MANAGEMENT

Organizational Commitment in Lodging Industry

Organizational Commitment in Lodging Industry

Introduction to the Problem

The lodging industry comprising mainly of hotels, is important in job creation and market share as it provided 1.9 million jobs in 2008. Hotel organizations value commitment among their employees because studies have shown that employees with strong organizational commitment (OC) find their job more meaningful and are more determined to work well in difficult situations. However, under certain circumstances such as a national crisis, levels of organizational commitment may change. The Australian national crisis in the form of a recession had an enormous impact on the fortunes of the Australian lodging industry and subsequently its employees. Hotel managers reduced operating expenses at their properties by an average of 11.8%. A number of these changes required reorganising which had a direct impact on employees in the form of layoffs, increase in workload and reduction in benefits. Consequently, employees begin to re-evaluate their organizational commitment. How do practitioners manage organizational commitment during adverse events such an economic downturn brought on by the recession to benefit both the organization and employees?

For example, due to the reduction in travel caused by the economic downturn brought on by the recession, the lodging industry suffered an aggregate decline of 37.8 % of profits which lasted from 2007 till 2009 (Angle & Perry, 1981, 1-14).

Furthermore, it suffered through the all-time worst year of performance in 2009 with over 90% of hotels loosing profits in 2009. The economic downturn and its effect on lodging industry revenue have driven practitioners to continue to implement competitive cost reduction strategies to remain solvent. Such strategies include reduction in job openings, recruitments and hires as employers reduce their hiring plans in response to weak demands. Furthermore, since labour costs were the greatest single expense item for most hotel departments, a blend of downsizing, employee layoffs, reduction in working hours, and salary or wage cuts caused a loss of 10.4 % in aggregate labour costs between 2008 and 2009. Thus, downsizing and threats to job security is prevalent in hotel industry due to the recessed economy. Although practitioners often undertake staff reduction practices with the aim of reducing cost, and increasing financial benefits, there are also negative costs associated with this practice. Such staff reduction and the subsequent job stress and job insecurity can cause a reduction in organizational (American Hotel and Lodging Association., 2001).

Probst et al. (2007) and Pfau and Kay (2002) agreed that although organizations might enjoy the financial benefits of downsizing, job insecurity conditions caused by downsizing provide only temporary positive results. Thus, this researcher sought to understand how practitioners can manage OC during an organizational climate clouded by the negative effects of changes such as, staff reduction and where offering job security to employees might not be practical. Researchers have theorized that low levels of organisational commitment will lead to inclination among employees to search for another job with intentions of leaving resulting in strong predictor in the turnover ...