Human Resource Management in the Hotel Industry - Term Paper Example

Introduction: There is a view that academic literature on HRM concentrates more on manufacturing industries rather than service industries, which employ almost 76% of the total employed workforce. The more surprising aspect is that the service industries like for e.g. hotels depend much more than manufacturing industries on their human capital for the quality of service being delivered by the intangible interface between the staff (the service provider) and the customer. The reason for this could be that the 'services sector' is not homogeneous and includes such diversified industries and services like banking, business services, catering, distribution, finance, insurance, leasing, hotels and transport etc. In addition to this, it is estimated that sixty five to seventy five percent of work in the manufacturing industries also relates to 'services'. However the services provided by different industries are different in content and nature and for the reason cannot be dealt with as a generic proposition. For example the hotel industry is seasonal unlike many others listed above. The hotel industry is characterised by ad hoc management, lack of trade unionism and high labour turnover. (Hoque 1999a 4) 1.1 Human resource management in the hotel industry: The most compelling argument for instituting human resource management in the hotel industry is that the customer is not only a recipient of the service but also a part of the process. Never before was the adage the customer being the king truer than now with intensified global competition, heightened customer expectations and abundance of choices across industries - and the hotel industry is no exception. The quality of human resources could well be the differentiator that can lend a competitive edge to the industry. The reputation that a hotel earns for its quality of service, is difficult for its competitors to replicate. The core philosophy of human resource management is that employee commitment enhances employee performance. A properly implemented human resource management system ensures attracting and retaining the right talent, motivating the workforce, developing workforce skills and resolving or avoiding conflict situations to achieve organisational goals cost effectively. Friedrichsen sums up the key objectives for pursuing strategic HRM in the hotel industry as follows: it must focus on both activities generating value for the company and optimising HRM costs at the same time (value contribution); it must develop, promote and retain human capital to suit the company's strategic objectives (aligning human capital with strategic objectives); and it must anticipate and support change initiatives with necessary processes, methods and instruments for a smooth transition (managing change). (2003) Hoque cites other researchers like Guest (1987) and Beer et al., (1985) to argue that employees' commitment makes them more satisfied, productive, adaptable, willing to accept organisational goals and values, and not mind to 'stretch' themselves to meet organisational goals. The 'stretch' will be in terms of additional productivity, effective contributions and taking part in continuous improvement processes. The spirit of self-motivation inculcated in the workforce would result in less need for supervision, which in turn results in reduced overheads by reducing the need for managerial tiers. Organisations that achieve congruence of perceived interests with their workforces are less likely to be viewed with suspicion when they have to perforce undertake changes necessary to meet environmental needs. Workforce in such organisations will be willing to swap roles (multi-tasking) that help them in more effective utilisation of labour. (1999a 8). In his illuminating article on the relationship between human resource management and performance based on a study of 200 hotels in the UK, Hoque demonstrates that the relationship between HRM and performance depends on the company's business strategy; that a strategic HRM policy coupled with focus on quality within the business strategy enhances business performance and that a systematic approach to HRM indeed contributes to "competitive success". Interestingly in this study, irrespective of the hotels' business strategy whether "focusing on cost minimization or price competition"; "focusing on quality enhancement"; or "with an ambiguous approach to business strategy" all had "responsiveness to customers' needs" listed as a common attribute. (1999b) Based on Hoque's logic "responsiveness to customers' needs" can only be achieved with a systematic approach to HRM. An example illustrates "responsiveness to customers' needs": if a guest has a problem with some aspect of his stay, the employee to whom he speaks about it should not say, "Oh, but that is not my area, please talk to 'so-and-so' about it". The essential principle of HRM that makes this possible is that if workers are to contribute to the achievement of organisational goals by their commitment, 'stretch' and flexibility, the organisation also must reciprocate by offering them fair wages, (wage design) imparting necessary skills/training for the successful conduct of their job functions, scope for career development, (training and development) employment security (psychological contract) and a just and equitable working atmosphere. It is argued that the HR strategy that may be adopted depends upon the business strategy of the organisation, the contingency approach within the business strategy, the finance strategy and finally the size of the business. 1.2 Hotel industry overview: The irregular seasonal nature of the hotel industry may to a certain extent be responsible for managers adopting a numerically flexible and contingent labour approach and to employ low cost female/immigrant/ethnic minority labour, at least in the areas in which the labour does not come directly into contact with customers. The other key determinant of the HR/labour policy in the UK hotel industry is the tight control on costs. This has inevitably led to a low level of training, low-skilled workforce with little motivation to 'stretch', or a lack of interest in flexibility of functions. On-the-job training is notable by its absence, skill up-gradation and implementation of high commitment practices even less so. The industry has no mechanism to resolve workforce grievances, consolation, communication or information sharing mechanisms with employees. These practices in HR management in the hotel industry (or lack of them) resulted in high labour turnover, absenteeism and dismissals. (Wilton 2003, Knox 2005) The development of strong employee commitment, and management of "commitment cultures" begins with objective recruitment & selection procedures and training & development practices. McGunnigle et al. find that while the industry has a desire for "commitment", it has paid little attention to objective recruitment and selection procedures. If enough attention is paid to the "incoming culture" by selecting and recruiting the right kind of employees - employees with the right attitude and behaviour - it will also bring about changes in the attitude of employees already working in the organisation. Contrastingly some hotels in the industry have put in place "relatively sophisticated training and development systems congruent with an HRM approach". The futility of this approach is evident because if employees without the right attitude and aptitude are brought in, no amount of training and development is going to inculcate in them a "commitment culture". However the adoption of HRM practices in general seems to be random and sporadic with some practices being adopted by some hotels rather than an integrated approach to HRM. Overall, according to the researchers, the UK hotels industry is yet to shift towards HRM (McGunnigle et al. 2000), although the larger hotels are veering towards formalising HRM policies and procedures. (Knox 2005) The other areas that a strategic HRM approach should take into consideration are performance appraisal and reward systems, employee participation and involvement, and empowerment of employees. A serious dilemma that hotel industry cannot wish away is that the number of new entrants is increasing without a corresponding increase in the numbers of hotel guests. This means that the employees - the good ones at least - have the opportunity to swap employers. The best course of action for managements to make service a differentiator is the 'back to basics' approach to HRM: exercise due diligence in the recruitment and selection of employees; train them well not only to ensure that they delight the customers in their own functions but are able to assume multiple roles if necessary; reward the good ones based on regular performance appraisals offer fair wages and ensure that there is a mechanism to redress grievances. 1.3 Recruitment and selection: The example mentioned above has two implications: one the attitude of the employee and the other the training and development he continues to undergo. According to literature available on the subject selection procedures involving traditional interviews are not much better than chancing upon good employees. McGunnigle et al. suggest "psychometric testing and profiling, occupational personality questionnaires (OPQ), biodata analysis, behavioural event and episodic questioning techniques" in order to select attitudinally right candidates. (2000) 1.4 Training and development: Revisiting the example quoted in 1.2 above, the employee should be resourceful enough to promise that the problem would be sorted out, take it to the appropriate department and follow it up till a solution that is satisfactory to the guest is found. If, in the event of a solution that the guest desires is not possible, the employee must have the tact not to throw the rulebook at the guest but explain the situation to the guest politely so as not to hurt his feelings. A proper system of training and development cultivates such tact in employees. McGunnigle et al. list the objectives of a system of training and development as: Bringing about employee commitment Using systematic recruitment and selection methods to be able to select employees who will fit into a culture of commitment Using formal appraisal systems linked to training and development which will reinforce employees' commitment (2000) 2.1 The Headrow Hotel: The 'more-than-a-century' old hotel founded by Frank Green and run by the Green family ever since has been a reputed landmark in Leeds and is famous for its 'old-fashioned' service. The hotel's reputation made it a prime target for 'take-over' bids by leading hotel chains. Headrow is ideally located for the city's business community and thriving nightlife to enjoy. The management is eager to increase the hotel's share of the lucrative leisure and hotel market. With this end in view they plan to upgrade the hotel from its present three-star to four-star status within the next three years. The challenge that the management faces is to provide modern facilities that appeal to the hotel's twenty-first century clientele while retaining the 'old world' ambience for which the hotel has been famous. In fact they see that if they were able to achieve this, it would be the main 'differentiator' that sets Headrow apart from the competition. The hotel has at present ninety-eight bedrooms on three floors. The hotel has a bar, a restaurant and three conference/banqueting halls. The management is planning a major refurbishing programme to cover most of the hotel premises. They plan to reduce the number of bedrooms to sixty but add a health spa in the basement in keeping with the tastes and requirement of health conscious modern clientele. All communal areas like the conference/banqueting areas, lounges and the restaurant and the external faade will be given a face-lift. 2.2 Headrow's HR situation: The management is conscious of the fact that all these changes will come to naught if the hotel staff does not share their business goals. But Headrow does have a HR problem. The hotel has a 'core' staff of approximately thirty people who have been working in areas such as housekeeping and front office for many years that takes pride in delivering high standards of service. The other staff number between 190 and 210 depending on the seasonality of demand and the turnover of the other staff has been as high as 88% in 2004. The reasons for this are not far to seek: the wages as with other hotels in the industry are low; the working hours are unsociable; there is attrition from other hotels in the area. But the more important reason seems to be the prevailing atmosphere of antagonism between the core staff and the rest. The family members on the board and departmental managers have handled 'human resources' till now - it would be more appropriate to say that they were looking after staffing with a personal rather than a professional touch. The management's current dilemma is whether to appoint a human resources manager or 'outsource' the function to a consultant who will manage human resource issues during the proposed expansion phase of the next three years. 2.3 HR issues Headrow Hotel should address: It is clear from the foregoing discussion that a systematic approach to HRM will usher in a commitment culture (McGunnigle 2000) among employees and facilitates competitive success (Hoque 1999b). The hotel should therefore begin by recruiting a qualified HR manager well versed in managing employees in the hotel industry. A full time/permanent HR manager is preferable as he will be 'in situ' to take on the challenges of the function as they crop up, as they are certain to do in the dynamic hotel industry with its performance judged by the quality of service it delivers. The first assignment for the new HR manager will be to design a set of procedures for selection and recruitment, training and development, rewards and recognition, mechanisms for redressing grievance etc. It is also necessary to identify functional areas that need only part time employees and functions that may be outsourced in order to avoid 'ad hocism' and institute a set of standard operating procedures, which help organizations function like well-oiled machinery in times of stress. At this stage it is possible to control the 'incoming culture' to select attitudinally right people by instituting selection procedures for recruitment and selection of employees suggested by like psychometric profiling, occupational personality questionnaires (OPQ), biodata analysis, behavioural event and episodic questioning techniques. (McGunnigle et al.2000) Before the hotel takes up the exercise it is necessary to resolve the issue of the 'atmosphere of antagonism' between the core employees and the rest. As the first step for this, the core employees should be put through the same tests: psychometric profiling, occupational personality questionnaires and behavioural event and episodic questioning techniques. This can be done by counselling these employees that it is in their and the organisation's interests to do so. Employees who top the tests automatically qualify themselves for retention. The company will arrange for a series of on and off the job training programmes to help the middle rankers to 'make the grade'. Below a cut off point or by a case-to-case basis the hotel may decide to discharge the 'no-gooders' by following appropriate procedures and with fair severance pay. It may be painful but it is in the interests of the organisation to do so - retaining them will only vitiate the atmosphere. The next job for the new HR manager will be to design a series of training and development programmes by identifying individual training needs of employees. The employees retained and the new recruits may then be put through a series of training and development programmes in batches that can be handled keeping individual needs in view. It is necessary to train old and new employees in mixed batches in order to create a new corporate culture that is congruent with organizational objectives and creates an atmosphere to achieve them. Kamoche suggests the following conceptual framework for the working of HR (2003) It is clear from the depiction that HR is a part of the fulcrum that aligns the external competitive pressures with the internal efficiency pressures, balances structures and flexibility to deliver value to the quality customer. As Headrow heads into a new phase where it seeks deliver value to the twenty-first century customer offering an 'old-world' ambience as its unique selling proposition (USP) it is necessary for the hotel to craft its HRM policies with Kamoche's depiction as its road map. Friedrichsen, Marc. (2003) Human Resource Management - Contributing to Value Generation and Productivity. Hospitality Net. URL: http://www.ehlite.com Hoque, Kim. (1999a). Human Resource Management in the Hotel Industry: Strategy, Innovation and Performance. London. GBR: Routledge. http://site.ebrary.com/lib/britishcouncilonline/Docid=10070684&ppg=19 Hoque, Kim. (1999b). Human Resource Management and Performance in the UK Hotel Industry. British Journal of Industrial Relations. Sep 99, Vol. 37 Issue 3. pp 419-443. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=2175591 (Accessed 2006-04-27) Kamoche, Ken. (2003). Riding the typhoon: the HR response to the economic crisis in Hong Kong. International Journal of Human Resource Management. Mar 2003, Vol. 14 Issue 2. pp 199-221. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=9630603 (Accessed 2006-04-27) Knox, Angela. (2005) Organisational flexibility and HRM in the hotel industry: evidence from Australia. Human Resource Management Journal; 2005, Vol. 15 Issue 1, pp 57-75. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=15908287 (Accessed 2006-04-27) McGunnigle, Peter J. HRM in UK hotels: a focus on commitment. Employee Relations; 2000, Vol. 22 Issue 4/5. pp 403-421. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=3672283 (Accessed 2006-04-27) Wilton, Nick. (2003) Diversity in the Management of Employee Relations in the Hotel Sector in South West England. ESRU Working Paper No.8, July 2003 Bristol. Bristol Business School. University of the West of England. Available from: www.uwe.ac.uk/bbs/esru. (Accessed 2006-04-27) Read More