Sliema Bay Hotel: Nine Leavers, €30,000 and Two Ways to Spend It

Labour turnover

9 leavers ÷ 14 posts × 100 = 64% a year. (If you use the average number employed as the base, state your figure; with a stable headcount of 14 the answer is the same.)

Direct cost of turnover

9 × €1,450 = €13,050 a year. This understates the true cost: each new starter takes six weeks to reach normal speed, so there are also months of slower check-in, more errors and more supervision - which is consistent with complaints rising 18%.

Option 1 - 6% pay rise

• Hours: 14 × 40 × 52 = 29,120 hours
• Wage bill: 29,120 × €10.80 = €314,496
• 6% = €18,870 a year, so €56,610 over three years
• New rate: €10.80 × 1.06 = €11.45 - still below the €11.60 the two competitors advertise.

Option 2 - rostering, training and team leaders

• Year 1: €21,500; years 2 and 3: €11,000 each → €43,500 over three years

Comparison

Option 2 is €13,110 cheaper over three years and fits inside the €30,000 budget in year one. Option 1 is affordable but does not close the pay gap. Both are small relative to €314,496 of wages, which is the point: the problem is not primarily the size of the pay packet.

Pay as a hygiene factor

Herzberg distinguishes hygiene factors (pay, working conditions, company policy, supervision, job security) from motivators (achievement, recognition, responsibility, advancement, the work itself). Hygiene factors do not motivate when present - they only demotivate when absent or perceived as unfair. A 6% rise moves pay from €10.80 to €11.45, which is still below the €11.60 competitors advertise, so it does not even remove the grievance it is meant to remove. At best it prevents further dissatisfaction; it creates no reason to stay.

What the exit interviews actually say

• Six of nine: rosters published three days ahead and changed without notice. This is company policy and working conditions - pure hygiene, and one the pay rise does not touch. It also destroys the ability to plan childcare, study or a second job, so it damages security and social needs as well. People leave to escape unpredictability, not to earn €0.65 more an hour.
• Four of nine: 'nowhere to go'. This is advancement - a genuine motivator. A receptionist who can see no route to team leader, duty manager or revenue analyst has no reason to invest in the hotel. Option 2's two team-leader posts create visible progression for 14 people; that is a motivator, and it is cheap relative to replacing staff.
• Three of nine: night shifts. Working conditions again, but one that can be managed by rostering fairness and rotation rather than by money.

Conclusion

Herzberg predicts exactly what is observed: the complaints are concentrated in hygiene and advancement, and money addresses neither. Note also the link to Maslow - unpredictable rosters undermine security and belonging, which sit below esteem and self-actualisation, so the team-leader posts alone will not fix the problem unless the rostering is fixed first.

Recommendation: Option 2, provided the rostering change is treated as non-negotiable and delivered first.

Justification

• It is cheaper over the decision horizon. €43,500 over three years against €56,610 for Option 1, and the year-one figure of €21,500 leaves €8,500 of the €30,000 budget as contingency.
• It matches the diagnosis. Six of nine leavers cited rosters and four cited progression. Option 2 addresses both directly; Option 1 addresses neither, and leaves pay at €11.45 against a market rate of €11.60 - a pay rise that will be read by staff as an insult rather than a concession.
• It attacks the cost driver. Turnover is costing €13,050 a year in direct replacement cost alone. If Option 2 halves leavers from nine to four, it saves about €7,250 in direct costs plus the productivity loss during six-week ramp-ups, which is where the guest complaints and the rating slide from 4.3 to 4.0 are coming from.
• It creates an internal labour market. Two team-leader posts give 14 people a visible next step and give the hotel a pipeline for duty managers, reducing future external recruitment.

Risks to acknowledge

• Rostering software is useless if managers override it; the policy must be written and enforced (rosters published 14 days ahead, changes only by agreement).
• Team-leader posts can create resentment if the selection is seen as favouritism - use a published, criteria-based process.
• Pay still trails the market by €0.15; plan a staged move to €11.60 over two years so the retention gains are not immediately undone.

Measures to track monthly

1. Financial: front-office labour turnover cost (leavers × €1,450) and the number of leavers, reported alongside the monthly wage bill so the trade-off between pay and turnover is visible.
2. Non-financial: the percentage of rosters published at least 14 days ahead and the number of unplanned changes, plus check-in complaint volume - these are the leading indicators that the actual causes are being fixed, where the online rating is a lagging one.