Strategic HRM Models, the UK Hospitality Industry - Essay Example

STRATEGIC HUMAN RESOURCE MANAGEMENT al Affiliation No. of Words: 2781 Every department in an organization must play a crucial role in pursuit for optimal performance. HRM is a crucial aspect of organization management that gives life to overall organization strategy but partially. Attempts to link HRM in organizations to the overall strategy become an inevitable. The following task entails a comparison and contrast between competitive advantage and life-cycle model and a highlight of UK Hospitality sector. The task encompasses the way Compass Group UK aligns its strategy to compete and achieve excellence in the UK foodservice industry. The discussion provides recommendations on how organizations should align their strategies to achieve excellence. Strategic HRM Models Competitive advantage and Life cycle models explore the link between the set business strategy and the policies and practices within the human resource department. Comparing and contrasting lifecycle model and competitive advantage is essential in terms of their similarities and differences with respect to HRM. Similarities Competitive advantage model includes differentiation as a way of achieve unique feature that can be of valued to the buyers. The resources that give a firm a competitive advantage should have value. Life cycle model encompasses all the relevant stages demonstrate the growth or maturity stage of a firm. For the HRM to have a gain competitive advantage, the policies and practices must be in keeping with the development stage in the life cycle model (Rees and Smith, 2014). The viability of human resource depends on how well the differentiated products are in tandem with the industry demands (Johnson, Scholes, and Whittington, 2002). Therefore, competitive advantage and life-cycle models help to shape the HRM policies and practices in response to industry demands in different life cycle stages. Competitive advantage and life cycle models cannot be applied in isolation. A mature organization requires cost leadership and differentiation to survive in the industry. The viability of a firm to sustain competitive advantage stems from attaining maturity. Boxall and Purcell (2011) argue that a firm may set out to be the best in the industry by focusing on cost and product differentiation but it must have reached the maturity stage to position itself well in the market. The organization must be mindful of the lifecycle stages to initiate a change in the tactics used to approach the market. The HRM practices are geared towards reducing competition and offering products that are cost effective for all customers (Marchington and Wilkinson, 2012). Competitive advantage and lifecycle model evoke organizational agility. The role of the HRM is to align human capital practices that are in keeping with the changing life cycles of the firm. Competitive advantage model proposes quality enhancement strategy while lifecycle model gives highlights the context of the firm with respect to the prevailing business changes in the market. An organization that aligns human capital in response to changes highlighted in different lifecycle stages stands to sustain competitive advantage and increase its built-in capacity (Marchington and Wilkinson, 2012). A mutual reinforcement from the two models is the only way a firm can compete and retain its overall market share. Figure 1: Linking Competitive Advantage and Life Cycle Models-Researcher, 2015 Differences Competitive advantage model proposes techniques that a firm that can use to improve its HR practices (Nilsson and Rapp, 2005). The model leads to the creation of competitive mission and values. The HRM department learns how to take defensive action through cost leadership and differentiation. The focus entails becoming the best in the industry segment. However, there must be supportive HR practices including appraisal, staffing, training and remuneration (Millmore et al., 2007). On the other hand, lifecycle models require close monitoring of the industry to avoid rendering the process of costs leadership and different futile. As the organization goes through start-u, growth, maturity, and decline, the HR strategies unleashed should change accordingly. The organizational development phase determines the products and human capital changes that a firm should make. The people working in organizations are the definitive sources of competitive advantage (Nilsson and Rapp, 2005). The resources may decline with the development stage of the organization, and it is the duty of the HR department to align the fittest resources (Boxall and Purcell, 2011). Subsequently, the lifecycle model acts as an indicator for the HRM practice while competitive advantage becomes the ultimate tools use to realize the targeted results. However, lifecycle model does not recognize the value of human capital as competitive advantage does. The UK Hospitality Industry As individual companies continue to look for the best HRM practices to sustain competitive advantage and sail through different lifecycle stages, the approaches change from one industry to another. The hospitality industry in the UK has carved its niche in the economy through key players and capacity to confront challenges and exploit opportunities (Caan, 2014). Highlighting its size, main players, trends, opportunities, and challenges amongst other business practices is essential. Size According to Caan, (2014) UK hospitality industry features guests and companies that are quality driven. The industry is made up of hotels, restaurants, pubs, clubs, bars and contract catering services and makeup 10percent of the national commerce industry. According to British Hospitality Association (2015) at least 45,000 hotels serve at least 19 million hospitality customers. The industry has created 30,000 jobs for young professionals in the economy. Figure 2: Chart Showing UK Workforce (BHA, 2015) Main Players The largest organizations in UK hospitality industry include Whitbread Hotels and Restaurants, Hilton, Marriot, SSP UK, The Ritz, Accord, Compass UK, Sodexo, Belfry, Travel Inn, Holiday Inn Express, Travelodge and Ibis. The companies contribute to the 856,750 rooms and an annual turnover of $40billion. The key suppliers of hospitality are divided into independent (51%), branded budget hotels (18%), full service (14.7%), mid-market (11.7%) and consortia (4.6%). Branded budget hotels are expected to grow by 2030 because it is highly dynamic (British Hospitality Association, 2013). Figure 3: A Bar Graph Showing Main Segments in UK Hotels (BHA, 2015) Trends Every key player in the UK hospitality sector is cognizant of the defining trends shaping the industry. According to Melvin Gold Consulting Limited survey, the industry is set for further growth in branded hotels. Independent hotels are closing down due to the increasing demand for branded outlets. The survey also found out that consortia and corporate branded hotels are facing a possible 68.5percent in supply (Melvingoldconsulting.com, 2015). There is a growing demand for digital operations from the prime guests (Mazars.co.uk, 2015). The spectrums of business in the hospitality sector are calling for digital channels to boost brand strength and valuable distribution channels. Harnessing social media, CHIP and PIN and mobile technology has become a norm. There is the ongoing trend of eating out in UK. The pressure is mounting on independent hotel operators who have not registered meaningful seat turnovers when compared to branded operators. Eating out trend has increased since 2013 and has generated 1.3 percent increase in overall food and beverage sales in the UK market (Jack, 2014). Branded restaurants will continue to gain market share in the next five years due to growing consumer confidence and physical expansion. The robust trading performances from coffee shops, sandwich chains, and other branded outlets have been the key source of the growth. The industry is dealing with consumers who are still conscious of their spending levels and the state of the economy (PwC, 2015). The prevailing economic pressures are compelling consumers to opt for breakfast and dinners due fear of low-income generation in future. The consumer spending levels dropped from 45percent in 2012 to 39percent in 2013. The work of the operators is to create menus that have value and accompanying affordable prices. Eating out may be the new norm but customers are still defensive about spending. Challenges Restaurant owners and independent operators have not implemented schemes and plans to embrace CHIP and PIN technology (Line and Runyan, 2012). Consumers in the UK hospitality sector have been left to contend with card crime and theft despite the industry attracting 60percent of the cardholders. Pricing competition has elicited new arrivals in the sector (Jack, 2014). The new entrants are setting the pace in the market for strong business strategies and performance. The level of competition is calling for an overhaul of HR departments to retain quality staff. A survey carried out by Mazars Hospitality and Leisure in 2012 revealed that HR directors, hotel managers, and financial directors are cognizant of the government’s agenda in the sector. The sector is calling for business strategies that can contend with the new face of competition. Key Opportunities Branded and managed outlets will define the hospitality sector in the next five years. The branded budget hotels and pubs have taken 2.1 % share of the overall turnover (Testa and Sipe, 2012). The remarkable turnaround among the prime consumers entails value for quality food and beverages. Any independent operator intending to retain a market share should consider changing approach to include branded coffee shops, and sandwiches. Operating as independent operators will be a risk because consumers UK determine the direction that the foodservice industry will take in future. A Profile of Compass UK Winning Business and Industry Caterer of the Year at Food Service Cateys, 2014 speaks volumes of a company whose organizational strategy is about winning. Compass UK dedicates its efforts to the food service industry in UK through the delivery of exceptional services (Compass-group.com, 2015). Compass Group UK founded the food service outlet and implemented policies, procedures, and controls that are within the UK ethical and legal limits. The organization strategy of Compass UK entails vision and values, policies, code of ethics and a clear mission statement. An autonomous management structure helps to distribute various roles and responsibilities to all workers in the hotel. The vision and values of Compass UK encompass a framework of ideas that differentiates the company from other key players in the industry. The actions, every decisions, and behavior are based on the workers and the top executives’ beliefs (Line and Runyan, 2012). The strategy helps the company to set clear objectives in a bid to boost financial performance and confront critical business issues within the hospitality industry. The process helps to realize the vision of becoming a world-class leader provider of quality food and support services. The goals and objectives of Compass UK revolve around the delivery of value to both shareholders and customers (Compass-group.com, 2015). The group aligns its goals and objectives with the vision to achieve a sustainable organic growth. Competitive advantage model demands that a company must strike out a unique way of facing competition. Additionally, the practices must be cognizant of the development stage and prevailing industry demands as stipulated in the life cycle model. Compass UK is committed to achieving its goals and objectives through clear strategy. Compass UK’s Strategy The food service company aims to deliver highest quality and service performance in the UK hospitality sector. The company understands the mechanics of competitive advantage model because it works on adopting cost leadership in the UK market. Compass UK is driving itself towards lowest costs and efficient services without offsetting its profit margins. The company is experiencing its highest growth rate since inception. Lifecycle’s growth stage of organization development calls for relevant expertise and strength. The company has invested in professional skills that can help contract food service and support services become a reality in the country. There are real prospects for growth give that the Compass UK has a growing international client base and gain a global capability to outshine local firms. Compass UK strategy also entails Management and Performance (MAP) and global performance framework (Compass-group.com, 2015). The company aims at establishing a sturdy performance culture among employees and work on five key drivers of performance. The company will focus on costs of food, unit costs, above unit costs, consumer sales and marketing and client sales and marketing to penetrate local and global food service market. Additionally, the food service industry requires highest standards, and Compass UK will come in to set high standards for legal corporate governance and ethical and responsible practices. The practices will include health, safety, environmental practices and ethical business conduct. Compass will not relent to adopt the best HRM practices to achieve its goals. UK offers the professional and fresh graduate (Compass-group.com, 2015). Not only will the company hire and place the best people in the market but also it will create a platform for training and imparting professional skills to fresh graduates. The current state of competition defines a market where firms are scrambling for the top spot. Life cycle growth stages welcome forms whose marker leadership encompass costs effectiveness, devoted workforce, and operational excellence. Company UK hopes to gain competitive advantage through customer and client satisfaction and positioning a high-quality portfolio on UK foodservice market. The company has demonstrated its commitment to business strategy by winning Foodservice Catey award two years in a row. Organization’s Approach to HR Company Group understands the role of human capital in the pursuit of performance and confronting competition in the food service industry. The foodservice company is dedicated to the HR approach and strategy that entails the development, relations, and rewards. The company looks after its employees because it is a leading employer in UK. Compass Group UK provides decent careers and apprenticeships as part of HR development strategy. Competitive advantage calls for differentiation, and the company looks for the right people with relevant skills in the food service sector (Li et al., 2013). The company selects interested applicants aged 16 years and above and engages them in rigorous induction, training, and development. Lifecycle model points out that a company must align its HR practices with the changing industry demands. Compass heeds the call and conducts regular performance reviews, experiential, on-job and face-to-face courses. The apprenticeship program has attracted 3500 colleagues where some are undergoing training in established chef academies. The reward strategy aims at treating all employees equally and appreciating them for their outstanding efforts (Li et al., 2013). Compass treats all employees with respect and dignity irrespective of their age, color, level of education, marital status, and sexual orientation. The company gives employees a platform to become stars by nominating winners on an annual basis. The winners share their experiences with other workers before becoming part of the Compass Group. On the other hand, the relations approach of HR for Compass is in keeping with the changing face of corporate culture. The company has reached a life cycle growth stage where employee and engagement and culture are vital. The company carries out regular development surveys to understand the needs of workers. The platform paves the way for promotions through proper listening and advisory panels. Conclusions Organizations look for constant ways to increase their leverage and stay afloat in the business. HRM is one of the vital facets of a well-to-do organization. The HRM strategies that a firm adopts should be in line with the development stages and aimed at gaining an integral market share. Adopting the suggestions enshrined in Competitive Advantage and Lifecycle models is one ideal way to sustain and foster growth. Competitive advantage and lifecycle models prompt for HRM practices that guarantee a company cost leadership, differentiation and capacity to change according to the development stages’ demands. The UK Hospitality sector has been highlighted with key players such as Compass Group striking a proper HR bargain to compete locally and globally. However, there is still room for improvement in the HRM practices. Recommendations Firms should adopt positioning as opposed to the current way of prospecting competition and growth (Wright and McMahan, 2011). Positioning employees, customers, and clients will give rise to companies that take strategic and intentional actions to foster growth amidst industry based challenges. The resultant effects will be exponential growth. Organizations should pay close attention to the value chain to gain an optimal competitive advantage (Schuler and Jackson, 2007). Companies manage to come up with products and services that customers can pay and willing to consume. The UK Branded operators have heeded the call, and there is an increasing demand for branded food and beverage items. The choice of the HRM and overall business activities should be made promptly and configured to the prevailing demands. The cost differentiation method must generate value to the target customers, clients and shareholders. The challenge of the information revolution is imminent, and a well-placed company will align its strategy with relevant opportunities and investment in IT (Porter, Smith and Fagg, 2006). IT approach should be beyond computer knowledge to include strategic operations that reinforce the value chain. According to Ree, French and Rayner (2010) the extent a customer is willing to pay premium should be commensurate with the value created. IT will provide an efficient linkage between value chain activities and help to reduce cost. References List BigHospitality.co.uk, (2015). Labour pains: How can the hospitality industry tackle the recruitment challenge?. [online] Available at: http://www.bighospitality.co.uk/People/Labour-pains-How-can-the-hospitality-industry-tackle-the-recruitment-challenge Boxall, P. and Purcell, J. (2011). Strategy and human resource management. 2nd ed. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. British Hospitality Association, (2013). Hospitality industry unites to create over 30,000 job opportunities for young people by 2015 - British Hospitality Association. [online] Available at: http://www.bha.org.uk/bha_news/hospitality-industry-unites-to-create-over-30000-job-opportunities-for-young-people-by-2015/ Caan, J. (2014). To succeed in hospitality, focus on the customer. [online] the Guardian. Available at: http://www.theguardian.com/small-business-network/2014/mar/05/succeed-hospitality-focus-customer-james-caan Compass-group.com, (2015). Strategy | Compass Group. [online] Available at: http://www.compass-group.com/strategy.htm Hospitality & Catering News, (2013). UK Foodservice and Hospitality market set for positive growth - Hospitality & Catering News. [online] Available at: http://www.hospitalityandcateringnews.com/2013/08/uk-foodservice-and-hospitality-market-set-for-positive-growth/ Jack, I. (2014). Dining out in Britain has become a febrile, noisy, expensive ordeal | Ian Jack. [online] the Guardian. Available at: http://www.theguardian.com/commentisfree/2014/feb/22/dining-out-britain-febrile-noisy Johnson, G., Scholes, K. and Whittington, R. (2002). Exploring corporate strategy. Harlow (England): Financial Times Prentice Hall. Li, L., Gray, D., John Lockwood, A. and Buhalis, D. (2013). 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