Combating War for Talent: Staff Retention Strategy of Industry Leader to Retaliate Against Challengers to Sustain Strategic Position.

Abstract

Sri Lanka Tourism industry is expected to grow by 22.3% year-on-year with the supporting external environment, according to SLDA** in-order to achieve 2.2 million tourist arrivals at the end of 2016 and 4 million tourist arrivals by 2020(Asian Hotels and properties PLC -Annual Report 2016/17).In today’s context hotel industry is very attractive for investors. Golden Ray Colombo is performing extremely well in terms of revenue with 31% market share and creating strong brand to be the market leader. With the increasing competitive situation, industry itself is creating lot of market opportunities for its players and for the employees. Research results indicates that, Golden Ray has introduced lot of initiatives as proactive strategy elements. Althoughtourism industryin its growing status, market opportunities are increasing as Sri Lanka has been recognized as the emerging hotspot to travelers. Golden Ray Colombo (GRC*) is the market leader in Colombo city five-star hotel business and posted a profit before tax of Rs.1.591billion and profit after tax of 1.448 billion indicating a 3% growth over the year 2016. (Asian Hotels and properties PLC -Annual Report 2016/17)profit growth is due to the fact that 6% increase in revenue and as well as management’s constant efforts to save the operational cost. Golden Ray Colombo accounted for 65% of Group Revenue and recorded year on year revenue growth for group leisure sector. The Average Room Rate displayed a growth of 3% with GRC* averaging Rs.18,885, while occupancy averaged at 76%, with totaling 138,460 room nights during the year 2016. There is a 5% growth of GRC* room revenue. F&B at Golden Ray added Rs.2.37 billion to total revenue compared to year 2015 , Rs.2.2 billion. However Cost of Sales was increased by 2%. This can further increase due to increase in marketing activities (Advertising & Promotions) in the future. Last year, relatively flat year for this strategic group. This is due to the fact that majority of travelers are from business visitor segment who pay frequent visits to mega projects in the country.Reason being increased room capacity added to the industry, these travelers are being absorbed by the three and four star class hotels, between Colombo and Negombo area. This had resulted a decline in crew & stopover segment. Nonetheless, arrival of global industry giants are attracting talent from existing players while creating a war of talent situation in the industry. On the other-hand industry players including the market leader Golden Ray Colombo are currently combating war for talent.Due to this fact, a platform has been created for skilled and semi-skilled employees to demand a pay rise from their employers. Author will elaborate and discuss strategies executed by the industry leader to face the industry changes and to compete the war of talent. According to SLDA government decision to increase room capacity up to 75,000 and to abolish the minimum room rate. That will definitely create a bigger challenge and higher risk for existing firms. Global hospitality giants like Shangri-La, Sheraton, Movenpickentered in to Colombo five-star city hotel business during the year 2014 and 2015.Movenpick already launched their business operations in Sri Lanka by the 1st quarter of the year 2017 specially focusing Colombo city hotel business. Shangri-La hotel commenced the business operations in Hambanthota in 2016 and they have already planned to launch Colombo city hotel business operations in September 2017. GRC* competes in the five-star city hotel category. There are higher chances that the market leader can be challenged by new entrants and existing three and four star class hotels in the future. Growing competition will be a bigger challenge for the hotel to retain its market position. Golden Ray has implemented few strategies to become market leader in the Colombo city five-star hotel business. Further GRC* has executed rigorous defensive strategies with a top focus to develop the hotel’s human capital in-order to face upcoming highly competitive market with international hospitality giants like Shangri-La, Sheraton, Movenpick and etc. As part of the human capital development and retention strategies,Hotelinvested significant amount for training & development, employee engagement strategies, enhance occupational health and safety, work life balance, diversity and inclusion, recognition and etc. Global Giants are seeking to hire best skilled and semi-skilled employees from the hospitality industry.Shangri-La launched a massive recruitment campaign at the beginning of the year 2017 while offering very attractive remuneration packages for potentialcandidates. One of the Shangri-La main strategy was to hire top key positions from market leader and to attract highly skilled and well trained employees. GRC* has identified that threat of losing good employees as one of the key business risk at the moment. They came up with various suggestion and initiatives to improve GRC* retention strategies. Due to this reason GRC* carried out a market salary survey in-order to identify the current market ratesfor each position and suggested to adjust salaries of key positionswith anincrement for all employees after screening their performance and competency levels. Employees who did not receive the market adjustment had major concerns as to how the other team members were entitled for same market adjustment scheme. There were series of meeting and discussions organized by the hotel management to explain thisprocess for those who haven’t received market adjustments. Human resources department allocated three consecutive days for associates to come and talk to them about their concerns regarding the market adjustments. The main staff union of the hotel also had series of meetings with HR department in-order to discuss about the market adjustments and they proposed a difference scheme to increase their salaries byconsidering their number of years’ service to the hotel. Similarly each department of hotel had to spend considerable amount of time with their associates to explain this exercise in details and to motivate all the department employees to achieve business objectives. On the other hand all these sequence of event took place towards the end of the financial year .Actually this became a real challenge for the hotel management to conclude the financial year successfully while achieving all the business objectives set at the beginning of the financial year. Even after implementing this key staff retention strategy, GRC* was not be able to retain 100% key talent. GRC* is currently smoothly operating the business with existing key talents. But the sustainability as the market leader will be a question mark in the near future as and when all global hospitality giants commence their business in full capacity in Colombo.