The Significance of Improving Productivity in the Hospitality Industry - Essay Example

?The Significance of Improving Productivity in the Hospitality Industry It is a difficult task to define productivity in hospitality industry. As a result, people in the industry possess vague ideas on productivity, and various people use various methodologies to identify productivity variation in companies. Though it is difficult to define productivity, generally all people agree on the factors that can affect productivity. Thus, this work identifies the factors that affect productivity in hospitality industry specifically in bars and clubs, and then suggests some ways to ensure high productivity in this labour-intensive field. Introduction Productivity has a huge impact on all businesses; both individual and corporate. In fact, the hospitality industry is witnessing a steady decline in productivity after World War II, and for many decades the industry effectively hid its poor productivity behind the baby boom in the size of the market. According to estimates, the hospitality industry is only 50% as effective as other industries. Still, it is surprising to note that am effective strategy that could be used to measure the productivity in hospitality industry is not available. This work intends to check why productivity is important in hospitality industry; especially bars and clubs, and also it tries to analyse the existing notion of and attitude towards productivity in the hospitality industry. Thereafter, it tries to suggest some ways that can be adopted to improve productivity in the hospitality industry, especially bars and clubs. The Productivity Paradox of Hospitality Industry The main problem with hospitality industry, according to scholars, is poor productivity. From studies, it became evident that most people in the hospitality industry possess relatively little idea about the importance of human resources in the hospitality industry. In the opinion of Mill (2010), in hospitality industry, the role of human resources has been undervalued. In addition, it is pointed out by Christie Mil that there is little scope for replacing humans with technology as it will not go hand in hand with the term ‘hospitality’. The view that technology is of little help in the field is supported by David, Grabski and Kasavana (1996) too. According to them, despite the best efforts by the hospitality industry to incorporate information technology in operations, there is no evident improvement in productivity. According to them, an important reason for this lack of evidence lies in the fact that there is no effective tool for the measurement of productivity improvement. In addition, it became evident from the study that those who used technology did not use it to improve productivity, but to improve the guest experience. Another serious issue is that different people use different set of criteria to measure productivity (ibid). Similarly, the study by Ingram and Fraenkel (2006) looked into the perception of productivity among hospitality managers. It is pointed out that they possess little idea about the notion of productivity, and the more they tried to understand what productivity is, the more confused they became. The same opinion is revealed by Mill. So, it seems useful to look into the different ideologies on productivity. Definition of Productivity and its Measurement In the opinion of Gummesson (1998), it is both ambiguous and inadequate to measure service productivity. However, in the opinion of Reynolds (2004), as about 30% of the hospitality cost comes from labour, a general tendency in the industry is to reduce labour costs while maintaining productivity. However, an article published by the New Zealand Tourism Research Institute warns that the productivity targets achieved in this way will not last long. This is so because reduced costs will lead to a decline in service standards. As Kimes (2001) states, this poor service, in turn, will affect customer satisfaction, which, eventually, will result in poor sales, and finally, poor productivity. There are people like Parasuraman (2002) who argue that in the hospitality industry, productivity is quality. Similarly, Bates et al (2003) found that though labour intensive, offering better service results in higher long-term profits per employee. Thus, from these people, it seems that better service results in more customer satisfaction, and thus, more return on total assets. Robert Christie Mill opined that in the hospitality industry, productivity is measured using various methods. Some of them are; payroll costs divided by sales, sales per employee, sales divided by number of employees, sales per hour, sales divided by the number of hours of operation, sales per employee hour, and sales divided by departmental employee hours. The study by Clark (1997a) found that most companies assess productivity by measuring the number of sales per labour hour. From the study by New Zealand Tourism Research Institute, it became evident that different people have different perceptions about productivity. However, about three quarters of the respondents found customer satisfaction and loyalty as the most important factors to be used to assess productivity. In addition, about a third of the respondents found financial measures ranging from meeting budget, costs, and sales/revenue per person as the most important criteria to measure productivity. From the above, it becomes evident that the perceptions of different people in the industry about productivity and its measurement vary greatly. However, it seems that reaching a common consensus on what can be done to improve productivity in the hospitality industry is an easy task as most people generally agree on the various factors that influence productivity. productivity in hospitality industry according to various scholars According to New Zealand Tourism Research Institute studies, the various factors that can affect productivity are contented staff, management capability, internal communication, training, employee retention, technology, labour outsourcing, seasonality, and employee turnover. The Role of Management in Productivity Undoubtedly, management has an important role to play in achieving higher productivity in hospitality sector. As D’Annunzio-Green et al (2000) observed, in a labour-intensive field like hospitality industry, people and their skills are very vital in maintaining productivity. In addition, there are studies like the only by Drucker (1994) that acknowledge the relation between human resource management and high level staff performance. More recently, there are studies like the one by Guthrie (2001) that shows the efficacy of empowerment and high involvement work practices in improving productivity. Similarly, a study by Simons (2002) recognized that effective leadership leads to higher Organisational performance while poor leadership leads to poor performance. In the same line, Gavin and Mason (2004) are of the opinion that the Organisations that promote work satisfaction will have a healthy and happy workforce and thus, more productivity. Also, Goldstein (2003) has acknowledged that employee development and employee wellbeing steps taken by the management lead to more employee satisfaction and productivity. Communication and Autonomy In fact, the level of communication among staff, especially in a team, is a very important factor for the staff to perform their role effectively, leading to good customer experience. In fact, New Zealand Tourism Research Institute reports that from interviews, it has become evident that staffs prefer to have smaller groups instead of big ones. In small groups, employees can listen to each other, thus avoiding mistakes, resulting in reduced conflicts in the workplace. Also, it is pointed out that quality relationships with management helps develop a climate where employees find it comfortable to discuss productivity and ways for improvement. In the opinion of Johlke and Duhan (2000), a low-stress work place can be created through effective staff-management communication. In addition, Lo & Lamm (2005) proved that stress in the workplace is directly related to work output and employee performance. Thus, in total, researchers have identified that an unpleasant and stressful working place will adversely affect the quality of service, employee productivity, and eventually, business performance. Work-life Balance Another significant factor, according to New Zealand Tourism Research Institute, is the quality of working life. A general feeling found in the research was that many people think hospitality work is hard, tiring, and poorly paid. Here, it is pointed out that this can result in poor performance. Though the employees may find it interesting to work overtime at first, later on, they will get overworked and stressed out. Some other problems as pointed out by employees are negative customers, low pay and high formality. Support Networks Evans et al (2006) (as cited in Department of Labour) identified the fact that for employees, network is very important. This is especially so when it comes to hiring process, recommendations and attracting hew workers. Moreover, Tuffs (2006) has identified that effective team work is a highly effective way to learn new skills and create a more enjoyable work environment. Hiring and Training Another very important step that can positively influence productivity is training. In the opinion of Shaw & Patterson (1995), effective training helps in developing the ability to meet the demands of the market. It has also been identified that training is associated with Organisation commitment. In addition, Milne & Atelgevic (2001) identified that better training enables the employees to effectively use new technology in the workplace. From the study by Zealand Tourism Research Institute, it became evident that training can improve job satisfaction, employee productivity, customer satisfaction, and competitive advantage. In addition, it is found that training is associated with reduced workplace problems and staff turnover. Employee Turnover and Retention According to scholars, it is important for the hospitality industry to retain their employees. This is because in the opinion of Sheehan (2001), employee turnover will negatively affect productivity, especially in inter-dependent groups and teams. In addition, some other problems identified to be linked to employee turnover are pr-departure productivity loss, errors and waste, supervising disruption, and peer disruption (ibid). In fact, studies have proved that short-employment period is a major issue affecting hospitality industry. Also, it is identified that 85% of the employees were in the field for less than five years. Technology In the opinion of Lee et al (2003), incorporating technology has a positive influence on productivity. Technology can be utilised to support employees, enhance the quality of service, improve efficiencies, gain competitive advantage, maintain relationships with customers and increase profitability (ibid). However, people like Gummesson (1998) identify the fact that as there is the need for ‘human touch’ in the hospitality industry, it is likely for hospitably industry to face problem incorporating technology into the workplace. According to many scholars, the most common technology that is used in the industry is computer, followed by kitchen technology, point of sale, hospitality management system, email loyalty program, reservation system, wireless personal digital assistants, and TXT orders (New Zealand Tourism Research Institute, 2007). The general understanding among hospitality employees and scholars is that the use of technology like wireless personal digital assistants can help employees to do their job easily and effectively, and even multitask performance will become, to a great extent, error free. However, here, one has to remember the fact that for the new recruits, learning to use the technology along with other tasks may be a tiresome experience. So, there arises the need for proper training. Thus, it becomes evident that the incorporation of technology should be accompanied by proper training. Now, based on the above findings, it is time to move on to suggest some ways to improve productivity in hospitality industry, especially bars and clubs. Ways of Improving Productivity From the above discussion, it becomes evident that productivity in the hospitality industry is a matter of serious concern. If the industry wants to improve productivity, various measures will have to be adopted. Hiring the right people As already found, the number of people who continue in the hospitality field for a long time is alarmingly less. So, the first step in improving productivity starts from hiring the right people. While hiring, one should be aware about the changing demography of the country. It will be irrational to turn a blind eye towards the ethnic groups and women as in future; their presence is only to increase in the society and in the workplace. Training Another vital aspect is training. As scholars have identified, giving proper training makes the new recruits more accustomed to the workplace in a short time, thus making the employees, employers, and the customers equally satisfied. At this juncture, employees should be taught how to utilise technology effectively in the workplace. Designing the workplace It is well-understood by all people in the hospitality industry that a poorly set workplace will considerably increase labour, cost and thus, leading to poor customer satisfaction. So, while panning a workplace, there is the need for a thorough market research. Market analysis In the case of bars and clubs, the most important aspect to be identified is the demographic groups that are to be served. One has to remember the fact that the music that attracts the old ones may not suit the young ones. Similarly, the drinks for the old are different from the favorites of the young. It is important that these groups be addressed separately. Menu development The menu should fit the demographic group that is being addressed. When there is a majority of people who are regular visitors, it is important for the club or bar to change the menu often and add items according to season. This will help reduce monotony. However, the size of the Organisation should be taken into consideration while preparing the menu. More on the menu means more time and effort on service. With limited staff and facility, it is risky to offer an elaborate and complicated menu. There are certain things to be taken care of while preparing the menu: the items should appeal to the demographic groups that visit the place, the items should be profitable, the items should not be so difficult to prepare, the items on men should be readily available, and a variety of prices should be offered so that customers get a chance to choose according to their budget. Scheduling and timing It is advisable to schedule employees irregularly. The staff should be arranged in such shifts that more employees are present during peak business hours and less when there is less business. Another point is the effective use of part-time people. The fulltime employees should be kept to play the crucial roles and the part-time staff can be used to supplement the core during peak business hours. Another point is to utilise the employees effectively, especially the fulltime ones. This is so because in the hospitality industry, there are periods of weak business in the day and also in the year. However, the staffs receive the same pay over all these periods. So, it is necessary to identify the times when the different staffs get free, and they should be utilised for some other purposes like preparing for an event that is to come. Development of a productive company culture The companies that are successful place a lot of emphasis on values. Such companies analyse the economic and business environment they are in, develop a clear idea about how their business should run, develop necessary values for their Organisation, and communicate those values well with the employees. Such values should be both lenient and strict at the same time. In other words, while there should be a clear idea at every juncture as to what to do, individuals should be allowed to develop newer ways to achieve that target. In addition, care must be taken to ensure that values are not changed at will. Deviations from the norms should be properly handled. Effective reinforcement of progressive discipline It is necessary for managers in the hospitality industry to adopt various punishment methods as they are in a labour-intensive field and as they are dealing with a lot of humans who work in collaboration with a number of other people. The punishments should positively indicate the company values. Conclusion In total, it becomes evident that hospitality industry including bars and clubs are places where human resources are to be handled with care. The success and failure of any club and bar are almost entirely dependent on how the employees perform, as the productivity there is purely based on human labour. So, the efforts to improve productivity should totally aim at ensuring that the employees function properly. However, as coercion does not provide long term results, it is necessary to develop a work atmosphere where employees feel satisfied to function and committed to perform. Reference Bates, K, Bates, H & Johnstion, R 2003, ‘Linking service to profit: the business case for service excellence’, International Journal of Service Industry Management, Vol.14, No. 2, p. 173. Clark J. R (1997), ‘Improving catering productivity’, Cornell Hotel and Restaurant Administration Quarterly, Vol. 38, No. 6, p. 60. D’Annunzio-Green, N, Maxwell, GA & Watson, S 2000, ‘Human resource issues in international hospitality, travel, and tourism: a snapshot’, International Journal of Contemporary Hospitality Management, Vol.12, No.3, pp. 215-216. David, JS, Grabski, S & Kasavana, M 1996, ‘The productivity paradox of hotel- industry technology’, Cornell Hospitality Quarterly, Vol.38, No.2, pp. 64-70. Drucker, P 1994, ‘The theory of business’, Harvard Business Review, Vol. 75, No. 5, p. 95-104. 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