Club Med Harvard Case/turnover

In 1972, Club Med started to sell vacation packages in the American Zone. Upon Club Med’s expansion into the American Zone, there have been some logistical problems with hiring and maintaining superior employees, including employee turnover.

Club Med employs a wide variety of individuals to control each village. The main person in charge of each village is the general manager, or the Chief of the Village. The next person in the hierarchical order is the Chief of Services. After the Chief of Services, comes the GOs, or hosts. The GOs have a wide variety of jobs, ranging from entertaining guests (GMs) to general maintenance of the resort. The GOs are the young and personable employees that are expected to put in long hours on the job. GOs average about eighty hours of work a week. Their job is not considered “work�

Club Med should focus on improving their current system of recruiting by generating a larger and more qualified applicant pool. Club Med presently advertises job openings in major American magazines; this method is too broad and nonspecific. Amzallag and his team could focus their GO search by advertising in magazines that are geared towards individuals who possess certain qualities that would fit with the resort’s culture. A good example would be to advertise in Sports Illustrated. Club Med should also push GOs for employee referrals, which would be one way to reduce costs and to find potential GOs that “fit” within the organization. The recruiters currently conduct college campus visits, but they are only held at Arizona State, UCLA, and USC. They should broaden their college locations in order to obtain diversity and increase the number of applicants.

Workplace vandalism is another cost of involuntary turnover. This usually arises from disgruntled former employees that feel that they should be compensated in some form for the loss of their job. The costs of this turnover depend greatly on the type of violence the former employees resort to. For example, to calculate the costs of stolen goods, Club Med would need to know the costs of the goods that were stolen, the original inventory, and the amount of accountable inventory. This would give them a shrink number. There is always going to be an acceptable shrink number because of damaged goods and the like. Therefore, Club Med would need to look at the current shrink number, and subtract the acceptable amount of shrink. This would equal the cost of stolen goods. The cost of stolen goods can be considered a cost of turnover.

The main problem that Jacky Amzallag faces related to the resort’s high turnover rates are finding the right people to become GOs and employee job satisfaction. Once Club Med finds the right people, they will drastically reduce turnover costs. The main causes of Amzallag’s problem are in their recruiting, selection and training methods, as well as in the cultural differences between European employees and American/Canadian employees. The recommended methods of finding the right GOs for Club Med are costly, but are highly beneficial for the company in the long run because they will reduce the high costs of turnover. If Club Med hires better personnel they will gain a competitive advantage over other resorts through human resources. After Club Med hires the right employees, they need to focus on keeping those employees happy—through job satisfaction.

In regards to the turnover costs related to the loss of talented employees, they would be minimal. After refining their hiring and GO selection procedures, Club Med should only hire the top 85th percentile of applicants. Therefore, the costs of losing talented employees would be greatly reduced. However, Club Med would sustain the turnover costs related to selecting and recruiting the high quality replacement GOs.

The benefits associated with the proposed strategies would out weigh the costs in the long run because once the new policies are implemented, Club Med will hire people who are better suited for the company and will retain these employees for a greater amount of time. Club Med will reduce turnover and thus the costs associated with it. With regards to recruitment, advertising in a more specialized arena will have higher costs, but the benefit would be an increase in a more qualified applicant pool. Recruiting to a wider range of college campuses would include costs associated with traveling to the colleges, but would also generate a more diverse applicant pool for Club Med. Employee referrals are a great way for the company to keep costs down while gaining the added benefit of high quality candidates. Designing a better job description would not cost the company much money at all, only the cost of the HR employees who write the new description. The

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