EFFECT OF PSYCHOLOGICAL CONTRACT ON EMPLOYEE TURNOVER INTENTION IN SELECTED HOTELS IN ELDORET TOWN

Abstract

Employee turnover is a common problem in the hospitality industry and it is not country specific. It accounts for employee turnover of between 60% and 300% annually in the Hospitality and Tourism industry. The main purpose of this study was to determine the effect of the psychological contract on employee turnover intentions. Specifically; to determine the effect of job security, to establish the effects of employee fair treatment, to examine the effects of employee engagement and to assess the effect of career development on employee turnover intention in selected hotels in Eldoret town. This study was guided by The Resource Conservation Theory, Maslow Hierarchy of Needs Theory, and The Expectancy Theory. A Cross-sectional research design was used. The study was carried out in selected rated hotels in Eldoret town. The target population was the non-managerial cadre of staff accounting for 374 employed staff. Stratified sampling was used to select the hotels that participated in this study. Proportionate random sampling was used to select 187 participants from the sampled hotels and a questionnaire was employed to gather data from respondents. Data was analyzed using Statistical Package for Social Sciences (SPSS) version 23.0. Descriptive statistics, standard deviation, percentages and inferential statistics were used in representation of data. Reliability of the data was checked by use of Cronbach Alpha coefficient test set at a value of at least 0.7. The coefficient of determination (R squared) was 84.9% indicating the proportion of variation in employee fair treatment, employee engagement career development and job security. The research found that the objectives of Employee fair treatment (= 0.296, p= 0.025), Employee engagement( = 0.593, p= 0.003) career development (= 0.640, p= 0.000) had a P value of <0.05 hence the three null hypotheses were rejected. While job security (=050, p=0.286) failed to reject as p value was > 0.05. The study concluded that in the sampled hotels, management did not ensure there was fair treatment of employee, the employees were hardly engaged on matters affecting them. There was also no career development programmes to help employee have a career path and lastly job security was not assured. The study recommends Hotels management should have good leadership practices and to operate in a healthy culture where employees are fairly treated and engaged on issues that affect them and are assured of job security. They should also improve on training offered to employees to develop their careers. Lastly, it recommends replication in non-rated hotels in Uasin Gishu county to receive a complete regional picture.