p. 62). A graph

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA

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International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

charting the 95 percent confidence interval

by sample size shows very little change in
confidence gained after the sample reaches
100 responses (Alreck and Settle, 1995).
The researcher determined a random
sample of 500 managers would be used for
this study. Applying the response rate
previously obtained from this professional
organization of 40 percent, this would yield
200 usable responses.
The research questions that were
addressed include:
1 What is the mean turnover rate in clubs?
2 What impact is seen by extraneous
variables that may affect turnover rates?
3 What impact is seen on the mean annual
turnover rate in private clubs when
segmented by the following variables:
.
club size;
.
club type;
.
manager's years of experience in
current position;
.
manager's years of experience in the
industry; and
.
manager's completion of a college
degree in hospitality management.

Design

Data pertinent to the research questions

were gathered through a self-administered
survey. Although the data were self-reported,
care was taken in the design of the
questionnaire to clearly define the
information being sought. The managers
were asked demographic information to
collect data regarding the size and type of
club, as well as information about themselves
and their education. They were also asked
specific questions to determine the annual
turnover rate for their club. Further
questions were asked to determine the
manager's perception for the turnover at his
or her club to assess the level of perceived
control for which the manager has
responsibility.
Several actions were taken to heighten
content and construct validity:
.
The instrument was reviewed by six
experts for content validity, relevancy,
and under-representation of this research
topic.
.
Closed response questions were used
throughout most of the survey.
.
There were no complicated cognitive
demands.
.
There were no controversial items that
would lead to answers of social
desirability instead of honest answers.
.
The instrument was constructed at a
reading level appropriate to respondents.
.
The researcher conducted the turnover
calculations, therefore the participant was

not asked to calculate any values,

resulting in additional time savings.
Strong reliability existed in each question
tested, as documented through pilot study
analysis.

Analysis
The turnover rate was determined by
dividing the number of people who have left
the clubs' employment in 1998 by the average
number of employees. To reduce the chance
of turnover calculation error by the
respondents, the researcher only asked for
the components of turnover on the survey.
The respondents gave the values needed for
computation but did not assess the turnover
rate itself.

Example
Total W-2's in 1998

average number

of employees=average number of
employees  100;
or:
250W-2's

75 average employees=

75 average employees  100;

or:
175=75  100 233 percent turnover:

Sample to population

A chi-square test was conducted on the club

type results of the survey as they compare to
the population. The test indicated the sample
was a strong representation of the
population.
The total sample of 500 managers
represents 13 percent of the population. The
total number of 300 respondents represents 8
percent of the population. The response rate
was 60 percent.

Results
Manager and club profile

Personal demographic information included

managers' current position, years of
employment in that position, number of
years in the private club industry, and their
highest level of education attained. For those
who earned a baccalaureate degree, they
were asked to identify whether or not it was a
hospitality management degree.
Club specific demographic data included:
the type of club; the approximate annual
gross revenue, including dues; and the total
number of members belonging to the club.

[ 109 ]

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA
International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

For frequency of response for type of

position, see Table I. For frequency of
response in level of education, see Table II.
For frequency of response club type, see
Table III.
Descriptive statistics were calculated for
each of the demographic variables. Nominal
or categorical data were obtained in several
questions:
.
current position;
.
type of club;
.
level of manager education; and
.
whether or not a hospitality degree was
sought.

228

78

48
17
293

16
6
100

Turnover was considered a result of:

.
compensation;
.
number of hours worked; and
.
Conflict with supervisor.

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Club size was measured in two ways: revenue

and number of members. Respondents were
asked the approximate size of their club as
measured by both factors. The mean annual
gross revenue reported was $4,442,072, with a
range of $500,000 to $31,000,000. The mean size

Table I
Frequency of response for type of position

General manager/COO
Assistant manager/club house
manager
Other
Total

Number
responding Percent

Table II
Frequency of response in level of education
Level of education
High school or equavalency
Two-year or Associates degree
Four-year or Baccalaureate
degree
Other
Total responding

Number
responding Percent
27
73

9.0
24.4

167
22
289

55.9
7.4
97.0

Table III
Frequency of response of club type
Type of club
Country club
City club
Yacht club
Other
Total
[ 110 ]

Turnover

Each respondent provided the researcher

with data for computation of the club's
turnover rate. This was done to increase the
accuracy of the calculations and reduce the
likelihood of underreporting the turnover
rate to heighten social desirability. The
results are within the industry's range of
turnover rates. The mean turnover rate of
the study was 75.16 percent, with a range of 0
to 600 percent.
Turnover was also analyzed in a
hierarchical regression to see what impact, if
any, could be attributed to five external
factors: club size; club type; manager's years
of employment in the position; years of
employment in the industry and whether or
not the manager held a four-year hospitality
management degree. No statistical
significance was found between the level of
turnover and the five outlined variables.
However, the study revealed nine factors that
were statistically significant in their
relationship to turnover.
Turnover was lower in clubs where:
.
managers fill in for hourly employees;
.
clubs hold social events for employees;
.
there is promotion from within;
.
there is flexibility in scheduling;
.
there is high club loyalty; and
.
there is little concern over labor shortage.

Ordinal data were obtained in other

demographic questions:
.
years in position;
.
years in industry;
.
annual gross revenue; and
.
size of membership.

Position category

of membership was 1,020, with a range of 200

to 10,000 people.

Number
responding Percent
232
37
16
7
292

79.9
12.4
5.4
2.3
100.0

Each of these is discussed further in the next

section.

Discussion and implications

There were five factors correlated to
turnover at the statistically significant level
of p = 0.01. First, the study found turnover
has a negative correlation to the frequency of
managers filling in for hourly workers. In
essence, turnover was lower in clubs where
managers frequently had to fill in for
employees. There are several possible
explanations for this relationship. By
managers working alongside the employees,
a sense of teamwork shared vision, and
common goals develops, which all lead to a
sense of belonging and heightened
communication. Another possibility is that
employees recognize they are needed, hence
valued, and therefore they would be less
likely to leave. It is also possible that the

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA

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International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

manager is operating in a crisis management

mode and has not had the opportunity to
hire, train, and discipline or fire employees
because he or she is too busy filling in for
workers. Literature on turnover in the
hospitality industry states that employees
desire organization and support (O'Brien,
1998) and a sense of workplace community
(Gillette, 1996).
The second significant relationship was a
negative correlation that was found between
turnover and the frequency of holding club
sponsored social events for employees. The
more often a club held sponsored social
functions for employees, the lower the club
turnover was likely to be. Once again
workplace community and managerial
support are likely reasons for a strong
relationship. If the employee feels rewarded
for his or her loyalty to the club, it will
increase. Conversely, research shows a
strong inverse correlation between turnover
and incentive pay structure. Social functions
are a form of incentive pay as they cost
money on behalf of the employer. Employees
need to feel recognized for their
accomplishments, hence social functions
were attributed to reduced employee
turnover (Losyk, 1995; Price, 1977; Woods et
al., 1998).
The third significant relationship was a
negative correlation between turnover and
promotions from within. Turnover was lower
in clubs that were more likely to promote
from within the hourly ranks to supervisory
positions. This is consistent with earlier
research. ``Lack of advancement
opportunities'' is linked to turnover in
numerous studies. Ultimately, an employee
is more likely to stay longer at a club if he or
she believes there is career potential (Woods
et al., 1998; Foley, 1997; Castagna, 1997; Klara,
1997).
The fourth significant relationship was a
strong positive correlation between turnover
and the rating of ``time of day or night
required to work'' as a reason for turnover.
The hospitality industry is rife with positions
which require working late nights, early
mornings, weekends, holidays, and split
shifts (working lunch shift, break, return for
dinner shift). Although these facts are known
on being hired, they can become more of a
quality of life deterrent than some employees
will tolerate. Managers must be willing to be
flexible in their employee scheduling, and
predictable to avoid surprises (Oliver, 1998;
Crandall et al., 1996). Allowing employees to
help in making decisions about their
schedules (Losyk, 1995) and communicating
likely schedules on hiring (Oliver, 1998) could
reduce this impact on turnover.

The fifth significant relationship was a

positive correlation between turnover and
``lack of loyalty to the club'' as a reason for
turnover. Those managers who rated ``lack of
loyalty to the club'' as a high reason for their
turnover were also likely to have a high
turnover rate. These managers possibly have
failed to establish a team environment, sense
of belonging, and desirable organizational
culture which may, in part, be causing their
employees to leave. As mentioned earlier,
employees thrive in an environment that is
predictable, communicative, participatory
and where the organizational culture meets
their personal needs (Losyk, 1995; O'Brien,
1998; Lavra, 1997; Price, 1977; Klara, 1997).
Lavra (1997) discusses mentoring as a
training method to develop expertise within
the club. She also links it to turnover by
stating that ``mentoring should lower
turnover itself by fostering a sense of loyalty
other training methods can't achieve''
(Lavra, 1997, p. 35).
There was a negative correlation at the
statistically significant level of p = 0.05
between turnover and the degree of
management concern over the labor
shortage: the less of a concern it was to a
manager, the higher the rating it was given.
The remaining three relationships all
indicated positive correlations at the
statistically significant level of p = 0.05. Each
relationship indicated that as turnover
increased, so did the likelihood of the
manager listing the reason for his or her
turnover to be: compensation; number of
hours worked; or conflict with supervisor.
Each of these three issues have been directly
linked with turnover in the literature. The
factor of compensation indicates people will
leave for higher compensation elsewhere
(Klara, 1997; Castagna, 1997; Crandall et al.,
1996). As stated earlier, the hospitality
industry demands long hours, often standing,
and usually at a poor time of day. It is not
unusual for employees to work 50-60 or more
hours per week in the high season. Perceived
excessive work hours has also been linked to
turnover in the literature (Klara, 1997; Price,
1977; Castagna, 1997; Crandall et al., 1996).
Conflict with a supervisor is frequently
cited in turnover literature as a major source
of terminations. These are both employee and
employer initiated terminations. Especially
in a low-skilled workforce, relations with
supervisors are critical to the day-to-day
ability to perform (Klara, 1997; Price, 1977;
O'Brien, 1998; Crandall et al., 1996).
Finally, the majority of the responding
managers (87 percent) considered the labor
shortage to be a ``critical daily concern'' or a
``major concern''. The mean turnover rate for

[ 111 ]

Catherine M. Gustafson
Employee turnover: a study of
private clubs in the USA
International Journal of
Contemporary Hospitality
Management
14/3 [2002] 106113

the entire sample was 75 percent. In theory,

this could indicate 75 percent of a club's staff
is changing each year.

Conclusion

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The turnover issue in hospitality is such a

profound issue it is affecting all managers.
Regardless of type of facility and credentials
of management, the turnover and labor
shortage is impacting the entire industry
and, based on this study, clubs are no
exception. Compensation and opportunities
for better pay accounted for the largest
contribution to turnover in the clubs in the
study. The hospitality industry typically
operates with 3-4 percent annual profit
margins and is not well positioned to pay
high wages.
According to this study, there are certain
factors that are well within the manager's
control, which are strongly linked to
employee turnover in private clubs.
Managers need to regularly work side by side
with employees. This action demonstrates
teamwork, enhances communication, and
allows employees to feel needed and valued.
Managers need to hold social events for
employees to reward them for their loyalty
and heighten workplace community.
Managers should promote from within the
operation when there is an opportunity to do
so. The possibility of career potential
encourages employees to stay. Managers
should be flexible in scheduling, working
with the employee on logistical factors.
Employees appreciate predictable schedules,
and a voice in the outcome.
Several results of this study indicate that
it is crucial for managers to develop a team
environment in the workplace to increase
club loyalty, ultimately reducing employee
turnover. The goal of clubs, to provide the
ultimate in member service, can be better
achieved by reducing employee turnover, as
long-term employees are more likely to know
the members' needs.

Notes

1 In an attempt to more closely explore the

variables that influence turnover, each
variable was measured, and a hierarchical
regression was conducted, with adjustments
for multicolinearity. The first stage of the
hierarchical regression consisted of entering
the five variables listed in research question 3:
club size, club type, manager's years of
experience in current position, manager's
years of experience in the industry, and
manager's completion of a college degree in
hospitality management.

[ 112 ]

2 Adjustments for multicolinearity were made

across the variables. The final stage consisted
of entering the interaction terms to determine
what relationships existed. To the extent that
individual control variables were found to be
significant, Tukey's post hoc study was
conducted to identify specific differences. Kirk
(1995) proclaims the Tukey-Kramer test to be
``preferred''. In further explanation he states,
``this procedure controls the Type I error at
less than alpha and has the highest power of
the procedures investigated'' (p. 146).
3 Managers were asked to rate on a Likert scale
the degree to which they thought the stated
reasons are responsible for the turnover in
their club.

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