Compensation Strategies and Labour Turnover among Employees of 3-5 Star-Rated Hotels in Nairobi City County, Kenya
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Date
2024-03
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Kenyatta University
Abstract
Employee turnover is a key challenge in the hospitality Industry today. Compensation
plays an important role in determining employees’ job satisfaction. The study aims to
determine different types of compensations in practice in Hotels under study and
analysis the type which attracts retention of employees more. This study was guided
by five objectives: To assess the influence of the direct financial compensation
strategies on labour turnover intentions of employees in 3-5 star rated hotels in
Nairobi City County, Kenya; To evaluate the influence of the indirect compensation
(fridge benefits) strategies and Labour turnover intentions among employees in 3-5
star rated hotels in Nairobi city county, Kenya; To establish Non-Financial
Compensation strategies that influence Labour turnover intentions among employees
in 3-5 Star Rated Hotels in Nairobi City County, Kenya; To examine the influence of
the compensation practices on Labour turnover intentions among employees in 3-5
in star rated hotels in Nairobi City County, Kenya; To determine the moderating
effect of socio-demographic factors (Age, gender,Education,income) on the
relationship between compensation strategies and labour turnover intentions in 3-5
star rated hotels in Nairobi City county, Kenya. The study was guided by the
Herzberg’s two factor theory of motivation and Expectancy theory. Descriptive
research designs was used. A semi-structured closed ended questionnaire was used to
collect data. The target population comprised a total of 463 managerial and operative
staff. A stratified random sampling technique was used and a sample of 210
respondents selected and questionnaires administered. The Human Resource
Managers were purposively included in the sample and interviews were scheduled for
them as key informants. Data obtained was analysed using chi square contingency test
and odd ratio to evaluate the association of direct financial strategies, indirect
financial strategies, non- financial strategies and compensation strategies. Content
analysis technique was utilized to analyse qualitative data. The findings were; that
majority of employees in the 3-5 star rated hotels were between the age of 31- 40 and
had Diploma level of education. Although base pay and commissions were the most
popular compensation alternatives with a P<0.05, they were not significantly related
to employee turnover, whereas indirect and non-financial compensation were
significantly associated with employee turnover with 42.2% indicating that they
would likely leave. On hypothesis testing, the null hypothesis for objectives one to
three were reported as statistically significant with a P-Value less than 0.05. This
indicates that direct, indirect and non-financial compensation strategies influence
employee turnover (P<0.05). Notably, compensation practice does not influence
turnover (P>0.05). The study concludes that a mix of compensation strategies, salary
packages and improved working environments should be enhanced to reduce Labour
Turnover. The likelihood of exit is high in the 3-5 is high with a P<0.08 thus the
study recommends that the Hotels under study apart from base pay and commissions,
should also provide their employees with special employee retention packages such as
retirement benefits, insurance cover, medical allowance, travel, meal and recognition
allowances. In addition, periodic review of employee benefits based on the prevailing
market dynamics. The study recommended that a comprehensive compensation
package be provided to reduce labour turnover intensions.
Description
A Thesis Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirement for the Award of the Degree of Master of Science in Hospitality Management, in Kenyatta University, March 2024
Supervisor:
1. Rahab Mugambi
2.Vincent Maranga