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RIThink,

2016, Vol. 5 7

The Organizational Climate


and Employee Turnover
Intention in Dubrovnik
Hotels
Pavle KOMENIĆ1, Vanda BAZDAN2, Besim AGUŠAJ3

Rochester Institute of Technology, RIT Croatia, Don Frana Bulića 6, 20000 Dubrovnik
1Corresponding author e-mail pxk3756@mail.rit.edu
2Corresponding author e-mail vanda.bazdan@croatia.rit.edu
3Corresponding author e-mail besim.agusaj@croatia.rit.edu

Keywords: Organizational climate, turnover intention, leadership, employee satisfaction, hospitality industry.

The aim of this study was to find out the organizational climate (OC) in hotels in Dubrovnik and how
it correlates to employees’ intention to leave the organization. Surveys administered to front-liners
and employees in non-managerial job positions in three, four and five star hotels, measured different
elements of OC, in terms of performance of their organization and their perceived importance. The
results indicate that the organizational climate in these hotels is best described as rule-oriented. The
employees reported the highest level of satisfaction with ‘Role Clarity’ in their company, and were
least satisfied with ‘Career Development.’ While the participants also perceive ‘Role Clarity’ as the
most important factor for the organization, which suggests that management is adequately addressing
the expectations of employees, ‘Career Development’ is one of the factors rated as least important,
which is arguably troubling in the industry that struggles with employee retention. Results further
show that ‘Training and Job-Socialization’ is neglected in hotels, though high importance is allotted
to training by hotel personnel, making this the area in need of immediate improvement. The absence
of appropriate training could be seen as one of the factors influencing the difference in rating of
companies’ performance by permanent, seasonal and co-op workers, with latter providing lower
ratings for performance of companies regarding ‘Role Clarity’ and ‘Commitment and Morale.’

Introduction in the workplace; it is the way in which Goodstein, 1997). Organizational


employees perceive the organization climate is defined as a psychological
(Manning & Davidson, 2004). The initial state strongly influenced by conditions in
interest in organizational climate has the organization, like systems, structure,
Organizational Climate. Organizational been attributed to Kurt Lewin and his and managerial behavior. It may be
climate is a psychological environment field theory of motivation (Furham & further described as the shared

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perceptions of organizational members One must be able to reach the specific turnover is not only problematic because
who are exposed to the same goals in the specific time period in order of the productivity and the negative
organizational structure (Schneider, to satisfy the organizational standards impact it has on other employees, but
1990). Organizational climate is also and rules. Litwin and Stringer (1968) also because of the resources that are
defined as a perception of environment found that goal-oriented organizations wasted in the process of recruitment,
in the organization, how it is composed, and leaders encourage their employees selection and training. A typical
and its elements and dimensions. The to take personal responsibility for their organization spends $10,000 USD when
term organizational climate is derived specific job tasks and the results of managerial level turnover occurs, and
from organizational culture which is a these tasks. By doing so, employees set employees in lower positions such as
set of rules, values and beliefs that a high standards for themselves and for waiters or receptionists cost as much as
company has, and according to which the organization. $1,500 USD due to the training needed
the employees of the organization must in order for them to function according to
act (Asif, 2010; Cutler 2014). The culture Employee Turnover in Hospitality the companies’ rules and standards.
helps the employees by giving them Industry. Hospitality is one of the
guidelines on how to perform their job biggest industries in the world, it Organizational Climate and Job
correctly. The organization creates an employs large amounts of people and Satisfaction. Job satisfaction is a
atmosphere in which the employees contributes significantly to the feeling of satisfaction and dissatisfaction
work, and the way that they feel inside international gross domestic product in the workplace (Rahimic, 2013). It can
that atmosphere is considered to be the (Vasquez, 2013). Yet, it must be stated be defined as a positive attitude
organizational climate. Organizational that compared to other industries’ resulting in pleasure and passion about
climate is the way employees perceive employee turnover rates the highest the job or workplace. A study done in the
events, practices, and procedures, and occur in the hospitality industry (Tews, USA showed that out of most people,
learn about the kind of behaviors that Michel & Ellingson, 2013). In fact, the 80-85%, are satisfied with their job, at
are rewarded and respected. annual turnover rates for entry-level least on the primary level (Rothman,
employees in hotels and restaurants can 1997). This is true mostly because it is a
Categorization of Organizational easily exceed 50% (Hinkin & Tracey, part of human nature to rationalize
Climate. There are three basic types of 2000). things. Furthermore, every job has its
organizational climates: people-oriented, advantages and disadvantages, but it is
rule-oriented and goal-oriented Quality employees are the most essential to find the right balance
organizations (Manning & Davidson, important factor in the hospitality between the two. By rationalizing,
2004; McLaughlin, n.d.). According to industry (He, Lai, &Li 2011), as they people tend to eliminate the negatives
Hellriegel and Slocum (1974) the provide a critical competitive advantage by focusing on the positive aspects of
people-oriented organizational climate is to companies and can determine the the workplace. In other words, if the
the type of environment in which the difference between successful and feeling of satisfaction overwhelms the
satisfaction of the employee is the most unsuccessful companies. The company feeling of dissatisfaction, people will
important aspect, and where employees must make and maintain an overall find themselves satisfied with
experience favorable working organizational climate which will their job position, and vice versa. Job
conditions. In this climate category encourage workers to be more efficient satisfaction highly correlates with
leaders are working hard to satisfy their and achieve great results. Management rewards. There are two main types of
employees’ needs, such as fair is being pushed to make adjustments rewards, extrinsic and intrinsic rewards.
compensation, flexible working hours, and new plans to retain their employees Extrinsic rewards include conditions in
independence, involving them in the and lower their turnover rate. High the workplace and reward systems
decision making processes, etc. This turnover rate in a company can hurt their (Rothman, 1997). Extrinsic rewards are
kind of approach gives them a feeling of image and credibility, but this is also tangible rewards like salary, benefits,
belonging and builds their confidence problematic for the remaining security, and intangible rewards like
(Manning & Davidson, 2004). The rule- employees because it spreads negative working hours, schedule and the like.
oriented type of organizational climate is energy among them (Baneryee, 2014). There are also social benefits, and
based on tradition and a strong set of Another impact of employee turnover is relationships with co-workers that
rules that are valued and are not to be that turnover harms a company’s contribute as important factors of
changed. It is expected from the efficiency and can be costly (Joseph, extrinsic rewards. On the other hand,
employees to fit in and follow the 2013). High turnover rate has an effect intrinsic rewards are focused on job
procedures where rule-orientation refers on more than just the industry, it also content such as autonomy and self-
to a concern for adhering to rules and influences the local and global economy direction, challenges, decision-making
regulations. The existence of rigid rules since the hospitality industry, as we and the like. Dissatisfaction in the
and regulations are negatively related to mentioned earlier, is one of the biggest workplace is mostly connected with
innovation and are one of the employers, both locally and globally unrewarding job positions. Dissatisfying
characteristics related to big (Vazquez, 2013). Additionally, employee and psychologically unrewarding jobs
organizations (Nystrom, Ramamurthy & turnover impacts productivity, can lead to dissatisfaction in an
Wilson, 2002). This is a traditional, old effectiveness, and may alter a hotel’s employee’s personal life as well.
fashioned type of organizational climate cost structure and plan (Davidson,
and is not popular with the new 2010). Organizational climate and job
generation of employees (Manning & satisfaction are two different constructs
Davidson, 2004). The goal-oriented type Employee turnover is both expensive but they both influence employee
of climate sets an atmosphere in which it and troublesome as organizations are performance and the intention to leave
is expected from the employees to reach confronted with endless cycles of (Rahimic, 2013). It is very important to
the organizational goals. Goals can be recruitment, selection and training. have good communication, healthy
set on daily, weekly or monthly bases. According to Vazquez (2013), employee relationships and a well-functioning

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environment in order for the company to climate are. The OCQ measures 13 changes have been implemented into
operate properly. The same principles different dimensions of organizational the original questionnaire. The
apply for employees to reach the peak climate. The first dimension is ‘Role questionnaire was translated to Croatian
of their productivity and to have them Clarity,’ and it is connected with job and some the questions were
actively participating in the company’s description and job responsibilities. The eliminated, or modified in order to fit the
goals and objectives. Organizational second dimension is ‘Respect,’ and it is context when translated into the
climate is a motivation strategy. There based on respect between colleagues Croatian language. Since the original
are too ways to motivate your within a department and between questionnaire measures organizational
employees, by assuring them with fair departments. The third dimension is climate, and not specifically turnover
financial compensation and by providing ‘Communication,’ and it is connected intention, additional questions were
them with a workplace that is taking care with the level of communication between implemented, e.g. ‘I plan to work here in
of all their needs and therefore departments, and the ability to express the future’.
motivating them to perform better your thoughts and the like. The fourth
(Milman, 2002). dimension is ‘Reward System,’ which is The questionnaire is based on 46
connected with salary and benefits. The questions of which four questions are
Factors like flexible working hours, staff fifth dimension is ‘Career Development,’ about gender, hotel category,
training, team building, awards, etc., are and it is based on the ability to progress department, and type of working
important to make them happy. Satisfied inside the company. The sixth dimension relationship, used to detect potential
employees are key to success is ‘Planning and Decision Making,’ and it differences in ratings in hotels in
(Hamington, 2010), explained by the is based on coordination, planning and different hotel categories, different hotel
simple narrative that organizational autonomy. The seventh dimension is departments, and by those of different
climate influences employee job ‘Innovation,’ and it is based on following employment type and gender. The other
satisfaction, and is therefore crucial for trends in technology and finding new 42 questions are answered two times
the success of a company. It influences ways to do things. The eight dimension and are rated on the scale from 1-7. In
the employee’s psychological processes is ‘Relationships,’ and it is connected the first part participants needed to
of communication, problem solving, with flexibility of management to satisfy assess how much the statement applies
education, productivity and encourages the needs of their employees. The ninth in their case, i.e. performance of the
innovation which results in job dimension is ‘Teamwork and Support,’ company, where 1 means ‘strongly
satisfaction. Because of this, companies and it is connected with workload and disagree’ and 7 means ‘completely
are starting to realize the importance of quality of teamwork. The tenth agree’. In the second part they need to
understanding organizational climate. dimension is ‘Conflict Management’ and rate how much they believe the item is
it is based on problem solving and important for the organization, generally
Consequently, it is crucial that managers avoiding conflict. The eleventh speaking, if 1 stood for ‘completely
are familiar with their employees and dimension is ‘Commitment and Morale,’ unimportant’, and 7 for ‘essential’.
that they know what their needs and and it is based on the atmosphere or
feelings are (Lam, Zhang, & Baum, morale at the workplace. The twelfth The 42 questions are divided into
2001). It must be emphasized that in dimension is ‘Training and Learning,’ thirteen different categories which are
hospitality one of the critical aspects of and it is connected with amount, and based on the different aspects of the
corporate success is that companies are quality, of training that the organization workplace which are connected to the
satisfying their customers’ needs by offers to its employees. The final organizational climate. The participants
fulfilling the needs of their employees; dimension in this instrument is were not provided with the category
therefore, organizational climate plays ‘Direction,’ and it is connected with information. Category and item list is
an important role in shaping employee company’s plans for the future, and its available in the results section of this
satisfaction. path (Furham & Goodstein, 1997). paper (see Table 1, Table 4 and Table
5).
Measuring the Organizational
Climate. A large number of measures of This survey was administrated to the
organizational climate exist. There is a Methods employees of three, four, and five star
fifty-item questionnaire covering nine hotels in the Dubrovnik area.
dimensions by Litwin and Stringer This study examined the organizational Specifically, the research focused on the
(1968), House & Rizzo’s (1972) climate and turnover intention in three, front-liners and employees not in
Organization Description Questionnaire, four and five star hotels in Dubrovnik. management positions. From 120
the Survey of Organizations (Taylor & Specifically, this study sought to distributed surveys, 28 were not filled
Bowers, 1972), Business Organization determine the overall level of out properly, 16 were returned blank,
Climate Index (Payne & Phesey, 1971), organizational climate in Dubrovnik and 76 were analyzed. There were 28
and many others including the OCQ hotels, detect potential differences in (37%) participants working in five star
instrument that we used in our research. stances of employees in hotels with hotels, 25 (33%) in three star hotels,
Organizational Climate Questionnaire different star ratings, or different and 23 (30%) in four star hotels. There
(OCQ) has a goal to deliver all the departments and detect the effect of were 41 (54%) women and 35 (46%)
dimensions of climate (Furham & gender and type of employment in the men participating in the survey.
Goodstein, 1997). One of the important organizational climate assessment.
aspects that OCQ has to cover is that it Additionally, the relationship between
has to ‘travel well,’ meaning that it can turnover intention and specific aspects
be applied across the geographical of organizational climate was examined. Results
areas and across different cultures. It
also asks the respondents to state how The survey model is based on Furnham Organizational climate assessment
important each of the elements of and Goodstein’s (1997) organizational for items. For the purpose of assessing
climate questionnaire (OCQ). Some the general organizational climate of the

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sample, mean scores were calculated addressed immediately, i.e. those rated
for all of the items in the questionnaire. as low performance and of high
The items with the lowest ratings importance. Low performance recorded
reported in terms of organization for items ‘I think my boss is too tolerant
performance were regarded to of poor performances’, ‘I rarely have too
remaining in the company till retirement much to do over too little time’, ‘I can
(M=3.61, SD=2.17), rarely being work here till retirement’, ‘I can be part
overwhelmed with the amount of work in of decision making processes’, ‘There is
a short time frame (M=3.95, SD=1.80) an adequate system for career
and the assessment of whether development’, ‘Employees are
employees’ talents are fully utilized in adequately rewarded in the company’
their job position (M=3.99, SD=2.05). and ‘I am rarely put under undue work
Items with highest average ratings in pressure’, according to the matrix may
terms of performance were those be ignored as these were graded by
regarding role clarity, specifically, employees as being of low importance
respondents reported knowing their as well, hence changing these could not
responsibilities (M=5.82, SD=1.19), be expected to yield significant
having clear objectives and goals set for improvements. For the entire sample no
their job (M=5.66, SD=1.3), and knowing items were perceived as high in
exactly what is expected of them performance, yet low in importance for
(M=5.58, SD=.99). The items rated as the functioning of the organizations. This
least important for organizations were " suggests that there are no misguided
regarded to additional assignments and efforts in specific areas of organization.
work piling up (M=4.36, SD=1.78),
followed by the commitment of As for the items in the matrix that were
employees to remain with the company rated as high in performance and high in
(M=4.64, SD=1.90). The highest importance, these belong in the ‘Role
importance ratings regarded employees’ Clarity’ category, which suggests that in
awareness of what is expected from terms of role clarity generally speaking
them (M=6.53, SD=.70), followed by the the important issues are being
information needed to do one’s job addressed by hotels in the sample.
(M=6.49, SD=.90), and adequate
information sharing between Differences in assessment of items.
departments (M=6.46, SD=.76). Differences in assessment of items
regarding performance and importance
" were examined by the use of Kruskal-
Wallis test and Mann-Whitney test. Only
Results obtained in the described
significant differences are reported.
sample indicate that average scores for
agreement (personal report) of 5 or Hotel rating. Statistically significant
above can be considered high (third
differences between hotels of different
quartile), whereas scores of 4.3 and
star rating were discovered for three
bellow can be considered low (first items regarding performance.
quartile); and that average importance
scores of 6.3 and above can be
considered high, whereas importance
scores of 5.8 and bellow can be
considered low. With the high and low
scores determined, critical items were
entered into the matrix displayed bellow.

"

A post-hoc test (Dunn-Bonferroni post


hoc method applied for all Kruskal-
Wallis test) for assessment of
performance (PP) on the item ‘My job
has clear goals’ indicated that five star
hotels had significantly lower
performance ratings than three star
hotels, z = -2.40, p =.03. Follow-up tests
for performance rating on the item ‘I
have the ability to use all my talents in
" the workplace’ show significantly lower
ratings for four stars hotels in
Interestingly, the hotels in the sample comparison with five stars hotels, z =
have no items that would need to be -15.83, p =.03. Four stars also received

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a significantly lower rating than five stars Organizational climate assessment suggests that in terms of the
hotels on the item ‘Conflicts between for categories. Mean scores were also organizational climate there is one
departments are minimal’, z =-14.46, p calculated for all of the categories of pressing issue for organizations to
=.05. items regarding organizational climate. address (low performance-high
Role clarity (M=6.44, SD=.67) and importance category), and it regards
Type of employment. Results of Communications (M=6.33, SD=.68) adequate training of employees. The
Kruskal-Wallis test determining whether were rated as most important for results are further troubling as they
there were differences in performance organizations, while, interestingly suggest that Career Development and
assessment by permanent employees, Teamwork and Support (M=5.22, SD=. Teamwork and Support are rightfully
seasonal or co-op workers indicated 78) received lowest ratings, followed by less attended to. The importance of Role
significant difference in ratings for five Career Development (M=5.51, SD=.76). Clarity and Communication and high
items: ‘My job has clear levels of performance for these
goals’ (χ2(2)=10.57, p=.01), ‘My categories, on the other hand, are to be
company has adequate future celebrated.
plans’ (χ2(2)=6.41, p=.04), ‘My
company satisfies the needs of
employees’ (χ2(2)=8.22, p=.02), ‘Morale
is high in most
departments’ (χ2(2)=8.13, p=.02), ‘My
personal morale is high’ (χ2(2)=7.18, p=.
03).

Post hoc tests show that the differences "


are accounted for by permanent
Differences in assessment of
employees’ higher level of agreement
with specific items. Permanently categories. Differences in assessment
of items regarding performance and
employed rank the clarity of their role
importance were examined by the use
higher that those whose employment is
co-op related (z = 20.17, p =.03), or of Kruskal-Wallis test and Mann-Whitney
test. The only significant differences
those employed solely for the tourist
detected were for the type of
season (z = 14.06, p =.02). Permanent
" employment factor. The differences
employees also rank adequacy of their
were detected in the rating of
companies’ future plans higher than
In terms of performance, hotels in the performance regarding Commitment and
seasonally employed (z = 12.82, p =.
sample received highest ratings for Role Morale (χ2(2)=7.78, p=.02), with
05), report higher level of agreement
with morale being high across the Clarity (M=5.68, SD=1.03), and Respect permanent employees rating the
(M=5.39, SD=1.06) and lowest ratings in performance of organizations higher
organization than those seasonally
Career Development (M=3.39, SD=1.6), than the seasonal workers (z = 14.47, p
employed (z = 13.82, p =.03), and the
same contrast was determined between and Teamwork and Support (M=4.30, =.02), and in the ratings of importance of
SD=1.08). Communication category in
these two groups with respect to
organizations (χ2(2)=7.78, p=.02), which
personal morale (z = 13.79, p =.03).
was again rated as being of higher
In terms of role clarity, it needs to be importance by the permanent
employees than by the seasonal
noted that a significant difference was
workers (z = 14.47, p =.02).
also detected with respect to importance
ratings (χ2(2)=8.79, p=.01), with
Relationship between turnover
permanent employees ranking the
intention and assessment of
importance of role clarity in
performance. The variable ‘I plan to
organizations higher than those
work here in the future (personal
seasonally employed (z = 12.78, p =.
perspective)’, positively correlates with
03).The difference in evaluation of
all performance variables. Interestingly,
importance of knowing all important
information about the company very strong positive relationship was
detected with the Innovation variable, rs
(χ2(2)=6.12, p=.05), is also detected as
(74) = .83, p ˂.01; and weak relationship
the difference between the higher
rankings provided by permanent was detected with the Reward System
variable, rs (74) = .31, p ˂.01
employees as opposed to their
seasonal-employment counterparts (z =
12.43, p =.04). The only remaining
difference detected in importance
ratings was for the item about the
importance of mutual respect between
people from different departments
(χ2(2)=7.49, p=.02), which was also
rated higher by permanent employees "
than by seasonal workers (z = 12.24, p
=.05). Organizational climate matrix created for
item categories (first/third quartile)

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cooperative education program. lesser grades allotted to career


Although those with permanent job development importance by all types of
positions also value role clarity more, i.e. employees.
rate it as being of higher importance for
the organization, the discrepancy in their Low scores on career development
stances about the organizational role items inquiring whether the current job is
clarity and the stances of co-op and making full use of one’s talents or on the
seasonal workers might be the source of items regarding innovation, specifically,
lower commitment and morale reported being encouraged to innovate, again
by the latter, as well as a source of their speak in favor of the assessment of the
lack of belief in the bright future of their organizational climate within these
company. hotels as rule-oriented, as the emphasis
that seems to be placed on clarity of
Furthermore, the noted high ratings of expectations from workers seems not to
performance regarding role clarity seem be accompanied with an invitation for
to suggest a rule-oriented climate in the employees to make use of their talents
examined hotels (and a rule-oriented and exceed in terms of innovative
culture in terms of importance scores). approaches to the work that needs to be
Namely, high scores for communication carried out. Similar weak relationship
practices and role clarity are was detected with the Reward System
accompanied by lower scores for variable too. Though role clarity is a
relationships, innovation and direction recipe for efficiency in organizations
(goal-orientation) in performances of these lesser ratings on noted items
" their organizations. A troubling aspect of indicate that the hotels are not making
the functioning of these hotels, indicated full use of the talent pool of their
by the lowest scores received for workforce, although, it needs to be
performance, is that career noted, five star hotels seem to be doing
Discussion development, teamwork and support a better job in terms of talent utilization
and training and on-the-job learning are than their four star counterparts.
In this study we examined the at the bottom of the list. Namely, it Furthermore, as the added retention
organizational climate of three, four and seems that hotels sampled do not invest item ‘I plan to work here in the future’
five star hotels in Dubrovnik, specifically enough resources (or are perceived as very strongly correlates to scores on
among front-liners and non-managerial such) into developing their workforce, innovation-related items in terms of
employees, controlling for the effect of allowing the personnel to develop and performance, it would seem that the
gender, hotel star rating, type of advance, or in creation of a teamwork- hotels would additionally profit, in terms
employment and department on the friendly environment in which one can of the potential to retain experienced
organizational climate assessment, and find support in work assignment personnel, if the value of innovation was
noting the relationship between different completion. Interestingly, as portrayed in more emphasized in terms of
elements of organizational climate and the organizational climate matrix, the companies’ culture and encouraged in
employee turnover. workers do not even perceive teamwork performance of individuals.
and support and career development as
The results indicate that management in important elements in the functioning of In short, although training and on-the-
Dubrovnik hotels is sensitive to the organizations. This seems to suggest job socialization seems to be the area in
importance allotted to role clarity by the that even if these companies started which the hotels examined should
personnel, and provides adequate paying more attention to career immediately mirror the importance of
information about the expectations development and teamwork and these practices recognized by their
associated with specific role positions. It support, such efforts might wind up employees in the performance of
needs to be noted that the high level of being futile efforts if the organizational organization, there seems to be room for
performance ratings associated with role climate regarding these items, i.e. the improvement in making their workplaces
clarity are associated with the items that value ascribed to them by employees, is more employee-friendly, and appealing
determine the level of personal not addressed first. In fewer words, the for those seeking long-term employment
awareness of the requirements and employees might experience teamwork and the opportunity to advance. This, it
expectations of one’s own job position. or career development programs as a seems, requires a shift in organizational
Employees are adequately informed burden, if not convinced and informed culture, and an effort in allowing the
about the job requirements, and about the values these have on both personnel to see and experience the
furthermore, provided with all the individual and organizational level. benefits of such a shift away from
pertinent information for the company to structured and appropriately
operate smoothly, as indicated by the The most pressing issue the examined communicated job expectations toward
high performance ratings for hotels need to address concerns an environment more welcoming to
communications. Yet, performance of training and learning opportunities for initiative taking and innovation.
the organizations in the sample in terms their employees. A potential source of
of role clarity receives higher grades by the reported lower morale and lesser Due to the scope of this research, the
those who are permanently employed, role clarity by those not in a permanent results cannot be generalized and
and this suggests that the permanent job positions, as they might not be at the observed as a measure of overall
employees in this respect are better receiving end of appropriate job organizational climate in hotels in
informed than their seasonal socialization, the absence of such Croatia or Dubrovnik region. Further
counterparts or those employed through trainings might equally be a source of research to be conducted is to include a

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larger and a more representative sample intention to quit item can’t be used as a the assumption was that part-time
and should include the managerial staff conventional ‘intention to quit’ employees may wish to come back to
as well. Additionally, both full time and dimension; namely, as soon as an work in the future and therefore were
part-time employees were included in employment contract expires these kept in the sample throughout the
the survey even though the question employees are freed of their duties and analysis.

remains whether this is appropriate hence can’t truly consider the question
since with part-time employees the whether they want to stay or quit. Yet

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