CASUAL EMPLOYMENT AND COMMITMENT: A CASE STUDY IN THE HOSPITALITY INDUSTRY

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1 CASUAL EMPLOYMENT AND COMMITMENT: A CASE STUDY IN THE HOSPITALITY INDUSTRY Michele Day, Jeremy Buultjens Southern Cross University [email protected] ABSTRACT Casual employment in Australia has been increasing rapidly since the 1980s, especially in service industries like hospitality. It has been argued that there are many benefits arising from casualisation for both employers and employees. However, Australian hospitality industries experience relatively high levels of turnover that contribute substantially to business costs. An important contributing factor to the high level of turnover may be the lower level of organisational commitment among casual staff. This paper uses data from a study of a five-star hotel in south east Queensland to examine the level of casualisation, the levels of satisfaction among employees with their employment status and the extent of organisational commitment among casual and permanent employees. The findings indicate that the Case Study Hotel had a lower level of casualisation than the industry as a whole. The findings also indicate that casual employees are substantially less satisfied with their employment than permanent staff and also have lower commitment to the organisation. The case study used multiple methods of data collection, including a questionnaire based on Allen and Meyer s (1990) three dimensional Organisational Commitment Scale and interviews with managers and casual and permanent employees. The findings from this study suggest that lower levels of organisational commitment of casual employees is contributing to the on-going problems of high turnover in the hospitality sector and that issues associated with high turnover will persist if this type of employment continues to exist at its relatively high level. 1 INTRODUCTION Casual employment in Australia has been increasing rapidly since the 1980s, especially in service industries like hospitality. Employers in Australia have been enthusiastic about casual labour because it can suit a wide variety of circumstances. In 2004, casual employment was about 27 per cent across all industries (ABS August 2004). The increase in casual employment has been viewed as a pragmatic response by employers to attain flexibility and lower costs. The hospitality industry has utilised high levels of casual employment, in part to deal with the seasonal variability of demand in the sector. Despite the perceived benefits of casual employment it is possible that lower organisational commitment and higher labour turnover may be undesirable consequences of this type of employment. Labour turnover in the hotel industry is generally considered to be high, compared with other industries. Turnover rates in Australian hotels vary from 20 per cent in CBD hotels to over 300 per cent in remote resort hotels (Deery, 2002). The Australian Workplace Industrial Relations Survey (AWIRS) in 1995 found that the Accommodation, Cafes and Restaurants industry sector had the highest level of industry turnover of 35 per cent compared with an all industry average of 19 per cent (De Cieri & Kramar, 2003: 537-8).

2 For many hospitality organisations, high turnover rates are routinely accepted (Cannon, 2002: 157), and this acceptance has been described as turnover culture (Deery & Shaw, 1999). Hinkin and Tracey (2000) note that not only can high turnover rates affect service quality and damage employee morale, but also affect hotels profits. The direct costs of high levels of turnover have been recognised as increased recruitment, selection and training costs, as well as lost productivity (Simons & Hinkin, 2001: 66 & 68). In her study on turnover in hotels, Deery (2002: 60) found that strategies that have been used in hotels to maintain and develop good staff relations include providing greater opportunity for promotion, treating employees fairly and providing greater security of employment. Deery suggested the promotion of organisational commitment as one strategy that could be used to reduce staff turnover in hotels (2002). This paper uses data from a study of a five-star hotel in south east Queensland to examine the level of casualisation, the levels of satisfaction among employees with their employment status and the extent of organisational commitment among casual and permanent employees. The paper begins by providing a brief overview of casual employment particularly in the hospitality industry. This is followed by a discussion on organisational commitment. The study details and methodology are examined next followed by an overview of the results and a conclusion. 2 DISCUSSION 2.1 CASUAL EMPLOYMENT Casual employment can be defined in terms of its lack of the entitlements usually associated with permanent employment. For example, from , the ABS defined casual employees in their main job as employees who were entitled to neither holiday nor sick leave. However, the increasing recognition that many casual employees were in fact often employed on an ongoing basis has meant that casuals now have limited rights to some of the entitlements traditionally reserved for permanent employees, such as superannuation and parental leave. In addition to fewer entitlements, casual employees often suffer considerable confusion about their rights and responsibilities. For example, in his study of casual employment in the retail industry, Carter found that casuals were often confused about the precise terms of their contracts of employment, their work entitlements and their obligations (cited in Romeyn, 1992: 60 61). Explanations given for this confusion was that a large proportion of casuals are young, inexperienced in employment procedures and that they are employees for whom casual employment is often the only option (Romeyn, 1992: 81). Other problems associated with casual employment include the fact that casual jobs are often low and semi-skilled and concentrated in particular industries including hospitality; many of the new casual jobs are of poor quality and often involve irregular hours (Steketee & O Keefe, 2003). Disadvantages associated with casual employment include: insecurity of employment (Allan et al., 2001: 254); lower average earnings than equivalent permanent workers (Campbell, 1996: 574); unpredictability of income (Pocock et al., 2004), reduced access to adequate training and career advancement opportunities (Buultjens, 2001: 476); and lower organisational commitment (e.g. Dessler et al., 2004: 199). Lower levels of organisational commitment amongst casual employees may arise because of the precarious nature of their employment (Campbell, 1996). According to Caudron, (cited in Dessler et al., 2004: 198) people have a psychological reference point to their place of employment. Once you put them in the temporary category, you re saying they re expendable and therefore they are less likely to exhibit loyalty and commitment to their organisations.

3 2.2 CASUAL EMPLOYMENT IN THE HOSPITALITY INDUSTRY The hospitality industry has been one of the fastest growing employers of casual labour (Morehead et al., 1997: 604) with 58.6 per cent of workers in the ABS industry classification Accommodation, cafes, and restaurants employed as casuals (ABS 2004 Catalogue No ). The characteristics of the hospitality sector predominantly female and young part-time workers - are also the characteristics associated with casual employees (Barnes & Fields, 2000; Whitehouse et al., 1997). A recurring theme in the literature relating to casual employees in the hospitality industry is the possible reduction of organisational commitment on the part of casual employees. Studies in the NSW registered club industry by Lowry (1998) and Buultjens (2001) both revealed a possible reduction of commitment of casual employees. One of the disadvantages of employing casual workers identified by managers of NSW registered clubs, was lack of commitment and reliability (Buultjens, 2001: 473). Lowry et al., (2002: 63) found that whether or not a casual preferred full-time permanent employment and their level of satisfaction with management practices influenced levels of casual employee commitment. Furthermore, Walsh and Deery (1999) carried out a study of the characteristics, attitudes and perceptions of non-standard employees (including casual employees) across three service sector industries, including two sites of a 5 star hotel chain. These non-standard hotel employees had lower levels of job satisfaction and were less organisationally committed than non-standard employees in the other service sector industries surveyed in the study; retail and banking. The unsociability of the working hours and lack of attention by management to individual work preferences were found to be the main sources of non-standard employee dissatisfaction. 2.3 ORGANISATIONAL COMMITMENT Allen and Meyer (1996: 252) define organisational commitment as a psychological link between the employee and his or her organisation that makes it less likely that the employee will voluntarily leave the organisation. The links are determined by many factors. Allen and Meyer (1990) have conceptualised commitment as a three dimensional construct containing both attitudinal and behavioural components. The three dimensions are: Affective commitment - refers to feelings of belonging and a sense of attachment to an organisation. Continuance commitment - relates to perceived costs of leaving an organisation and perceived lack of alternatives. Normative commitment - relates to an employee s attachment to an organisation by some (internalised) values, creating the feeling of obligation to remain with the organisation. Organisational commitment has benefits for employers and employees (Mowday, 1998). For employees, commitment to work and an organisation represents a positive relationship that could potentially add meaning to life, whereas, for employers, having committed employees has the potential for increased performance and reduced turnover and absenteeism. Organisational commitment has also been linked, tentatively, to an organisation s efficiency, productivity, creativity and innovation (Hom & Griffeth, 1995 cited in Mir, Mir & Mosca, 2002:189) as well as its profitability (Raab & McCain, 2002). One of the few strong links in the literature is that between employee commitment to an organisation and staff turnover. As Allen and Meyer explain, employees who are strongly committed are those who are least likely to leave the organization (1990: 1). Turnover intention is consistently related to Affective and, to a lesser extent, Normative Commitment. Correlations between Continuance Commitment and turnover intentions are less consistent across studies. Similar results have been found in studies measuring

4 actual turnover, where turnover was significantly related to Affective and Normative Commitment but not Continuance Commitment (Allen & Meyer, 1996: 264-6). There have been a number of approaches developed to measure organisational commitment. However, from the review of the literature, it is apparent that the Organisational Commitment Scale (OCS) developed by Allen and Meyer (1990) has wide acceptance as an appropriate measure. It was chosen as an appropriate measure for this study. The OCS measures the three separate concepts of Affective, Continuance and Normative Commitment (Meyer & Allen, 1984; Allen & Meyer, 1990; Meyer & Allen, 1991). The OCS has been used in a wide variety of samples and settings and has been critically reviewed, both empirically and conceptually, by a number of researchers (Allen & Meyer, 1996: 271). 2.4 ORGANISATIONAL COMMITMENT & CASUAL EMPLOYMENT Although the literature consistently predicts lower levels of commitment of casual employees, there are surprisingly few studies where this is tested empirically. There have been British, US and Australian studies relating to the commitment of casual and temporary workers and many of these have suggested ways of improving the commitment of these workers, rather than considering whether lower commitment is, in fact, present. In one of the few studies comparing levels of organisational commitment of permanent and non-permanent staff (using Meyer and Allen s (1990) OCS), McDonald and Makin (2000: 88) unexpectedly found that non-permanent service staff in a large British hospitality organisation had significantly lower levels of Continuance Commitment, but higher levels of Affective and Normative Commitment. In a United States study, McClurg (1999) investigated whether patterns of organisational commitment found in traditional work settings also applied in the temporary-help service sector. She suggested that providing support to temporary workers in non-monetary forms is a low cost means for organisations to increase employee commitment. McClurg also noted that temporary workers should not be regarded as a homogenous group, as there may be different reasons for doing this type of work in the first place, and that these reasons may also affect their commitment, but she did not test this in her study. In Australian studies, investigations have been made as to the types of management practices which might enhance casual employee commitment. Lowry et al. (2002) found that casual employees experience varying levels of commitment and satisfaction according to their perceptions of work context factors such as training, promotion, work scheduling, management practices and social integration. Savery and Syme (1996: 20) suggested, in relation to their study of Western Australian pharmacists employed by public teaching hospitals, that satisfaction with employment security would have less of an impact on organisational commitment than satisfaction with quality of working life. Guest and Conway (2000, cited in Storey & Quintas, 2001: 361) found that, in the context of fostering commitment and innovation among employees, what was important was the clarity of the employment contract, rather than whether or not that contract provided a degree of permanency and security for the employee. They found that, in some circumstances, where the employment contract was specific as to what was required, short-term contract workers performed rather better than permanent employees whose psychological contract included more diffuse expectations such as corporate citizenship. 2.5 METHODS This study involved a single case study at a large five-star hotel in south east Queensland. Multiple methods of data collection were used (questionnaires, interviews and examination of secondary data), recommended by Yin (1994: 13-14) as a means of ensuring high internal validity, and methods recognised by Eisenhardt (1999: 138) and de Vaus (2001: 10) as typically used in case studies.

5 The study also involved the collection of data from a number of different perspectives within the case. One hundred and eighty-eight questionnaires were completed by both permanent and casual hotel employees at operational level, and interviews were conducted with one senior and two middle managers and eight operational employees. Interviews were also conducted with union representatives. Thus, an attempt was made to obtain a full picture of the complexity of the case by examining its constituent elements (de Vaus, 2001: 220). This multi-level approach also adds to the richness of the data collected and provides a cross-check on the validity of the data. Although there are disadvantages in doing a single case study as opposed to multiplecase studies as there is no opportunity for replication, the single study is useful in confirming, extending or challenging theory (Yin, 1994: 38). In this study, the single Case Study Hotel demonstrates most of the key employment characteristics present in the luxury hotel sector. Initial contact with the Case Study Hotel was made with senior management by telephone where the purpose of the research was outlined and processes for data collection discussed. A copy of the proposed questionnaire and interview questions were made available. Questionnaires were completed and interviews conducted between August 2003 and April Questionnaires were provided to departmental managers who asked employees to complete them at the start of their shifts. A researcher also spent two days in the staff dining area, where employees completed questionnaires in their breaks. Part 1 of the questionnaire related to details of employment. Part 2 set out the 24 items of Allen and Meyer s (1990) OCS together with 8 items from the Mowday et al. (1979) Organisational Commitment Questionnaire (OCQ), which were included following analysis of pre-test data. Part 3 asked respondents to provide demographic information. The interviews were conducted in order to obtain richer data so as to explain or add meaning to the questionnaire data. Each interview was conducted at the hotel, with interviews with managers taking approximately 45 minutes and interviews with operational employees approximately 15 minutes. 2.6 RESULTS The Case Study Hotel did not wish to be identified so it is not possible to give a precise description as this would render it instantly recognisable. The Hotel was large, with over 300 guest rooms and over four food and beverage outlets. It has been established for over fifteen years and had a change of ownership in The Hotel has a large workforce with in excess of 500 employees. Key workforce statistics (in percentages) are summarised in Table 1. Table 1: Key Workforce Statistics at the Case Study Hotel Employment Type Length of Service Gender (% within each category) Salaried* Casual 15.8% 31.3% 0 5 years 5-10 years 60% 20% Casual Male Female 50% 50% Part-time Full-time 18.6% 34.3% years 15+ years 9% 11% Part-time Male Female 40% 60% Full-time Male Female 61% 39% Source: HR Department, Case Study Hotel, September, 2003 *Salaried employees are those at executive level within the Hotel

6 The Case Study Hotel employs 31.3 per cent of its staff as casuals. This figure is below the industry average of 58.6 per cent, however the industry classification used by the ABS includes cafes and restaurants, which are likely to have higher rates of casual employment than luxury hotels. A comparison with the luxury hotel industry is also difficult, as the figure of 54.7 per cent calculated from the Australian Workplace Industrial Relations Survey of 1995, includes agency, contractors and outworkers as well as casuals (Knox, 2002). In discussions with managers from other luxury hotels in the south east Queensland region it appears that about 30 per cent is the norm, so that the case study hotel, at 31.3 per cent, has a typical rate of casual employment for its type of organisation in the region. While the rate of casualisation appears to be the norm, there appears to be very low staff turnover. There is an estimated annual turnover of approximately 3 per cent. Not surprisingly, turnover is highest among casual employees. Despite the higher turnover amongst casual employees, Senior Management asserts that there is a great deal of effort made to try and retain casual employees, even in periods of lower labour demands at the hotel. Of the 188 operational employee respondents to the questionnaire, approximately 40 per cent were casual. This represents a slightly higher proportion of casual employees than in the Hotel overall (31.3 per cent). There was a slight under representation of casual females in the study (45.9) compared to overall employment in the Hotel (50 per cent). Over 50 per cent of casual employees who responded to the survey indicated that they were only in casual employment because they could not find permanent work, indicating a preference for permanent work. In order to determine satisfaction with employment, employees were asked whether they were satisfied with their type of employment and, if satisfied, their level of satisfaction. Overall, 75 per cent of respondents stated they were satisfied with their employment and of these, approximately 45 per cent stated they very satisfied. Cross-tabulations were performed to determine satisfaction and level of satisfaction with respondents type of employment. It is very clear that casual respondents are much less satisfied with their employment than permanent respondents. Fifty-nine per cent of casuals indicated they were satisfied with their form of employment, and for those casual employees satisfied with their employment, 66 per cent were either only moderately or slightly satisfied. In comparison, approximately 89 per cent of permanent full-time staff indicated they were satisfied with their form of employment, and for those full-time employees satisfied with their employment, 36 per cent were either only moderately or slightly satisfied. To investigate whether casual employees have lower levels of commitment than permanent employees, the data from the OCS (as amended) was first tested for reliability and then a discriminate validity check performed. These results confirmed the validity, in this study, of the three components of organisational commitment identified by Allen and Meyer (1990). To compare the levels of commitment of casual and permanent employees, independent samples t-tests were performed. First the composite measures for affective, continuance and normative commitment were averaged across the items in each scale. As the literature predicts that commitment of casual employees is lower, one-tailed (directional) tests were performed. Table 2 summarises the results.

7 Table 2: Independent Samples t-test Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t Sig. (1-tailed) Affective Commitment Continuance Commitment Normative Commitment Equal variances assumed Equal variances assumed Equal variances assumed The analysis of the questionnaire data revealed that casual employees had significantly lower levels of Affective Commitment than permanent employees, but that there was no significant difference in the levels of Continuance and Normative Commitment between casual and permanent employees. This finding supports, at least in part, the recurring prediction of lower commitment of casual employees present in the literature (Dessler et al. 2004: 198; De Cieri & Kramar 2003: 237; Buultjens 2001; Lowry 1998; Walsh & Deery 1999). Analysis of the interview data revealed that although management perceived the commitment of casual employees to be lower than that of permanent employees, this was not borne out by the employees themselves. According to one middle manager with a large casual staff, they re [casuals] not as committed and their other commitments are bigger, like study and uni. And for the union delegate casual employee commitment was dependent on how they were treated by management, where a casual might ask, OK, I ve given you X amount of years but how about giving me something in return? The employees interviewed were asked questions relating broadly to the items in the OCS. For Affective Commitment, employees were asked whether they felt attached and proud to work for the Hotel. Both casual and permanent employees indicated that they were proud working for the Hotel, but both groups indicated a stronger commitment to their co-workers than to the Hotel, with one permanent part-time employee stating... you get to know certain people that you work with all the time and you always look out for each other and a casual employee stating everyone helps everyone out alright. The responses in relation to Continuance Commitment indicated that, for both casual and permanent employees, the benefits provided by the Hotel in the form of free meals, generous breaks and laundered uniforms could not be repeated by other hotels, so that employees felt a certain level of commitment to stay. With Normative Commitment, employee responses varied with employees indicating that they thought of loyalty as a reciprocal concept, or that they viewed loyalty from their own perspective ( it looks better if you stay with the one employer for a while ). 3 CONCLUSIONS The finding of the quantitative analysis of the questionnaire data of lower Affective Commitment of casual employees is important because, of the three components, this is generally recognised as being the most desirable (Allen and Meyer 1996). Both Mowday

8 et al. s (1979) and Allen and Meyer s (1990) conceptualisations of Affective Commitment indicate that it is the purest form of organisational commitment as it refers to feelings of belonging and a sense of attachment to an organisation, which is untainted by the slightly conditional forms of commitment present in both Continuance and Normative Commitment. For Continuance Commitment, attachment to the organisation is tainted somewhat because the employee sees certain benefits in remaining with the organisation (such as superannuation contributions) and also perceives a lack of alternatives in employment. For Normative Commitment, the concept is slightly clouded as the employee has a strong overall sense of commitment: with Normative Commitment the employee s innate sense of loyalty means that the employee would be loyal to any organisation, and because of this it is seen as the least desirable form of commitment. Therefore, the finding of lower Affective Commitment of casual employees is the most significant for the organisation. Although there is some lack of precision as to the consequences of lower levels of Affective Commitment, there is consistency in the literature that staff turnover can be increased (Allen & Meyer, 1996: 264-6). Interestingly though, the Case Study Hotel has very low levels of turnover generally, compared to the industry average, although this is certainly higher among the casuals. However, it is the findings from the analysis of the interview data in this study that can provide some insights into the management of both casual employees and turnover. Consistently both casual and permanent employees sense of loyalty or commitment to the organisation was expressed in terms of what the organisation could provide them, rather than a sense of loyalty or attachment to the organisation per se. They felt some commitment to the organisation because of the provision of services such as free meals and uniforms and their concern for the wellbeing of the organisation, if it were not faring very well, was tied very much to the effects that this would have on future employment, rather than any feelings of a possible loss of attachment to the organisation as such. To a large extent, the benefits appreciated by the employees (free meals, laundered uniforms, generous breaks and the possibility of being given extra shifts) are more easily made available by a large organisation. Although it has been found that larger organisations were less likely to engender feelings of commitment than smaller ones (Peters 1992), it may be that for casual employees, in particular, a larger organisation can provide basic benefits unavailable elsewhere and can also provide an element of security by its sheer size. Both types of employees expressed high levels of loyalty and commitment to their coworkers. This loyalty to their immediate work group is important as loyalty to parts of an organisation has also been seen as affecting commitment (Ward & Davis 1995) and this may be the new form of organisational commitment referred to by Sachdev (2000: 34), where commitment to the organisation is replaced by commitment to team-mates. This sense of loyalty was reinforced by the social context in which the employees viewed their work colleagues, with one permanent part-time worker indicating that she had no friends apart from her work colleagues. The concept of commitment being conditional on employer commitment was also a dominant theme to emerge from the employee interviews. Little research has been conducted on employer commitment to employees and it is taken as a given in the traditional commitment literature (Baruch 1998: 137). However, this is an area of relevance to the management of organisational commitment in workplaces of the future, with flexible work practices, which often result in less secure forms of employment, tending to work against organisational attempts to enhance commitment through methods recognised in the HR literature, such as the provision of training and development opportunities and feedback on performance.

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