Strategic HR Management in the Hospitality Industry Report

Introduction

Table of Contents

The fact that today’s employees are fundamentally different from employees of yesteryears necessitates the development of new methods and techniques to tackle current and future challenges in the Human Resource industry. Workers are different in terms of skills, motivation, goals, perceptions and many other variables.Hence, employees cannot be administered using traditional human resource methods. Apart from change in modern day workers, the internal and external environment that most firms operate from has also fundamentally changed.Human resource has experienced evolution over the years. Strategic Human Resource Management is a new development, which if effectively utilized, could be used to solve current problems facing human resource. Firms are becoming more market-oriented as opposed to production-oriented. Production has become less labour-intensive with advancements in technology.Firms are more sensitive towards employee welfare because it is crucial for optimal employee productivity. Strategic Human Resource Management offers solutions to current and future Human Resource problems.Strategic Human Resource Management is a fairly new concept. According to Schuler and walker, human resource management refers to the activities and processes carried out by the employees and managers in an organization to reach business solutions to problems. In essence, Human Resource Management involves the administration of workers/employees in an organization by a responsible line manager.Strategic Human Resource Management, on the other hand, is the systematic implementation of processes and activities to formulate policies that will govern the administration of workers in a firm. This is done in view of the objectives of the firm.It is a proactive approach that seeks to plan ahead and develop new ways through which a company can better manage its employees. This report takes a look at HR problems in the hospitality industries. It also puts forward recommendations to counter these problems. In addition, it also undertakes a precise analysis of the current internal and external environment in the hospitality industry (Lockyer, 2008).

A Brief Overview of the Hospitality Industry

The hospitality industry encompasses a broad category of fields within the service sector. Lodges motels, resorts, theme parks and other recreational centres form this industry. This is a multimillion dollar industry that forms the backbone of most world economies. This sector grows because of the availability of leisure time and a favourable disposable income.The industry can be divided into various subsectors such as; food and beverages, accommodation and lodging, gaming and entertainment, conferences and events and many other broad categories. Firms that operate in this industry have employees working under various functions of the organisation.Being a social and interactive industry human resource management is very important. Employees need appropriate training to make guests feel welcome and to build a reputation. In this industry, reputation is paramount.Employees of a firm can destroy or build the reputation of the firm. Employees play a major role in defining the image of the firm consequently, attracting or repelling customers. Being a dynamic and versatile industry, there are numerous challenges facing human resource practice in the hospitality industry.

Challenges Facing Human Resource Practice in the Hospitality Industry

Technological Advancement

Organisations are moving away from labour intensive production methods to capital intensive methods. This presents a lot of challenges to managers in an organisation with regards to human resources.New technology means that workers have to be trained in order to equip them with the relevant skills for optimum use of equipments. The firm also has to come up with strategies to combat employee resistance to change. Employees must be psychologically prepared for change if change is to be effective.In some cases, technological advancement may translate into staff being laid off. Technology may make some workers redundant and hence a liability to the firm. The firm is faced with the challenge of retrenching some of the workers. Retrenchment is a very sensitive matter which if not properly carried out could lead to conflicts.The firm also has to strike a balance between human labour and machines so as to ensure none of the two is compromised in the production process. For example online booking of reservations has greatly reduced the number of employees required at the reception office.

Globalisation

The world has become a global village. Now more than ever people are moving across countries for both business and leisure purposes. Multinational companies are increasing in size and stature.The media is playing a very crucial role in promoting foreign tourism. Influx of visitors from foreign countries has created a lot of business for firms in the hospitality industry. Globalisation has brought with it a lot of social interaction with people from different backgrounds.A firm has to train its workers on how to interact with visitors from foreign culture. Nowadays, ability to speak in a foreign language is an added advantage to job seekers in the hospitality industry. How then does a firm deal with the challenges that come with globalisation?

Value Chain

Human resource focus is shifting from managing activities to managing the value chain. Firms are thus forced to realign their strategies to be based on the value chain. Human resource managers are tasked with the activity of aligning all staff members towards a common objective. For there to be an effective value chain goal congruency is very important.

Labour Turnover

Compared to other industries, the hospitality industry is growing very fast. Such growth and expansion creates a lot of employment opportunities. The human resource function is tasked with the responsibility of recruitment training and retention of staff. The market is flooded with people trained in hospitality fields.It is difficult for the HR mangers to identify recruit and retain staff. Labour turnover is very high since there are numerous employment opportunities. The HR function has to derive mechanisms of retaining staff. High labour turnover is a cost that a firm must minimize.

Reconstruction and Mergers

Most companies are going global and those in the hospitality industry are not an exception. Most hotels and lodges want to have a presence in the world’s most popular tourist destinations. Hotels such as Hilton and Serena are present in most major cities of the world.This is made possible through acquisition mergers and takeovers. Such mergers and acquisitions task the HR function with the responsibility of harmonizing staff of the holding and subsidiary companies. If the workers are not well managed conflicts of interest may arise between the two sides.

Peak And Off Peak Fluctuations

One of the main problem facing firms in the hospitality industry is the fluctuation in business during peak and off peak periods. Visitors normally prefer to take holidays during summer and stay way during winter. During off peak periods, most resources of the firm including human resources are left idle.The HRM function has to be creative to keep workers busy during the off peak period or are forced to lay off some of the staff members. The firm therefore has to avoid recruiting and retrenching workers during peak and off peak periods respectively. It is costly and at the same time inefficient to keep on hiring and firing (Beer, 2005)

Analysis of the Hospitality Industry Environment

An organisation cannot exist on its own. Decision making and policy making is influenced by the immediate and external environment. The internal environment (micro environment) can be controlled by the firm whereas the external environment (macro environment) is not within the control of the firm. These environments have a direct effect on the HRM function of a firm (Brotherton, 2008)

External Environment and How It Affects HRM

Legislation

The hospitality industry is largely affected by government, municipal and other relevant laws and regulations. The human resource function has to keep abreast with legal matters at all times in order to formulate policies that do not contradict the law. The government for example can impose an age limit for sale of alcohol thus increasing or reducing the number of customers.The HRM function has to train staff to abide by these rules in order to avoid getting into the wrong side of the law. This is important since breaking the law will attract huge fines and bad publicity to the firm.

Political Factors

The hospitality industry is greatly affected by politics. Political instability in a country has adverse effects on its hospitality industry. Travel sanctions to unstable destinations issued by countries to its citizens have a negative effect on business. HRM function has to device mechanisms to counter fall in customers during times of political upheaval. The management also has to ensure that politics does not spill into the work place.

Environmental Factors

The world is going green, the society is more conscious of its environment now more than ever. Corporate social responsibility is a definite plus for companies. In the hospitality industry where image is everything, a firm has to employ eco friendly ways of production. The HRM function therefore, has to instil a culture of environmental consciousness to their staff.

Economic Factors

The hospitality industry benefits when peoples disposable income is high. During recession time, there was a major decrease of visitors to major tourist destinations. These had adverse effects on business in the hospitality industry with hotels and lodges experiencing record losses. The HRM function therefore has to review the salary of workers downwards in order to minimize losses or lay off staff. When business is booming on the other hand, there is a shortage of workers hence the HRM function has to recruit more workers to cater for the deficit.

Social Factors

With the globalisation and expansion of businesses, there is increased diversity in the work place and the hospitality industry is not an exception. Workers are drawn from different cultures and backgrounds creating a cocktail of employees. It is the work of the HRM function to device strategies that ensure that there is no discrimination on the basis of gender, race, age or social class. There has to be some cohesion among workers if the objectives of the company have to be met (Boela, 2005).

Internal Environment and How It Affects HRM

Company Culture

Every company has its own unique culture. The culture of the company is important in the hospitality industry. It is the company’s culture that shall determine a company’s reputation and consequently its image. A good image is a natural magnet to business. In a nutshell the conduct of the employees influences greatly the profitability and image of the firm.

Organisation Structure

The organisation structure is a very vital internal factor of the firm. Employees are divided amongst functional units such as HRM, accounting, marketing procurement among others. Each functional unit has its own functional manager. The HRM function however manages the workers in all functions of the firm.There has to be collaboration between the HRM manager and the respective line managers to avoid conflicts and misunderstanding. Opposing interests between departments may give birth to unhealthy internal competition that overrides the general goals of the organisation.

Finances

The size and business capabilities of a firm are largely influenced by its financial resources. Finance is the engine of business. HR policies with regards to remuneration allowances and bonuses are guided by the company’s financial prowess. The number of workers to be employed is also principally determined by the ability to pay of the firm.The HR function is responsible for administering workers salaries and must factor in the company’s financial muscle when drafting pay slips. A company can pay more than the general wage levels in the industry if it has the financial capacity to do so.

Technology

The level of technological advancement is another internal factor of great importance. Companies that are advanced in technology have a capital intensive approach to production while those that are not advanced have a labour incentive approach. Both approaches have their pros and cons that must be factored in when drafting policies that affect the welfare of employees.

Corporate Objectives

Generally, firms’ activities are guided by their objectives. In the hospitality industry, firms have diverse objectives. Objectives range from revenue maximization to building a good reputation for the firm. Whatever the objectives of the firm are, it is the duty of the HRM function to communicate them to the workers through training and civil education.Apart from awareness, goal congruency must also be ensured among employees from different departments of the organisation. Employee participation must also be ensured in the process of formulation of objectives and any changes communicated well in advance (Campbell, 1998).

Importance of Strategic Human Resource Management

The development of strategic human resource management is largely due to the deficiency of traditional human resource management techniques. Strategic human resource management can be of great use to solve problems encountered in human resource management. Strategic HRM can also be used to formulate policies in accordance to the prevailing conditions in the internal and external environments of a firm. Here are some of the benefits of strategic human resource management (Carnal, 2007).

Goal Congruency

Strategic HRM links Policies and practices with the overall strategies of the firm. Policies and programmes are drafted in view of the general goals of the company to achieve alignment towards a common direction.

Empowering Employees

Unlike traditional human resource management, there is devolution in functions of the HR downwards across the line and staff functions. Employees are empowered to think by themselves and work under minimum supervision. This creates a great sense of responsibility among staff.

Employee Involvement

Strategic human resource management advocates for employee participation if the goals and objectives of the firm are to be reached. Whether the objectives will be reached or not largely depends on the employees themselves. Their involvement is important as it improves accountability and gives workers a sense of satisfaction when set targets have been reached.

Contingency Approach

Strategic human resource management takes a contingency approach towards employee welfare. Policies and programmes are drawn specifically to suit the situation of the firm. Industry practices do not necessarily have to be company practices. Generalizations bring about a lot of ambiguity and irrelevance.

Advocates for Change

Strategic HRM is dynamic. It advocates for changes with changes in trends, technology legislation and other environmental factors. Companies must change if they are to survive in the industry. Sticking to the same old ways of doing things could prove catastrophic for the organization in the long run.

Long Term Perspective

Strategic human resource management takes a long term approach to managing employee welfare. Policies are formulated for the long haul and not merely the immediate future. This must involve a great deal of planning analysis and forecasting (Brotherton, 2006)

How Strategic HRM Can Benefit the Hospitality Industry

The hospitality industry stands to gain a lot from strategic human resource management. The dynamic nature of this industry makes strategic HRM an ideal approach towards the management of a company’s personnel. Here are some of the benefits that firms in the hospitality industry can draw from strategic human resource management.

Integration of Line and General Management Functions

Strategic human resource management integrates the line and general management functions of the business to create cohesion in the work place. Firms in the hospitality industry can benefit immensely from this since their operations require a high level of coordination of staff.

Goal Congruency

Being that strategic HRM factors in the overall strategies of the firm, it is important in aligning all the staff members towards a common goal. Unhealthy interdepartmental competition must be avoided at all costs.

Strategic Recruitment and Retention of Staff

Recruitment and retention of staff can be facilitated since strategic HRM focuses on the long term perspective. The organisation can forecast its staff needs in the future hence lay down appropriate recruitment selection and training plans.

Coping With Change

The hospitality industry is dynamic as it is largely affected by changes in the external environment economic, legal, political and social environment. With strategic HRM the organisation is able to forecast and plan for such drastic changes in the external environment in order to prevent unexpected adverse effects. The element of surprise and anxiety is therefore partially catered for hence giving all stakeholders some piece of mind.

Performance Management

When the performance of employees is pegged towards some given stated objectives, the employees are motivated to work towards that goal. Without set targets, lacklustre creeps in and the work rate falls drastically. For example, in a lodge, workers could be assigned a given number of rooms which they are supposed to attend to on a daily basis. Failure to clearly assign work would make the workers irresponsible.

Knowledge Management and Succession Planning

Big hotels and lodges in the hospitality industry such as the Hilton hotels use acquisitions and mergers to expand to major cities around the world. This brings a fusion of workers from the subsidiary and holding companies from different cultures and backgrounds. Discrimination in the workplace would affect the motivation of some employees and reduce their productivity.

Employee Involvement

In most organisations, employees are involved when identifying the objectives and goals of a firm. Since strategic HRM considers the firms strategies when making policies, employees are indirectly involved also. Employees can directly be involved through seminars conferences and meetings. For example it would be wise to consult an employee who is working in a restaurant which shift they could be interested in whether day or night.

Long Term Planning

Fluctuations in business between peak and off peak periods necessitate long term planning. Short term planning may give the business for example a tourist resort the wrong impression about expected revenues. Long term planning foresees depressions and economic slumps that are likely to affect revenue hence giving precise estimates.

Wholesome Approach

Strategic HRM is more wholesome as it factors in both the internal and external environment in the process of policy formulation. The policies and programmes therefore are more precise and relevant to the company. Assumption of industry practices instead of identifying a company’s specific needs would work against the company (Randall and Schuler, 1999).

Conclusion

Strategic human resource management offers solutions to a wide array of HR problems in the hospitality industry. Being a dynamic field, a firm must keep abreast with external and internal changes in the organisation. Failure to do so could be catastrophic.A business has little or no control at all on the external environment, due to this powerlessness, organisations must plan forecast and plan for the future. A short term perspective is a recipe for failure. The contingency approach adopted by strategic HRM is the most effective since each situation is unique and would require different treatment.Strategic management is all about the goals and objectives of the business. How will a business know if it’s on course with its objectives? Performance evaluation of is personnel is critical.This can be effectively done through performance contracting. For employees to remain relevant in this ever changing field, they have to be constantly trained and educated on new methods and technologies. Training is also important for career development and job satisfaction (Millmore, 2007).

Recommendations

In order to avoid a high labour turnover, workers should be accorded equal promotion chances on merit basis. This will motivate the employees to work hard and foster loyalty to the organisation.
The role of the human resource management function should be evaluated to include a much broader scope. Apart from employee welfare management, staff in this function should be actively involved in policy making if the objectives of strategic human resource management are to be met.
New workers into the human resource function should have some background on strategic human resource management. This eliminates the need to train workers on once they are recruited.
Due to the fluctuation of business in the hospitality industry, it would be prudent to employ workers such as waiters, bartenders, cleaners and other subordinate staff on contract basis to avoid the hustle of retrenching staff when business goes down.
Strategic HRM involves a lot of planning, analysis and forecasting. The HR function should work closely with the logistics function or should bring on board some members of the logistics team so as to have fruitful analysis and planning.
Long term planning is one of the pre requisites of strategic HRM. The organisation’s mission and vision statements briefly represent its plans for the future. This should be placed in strategic locations in the firm’s premises to constantly remind workers of their duty and obligations.
In order to keep up to date with current developments in the external environment, the HR function will have to work closely with the public relations team. It is important to find out current trends in the industry, emerging competitors and new opportunities that may benefit the business. A legal advisor could also be hired to advice the business on legal matters, ignorance could turn out to be very expensive.
Since Human resource management is a fairly new concept not much is known as per now. An organisation may benefit immensely from procuring the services of professional human resource consultants. Advice from qualified professionals would go a long way towards the implementation of strategic HR policies.
Due to the workplace diversity in the hospitality industry, team building is very important to achieve cohesion in the work place. The HR function should organise gateways, seminars and conferences that give the employees some time to bond and work out their differences (Christensen, 2006).