ADMAS UNIVERSITY

SCHOOL OF POSTGRADUATE STUDIES

MASTERS OF BUSINESS ADMINISTRATION

Assignment Research Proposal on

Factors influencing Employees Turnover within the restaurant

Industry in Ethiopia, Legetafo, and what are the possible solutions
to reduce high turnover rate.

Prepared by: - Amanuel Mamo PGMGB/6156/20

Addis Tilahun PGMGB/6103/20
Balemlay Belete PGMGB/6160/20
Betelehem Mengistu PGMGB/6182/20
Haymanot Dehu PGMGB/ /20

Submitted to:

February 2021
Table of Contents
No Contents Page
i. Abstract ------------------------------------------------------------------------------------------
ii. Table of Contents -------------------------------------------------------------------------------
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study -----------------------------------------------------------------
1.2 Statement of the Problem -----------------------------------------------------------------
1.3 Objectives of the study --------------------------------------------------------------------
1.4 Research Questions ------------------------------------------------------------------------
1.5 Scope of the Study -------------------------------------------------------------------------
CHAPTER TWO – REVIEW OF RELATED LITRATURES
1. Introduction -----------------------------------------------------------------------------------
2.1 Employee Turnover-------------------------------------------------------------------
2.1.1 Overview of Turnover---------------------------------------------------------------
2.1.2 Definition of Employee Turnover----------------------------------------------------------------
2.1.3 Causes of Employee Turnover-----------------------------------------------------------------------
2.1.4 Types of Employee Turnover------------------------------------------------------------------------
2.2 Theoretical Framework------------------------------------------------------------------------------
2.3 Empirical Evidences---------------------------------------------------------------------------
CHAPTER THREE – RESEACH DESIGN METHODOLOGY
3.1 Research Design ------------------------------------------------------------------------------
3.2 Population of the Study -------------------------------------------------------------------
3.3 Sample Size --------------------------------------------------------------------------------
3.4 Sampling Techniques ----------------------------------------------------------------------
3.5 Data Collection Method -------------------------------------------------------------------
3.6 Presentation and analyses and finding -------------------------------------------------
4. Time Schedule -----------------------------------------------------------------------------
5. Cost Budget -------------------------------------------------------------------------------
References ---------------------------------------------------------------------------------
Abstract
Employee turnover is one of the major problems for businesses employing staff. It has been
found by previous researches that a high employee turnover rate could cause many negative
consequences on the operation of an organization: increasing recruitment and training costs of
new employees, decreasing employees’ productivity and missing sales (Faldetta, Fasone &
Provenzano, 2013).
This proposal is aimed at conducting a study to investigate the causes of employee turnover
within the restaurant industry in Legetafo area and identifying what methods of retention should
be adopted. As one of the important industries for Ethiopia, the restaurant and hotel industry has
a great potential for growth in Ethiopia. However, high employee turnover has long been a

critical issue there. This translates negatively on the various restaurants and hotels in this crucial
industry as they constantly have to spend significant amounts of resources on hiring new
employees to replace the ones who have left. This is a costly procedure that is consuming
potential profits for these companies. This research will identify the main reasons as to why more
employees are quitting their job and what the possible solutions to reduce high turn overt are. To
do this, the research will focus on getting fundamental insights from the staffs who are working
in 6 cafe and restaurants around Legetafo area, past employees and the Managers who are
working in restaurant industry.
The research will also incorporate a comprehensive review of past literature on this topic. The
quantitative research method will be utilized in this project to help further comprehend the
research question. In the end, some factors will determine to cause the high employee turnover
rates in this sector and will outline a variety of recommendations that these companies should
consider the methods should be adopted to retention.
 CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Employees are an important asset to every company, business and organization. In fact, the
success of every company or business is entirely dependent on the effectiveness of its workforce
(Samuel and Chipunza, 2009). A business may invest a lot of resources into its core operations
and activities, but without a highly effective human resource, success in the long run cannot be
achieved (Ton and Huckman, 2008).
Turnover continues to be a serious problem for businesses especially voluntary turnover which
may be very expensive for organizations (Sigler, 1999). Retaining staff is commonly a better
investment than the cost of recruiting replacements (Mitchell et al., 2001; Farrel, 2001).'
Declining turnover could be a method to accomplish competitive advantage through employees.
Lower turnover costs are an opportunity for organizations to use this saved amount on better
investments. Thus, to retain employees, what do they actually need to function (optimal) and to
be happy in their jobs? The last two conditions have become more important to deal with these
days (De Lange, De Witte &Notelaers, 2008
Employee turnover, basically means the percentage of employees who within a particular period
of time choose to leave the company or business for other companies. This forces the company
to replace them with new employees at an additional cost (Tracey and Hinkin, 2008) also defines
turnover as “The ratio of the employees of an organization who left in a particular period of time
with the average number of employees in that organization during the same period of time”.
This is a great loss for the company, given the fact that it has spent a lot of resources to perfect
the skills
Conversely, employee’s retention is a vital issue and challenge to all organization currently, it
remains a crucial issues for the organization because of the costs associated with recruiting,
selecting and training new employees (Allen, Bryant and Vardaman, 2010). Employee retention
is the “effort by an employer to keep desirable workers in order to meet the business objectives”
by keeping the right people on the right jobs (Frank, Finnegan and Taylor 2004: Hassan et al.,
2011). A successful company often has a high employee retention rate.
This study is highly important given the fact that most companies in the Ethiopian restaurant
industry are expending a significant amount of resources on the acquisition of new employees. In
addition to this, employees suffer greatly from the constant changes in their working
environments
Therefore, it is important to conduct this research to find out why the employees turnover is high
in restaurants, what are the real causes and based on the reason behind we can provide the
possible solutions to minimize the turnover rate within the restaurants located in Legetafo.

1.2 Statement of the problem

In today’s competitive business world, it is considered to be an important task to manage
employee turnover for any organization. Managing turnover successfully is essential to achieve
the organizational overhead goals. A significant amount of research has been undertaken to
understand the major causes of employee turnover and retention mechanisms that organizations
should develop. Frequent turnover of employees could be costing the restaurant industry in terms
of productivity, performance, money, and time. However much researches have been done in the
past in Ethiopia most research has focused on large and star hotels. Therefore, it is important to
do this research to understand why this problem can also affect the restaurant industry what is the
reason that makes employees to want quit their job, what can be done to minimize the high rate
of staff turnover. Accordingly, this study primarily focuses on answering the following
basic/research questions.
1.2.1 Basic Research Questions
 What are the reasons for high employee turnover rates within a restaurant industry in the
Legetafo area based on an evaluation of the company's past and current employees’ perceptions
and from the perspective of?
 What could be the reason for employee turnover from the perspective of Managers/
Employers?
 What the effective methods of retention that can be adopted by companies
 What incentives, from the employees’ perspectives, are the most beneficial to employee
retention?

1.3 Objectives of the study

General Objective
The general objective of this research is to find out the factors influencing employee turnover
within the restaurant industry in Legetafo, and what are the possible solutions to reduce the high
turnover rate.
These will satisfactorily provide critical and conclusive information to paint a clear picture of
the employee turnover and retention rates in the restaurant industry in the Legetafo area.
Specific objective
Specific objective
 The specific objective will seek to show the various factors that contribute towards the
high employee turnover rates within the restaurant industry in the Legetafo area.
 To relate the findings from the survey to the restaurant sector in general. This will
provide a clear picture of the employee turnover and retention rates in the restaurant
industry in the Legetafo area.
 The final research objective will be to identify some of the effective methods of retention
that can be adopted by companies who are working in the restaurant industry to
significantly reduce their employee turnover rates.
1.4 The Significance of the Study
This research is great significance as it will identify the various reasons why there are high
employee turnover rates within the restaurant industry in Ethiopia, Legetafo area. The
organizations in this sector will be able to identify the areas they should work on to reduce high
employee turnover rate, thereby saving the resources spent in the constant replacement and
training of employees. Employees will also benefit as organizations will focus more on
developing a retention strategy to encourage employees to stay in the company through various
incentives like motivation, empowerment, bonus programs, training and development, and so on.
The findings will be added to the existing literature in the area of employee turnover and
retention in the restaurant industry.
1.5 Limitation of the Research
There are some expected limitations for this research the first limitation will be the fact that it
can be difficult to meet peoples face to face and collect information due to the current crisis
(COVID-19 and politically issue) this will hold back the employees to participate voluntarily.
The second limitation is there will be fear of losing their job on current employees when
responding to the questionnaire and interview so it will be difficult to gather exact information
from the respondent. The third limitation our sample size is small the larger the sample, the more
accurate results will be find so it will be difficult to identify significant relationships from the
data by these samples.
1.6 Organization of the Paper
This study will have five chapters. The first chapter will deals with background information,
statement of the problem, objective of the study, the significance of the study, scope, and
limitation of the study. The second chapter discusses the literature review will outline previous
literature on employee’s turnover and retention in the restaurant industry. Chapter Three will
discuss the methodology used in collecting data. Chapter Four, analysis and findings. Chapter
Five will summarize the result and makes a conclusion and recommendations.
 CHAPTER TWO
Literature review
In this Chapter, the scholarly review of related literature is presented Definition of
employee turnover is the first part. Issues related to causes, types, costs of employee
turnover, are well-reviewed. Employee turnover rate, effects of employee turnover, the
way to reduce employee turnover, managing resignations, theoretical framework,
empirical pieces of evidence, and conceptual framework are also topics that are assessed
very clearly.
2.1. Employee Turnover
Employee turnover refers to the number or percentage of workers who leave an
organization and are replaced by new employees. Measuring employee turnover can be
helpful to employers that want to examine reasons for turnover or estimate the cost-to-hire
for budget purposes
2.1.1 Overview of Turnover
Employees‟ turnover is a much-studied phenomenon. The hospitality industry is noted for
high turnover compared to other organizations (Catherine, 2002). According to Meaghan et
al. (2002), there is the need to find out causes of turnover, what determines employee
turnover, effects, and strategies that managers can put in place to minimize turnover. With
globalization heightening competition, organizations should continue to develop tangible
products and provide services that are based on strategies (Toret al., 2007). Employees are
extremely crucial to the organization since their value is essentially intangible and not
easily replicated but the negative impact of turnover leads to customer dissatisfaction
(Trevor 2002and Shah et al., 2003). In the article entitled “The Cost of Employee Turnover”,
Mathew O‟ Connell and Mei-Chuan Kung (2007) made the point that organizations tend to
underestimate the cost of turnover.
Perhaps it is because there is not a line item in the most profit and loss statements, nor is it
typically adequately defined in the budget, and no one submits an invoice at the end of the
month for turnover.
2.1.2. Definition of Employee Turnover
According to Mobley (1982), turnover refers to the cessation of membership but it should
be acknowledged that from a more institutional or organizational perspective, turnover
may also include accession or entry. Similarly, McShane and Glinow (2000) define turnover
as the process in which employees leave the organization and have to be replaced.
Turnover is the rotation of workers around the labor market; between firms, jobs, and
occupations (Abassietal, 2000; Beam, 2011) and the ratio of the number of organizational
members who have left during the period divided by the average number of people in the
organization.
Further employee turnover is a ratio comparison of the number of employees a company
must replace in a given time period to the average number of total employees. A huge
concern to most companies, employee turnover is a costly expense, especially in lower-
paying job roles, for which the employee turnover rate is highest. Many factors play a role
in the employee turnover rate of any company, and these can stem from both the employer
and the employees. Wages, company benefits, employee attendance, and job performance
are all factors that play a significant role in employee turnover. Companies take a deep
interest in their employee turnover rate because it is a costly part of doing business. (Beam,
2009).

2.1.3 Causes of Employee Turnover

There are many potential causes for employee turnover. Mobley (1986) states that a high
level of employee turnover may be related to factors such as low wages or unattractive
working conditions; or to a high concentration of casual or seasonal workers. Conversely,
high turnover may be related to a high level of demand for skills where workers are
induced to change employers in wages. Lawler (1986) suggests poor job feedback, job
dissatisfaction, unmet job expectations, performance problems, situational constraints,
socialization difficulties, greater degrees of job stress, and a lack of career advancement
opportunities among others as causes of employee turnover.
 Though many of such factors can be identified, the study has classified them into the
following:

1. Salary Scale: The most common reason for the employee turnover rate being so high is
the salary scale. Because employees are usually in search of jobs that pay well. Those who
are desperate for a job may take the first one that comes along to carry them through while
searching for better-paying employment. Low pay is a good reason as to why an employee
may be lacking in performance. Rampur (2009) in a like vein, “If you pay less than other
employers for similar work, employees are likely to jump ship for higher pay, if other
factors are relatively equal." (Handelsman, 2009 p.182)

2. Working Environment: Some employees jump from company to company because they
prefer a working environment that is suitable for them. “If working conditions are
substandard or the workplace lacks important facilities, such as proper lighting, furniture,
clean restrooms, and other health and safety provisions, employees won't be willing to put
up with the inconvenience for long." “If an employee finds an appropriate work
environment which is suitable for them in a specific company; they may work in that same
organization for several years (Handelsman, 2009 p.182).”

3. The Organizational Culture: The reward system, the strength of leadership, the ability
of the organizations to elicit a sense of commitment on the part of employees, and its
development of a sense of shared goals, among other factors, will influence such indices of
job satisfaction as turnover intentions and turnover rate (Edgar Schein,1928)

4. Unrealistic Expectations: Another factor is, the unrealistic expectations and general
lack of knowledge that many job applicants have about the job at the time that they receive
an offer. When these unrealistic expectations are not realized, the worker becomes
disillusioned and decides to quit.
5. Demographics: In their study on causes of labor turnover, Mitraetal. (1992)
demonstrated that turnover is associated in particular situations with demographic and
biographical characteristics of workers.

6. The Person: there are factors specific to individuals that can influence turnover rates.
These include both personal and trait-based factors. Personal factors include things such as
changes in a family situation, a desire to learn a new skill or trade, or an unsolicited job
offer. In addition to these personal factors, there are also trait-based or personality
features that are associated with turnover as cited by Mobley (1977). These traits are some
of the same characteristics that predict job performance and counterproductive behaviors
such as absenteeism, theft, substance abuse on the job, and sabotage of employer's
equipment or production.

7. Job Satisfaction: High job satisfaction level has an enormous impact not only on the
sense of loyalty, absenteeism, efficiency, productivity, termination of work, but also on
mental and physical health (Scott & Taylor, 1985). According to Robbins (1986),
satisfaction is strongly and consistently negatively related to an employee’s decision to stay
or leave the organization. But Lawler (1986) argues that although satisfaction and absence
are also negatively related, people should be careful in drawing conclusions regarding the
relationship.
2.1.4 Types of Employee Turnover
Mathis and Jackson (2004) classified turnover into two general types: involuntary and
voluntary. Voluntary turnover means the voluntary movement of an employee out of an
organization. It reflects an employee‟s decision to terminate the employment relationship
(that is, voluntary leavers leave on their own volition to further their career or to seek
greener job satisfaction elsewhere) while the involuntary type of turnover reflects an
employer‟s decision to terminate the employee‟s employment.
McShane and Glinow (2000) state that since employees leaving voluntarily are those not
dismissed by the employer, they are probably the ones that an employer would like to
retain most. Involuntary turnover may occur for reasons which are independent of the
affected employee(s) – that is, involuntary leavers are literally forced out by the
organizations by one means or another - such as the real or perceived need to cut costs,
restructure or downsize. Furthermore, voluntary turnover is often categorized into two
namely; functional and dysfunctional (Mathis & Jackson, 2004).

2.2 Theoretical Framework

The impact of turnover has received considerable attention from Senior Management,
Human Resource Professionals, and industrial psychologists. It has been proven to be one
of the most seemingly intractable human resource challenges confronting organizations
(SIGMA, 2007). Staff turnover is a readily measurable, objective behavior that can have
critical consequences for the worker and the organization.
Past theoretical models have synthesized turnover research and specified relationships
among determinants of turnover (Hayes et al, 2006).

2.3 Empirical Evidences

Alice and Wandering in their study entitled “Assessment of Causes of Labor Turnover in
Three and Five Star-Rated Hotels” in Kenya founded a corresponded finding with Gupta
and Shaw (2001) that pay is the most critical outcome of organizational membership for
employees to stay on. The unfavorable work conditions resulted in the employees
developing work-related stress and reduced employees “organizational commitment. This
was evident where few hotels, had employees who worked up to their retirement.
The study further established that employees were not involved in the decision-making
process, even those decisions which affected their jobs. Perhaps this resulted in the main
causes of resignation in the hotels under the study.
It was equally evident from the findings of the study that, the management did not treat
their employees well as cited by the respondents. Employers were described as inflexible
and they did not provide a balance between work and employees‟.
 CHAPTER THREE
Research Methodology
3.1 Research Design
The methodology that will be relevant for this study is a mixed-method both qualitative and
quantitative method. In order to acquire sufficient information.
3.2 Population of the Study
The target population for this research project is current and past employees of hotels and
restaurants in Legetafo area and restaurant managers that are willing to participate. The main
reason to include the past employees is because it is very easy for these employees to be honest
about their opinions as there was no fear of retribution or other consequences when responding
to the questionnaire and interview.
3.3 Sample Size
We will select 30-50 past and current employees who are volunteers to provide us useful and
relevant information to facilitate the successful completion of the research.
3.4 Sample Technique
The sampling technique for this research will be non-probabilistic. Non-probability sampling
provides a range of alternative techniques to select samples based on subjective judgment”
(Saunders et al., 2009, pp. 233). We will use several different techniques to obtain a sample this
includes self-selection sample, purposive sampling, and convenience sampling. Convenience
sampling involves selecting those that are easiest to obtain for our sample.
3.5 Data Collection Method
For the purpose of this research, and in order to achieve the objectives, the data will be collect
and will be used both primary and secondary data. The secondary data will contribute toward the
formation of background information, Primary data will be collected through a questionnaire and
interview this will use to gather vital information from the participants of this research.
 3.6 Presentation and Analysis of the Findings
This chapter will focus on critically analyzing the results obtained in this research. It will present
the results in a systematic manner, making it easier for the researcher to gather conclusive and
informed conclusions pertaining to the issue of high employee turnover rates within the
restaurant industry in Legetafo area.
This study will provide vital recommendations on the various methods which companies who are
in the restaurant industry can implement to improve their employee retention rates

Work plan
The provisional duration of the research will be Six months and its divide by week as follows:

Expected time to Complete

No Activities
Feb march April may June July

1 Proposal writing x

2 Review of Related Literature X

3 Preparing a Questioner x

4 Data collection x

5 Data analysis and Interpretation of the analyzed data x X

6 Summery, Conclusion and Recommendation X

7 First draft X

8 Final report x
Cost Budgets
In order to manage the overall research process cost budget is critical to accomplish research.
The table given below shows that the cost will be taken from topic selection to the final research
presentation.
No. Budget Items Total Time Rate Costs (In ETB)
1. Research supervisor 54 Hrs. 200/Hr. 10,000.00
2. Data collection 12 Months 100/Month 1,000.00
3. Secretary(1) 20 Hrs. 50/Hr. 1,000.00
4. Research assistant(1) 20 Hrs. 100/Hr. 2,000.00
5. Travel As needed - 1,000.00
6. Telephone As needed - 400.00
7. Internet As needed - 2,000.00

8. Stationary Different type - 600.00

9. Laptop - - 22,000.00
10 Other Expenses - - 1000.00
Total cost 41,000.00
Reference

Allen, Bryant and Vardaman, 2010 Retaining Talent: Replacing Misconceptions with Evidence-
Based Strategies

Bezuayehu Tegaye(2016) Assessment of professional employee turnover and its management

De Lange, De Witte &Notelaers, 2008 should I stay or should I go? Examining longitudinal
relations among job resources and work engagement for stayers versus mover

Faldetta, Fasone & Provenzano, and 2013 Turnover in the hospitality industry: can reciprocity
solve the problem?

Glebbeek and Bax (2004), Is High Employee Turnover Really Harmful? An Empirical Test
Using Company Records

Henry Ongori. A review of the literature on employee turnover. Department of Management,

University of Botswana,

Mitchell et al, 2001, Farnel, 2001 How to keep your best employees: Developing an effective
retention policy

Ongori, H. (2007). ‘A review of the literature on employee turnover’. African Journal of

Business Management):
Samuel, M.O. and Chipunza, C (2009) Employee retention and turnover using motivational
variables
Sigler, K.J. (1999), "Challenges of employee retention",

Tracey & Hinkin, 2008). Employee Dissatisfaction and Turnover Crises in the Malaysian
Hospitality Industry

Zeyneo, Ton Robert .S. Huckman (2008) Managing the impact of Employee Turnover on
Performance: the Role of process conformance.
Conceptual Framework

****************************************************************

General format or elements of research proposal

 Title page

 Preliminaries:

- Summary/ Abstract,

- Table of content,

- List of Tables& Figures

- List of Acronyms and Notations

 I. Introduction and Overview

 Introduction/Background

 Statement of the problem

 Objective/Aim of the study

 Hypothesis/Questions

 Organization of the study

 Significance of the study

 Delimitation and Limitation of the study Definition of Terms

 II. Literature review

 III. Research methodology

 Work Plan

 Budget

 References
 Appendices/Annexes