Handbook of Hospitality Human Resources Management

Dana Tesone, Dana V Tesone

• Publisher: Routledge
• Year: 2008
• ISBN:
  9781136400032
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Handbook of Hospitality Human Resources Management is an authoritative resource comprising an edited collection of papers, which review and discuss this crucial aspect of hospitality, whilst illustrating how theories and concepts can be applied to the hospitality industry. Written by internationally recognized practitioners and academics, this book provides thorough reviews and discussions.The depth and coverage of each topic is unprecedented. A must-read for hospitality researchers and educators, students and industry practitioners.

Part One Acquiring human resources

HR in the hospitality industry: strategic frameworks and priorities

J. Bruce Tracey

School of Hotel Administration, Cornell University 530 Statler Hall, Ithaca, NY 14853, USA

Sean A. Way

School of Hotel Administration, Cornell University 541A Statler Hall, Ithaca, NY 14853, USA

Michael J. Tews

College of Education and Human Ecology The Ohio State University 265-A Campbell Hall, Columbus, OH 43210, USA

DOI: 10.4324/9780080914350-1

Introduction

Creating and sustaining a long-term competitive advantage. These are the buzzwords that are uttered with increasing frequency in the board rooms, executive-planning sessions, and managerial meetings that occur throughout the industry today. Much has been written on the ways in which firms may accomplish their strategic objectives. Many scholars have emphasized the importance of environmental forces that may influence and shape a firm's strategic position, while others have stressed the roles of a firm's internal structures and coordinating mechanisms that may be used to execute the chosen strategies. What is clear is that there must be an alignment between the forces outside the firm—many of which are beyond the firm's control—and the policies, programs, and systems that are used to manage the firm's day-to-day operations¹.

1 It is important to note that firms really do not behave—people do. However, for the sake of convenience and convention, we will refer to firm actions in a manner that is similar to those of the people who are associated with it.

To achieve this alignment, firm leaders make choices about identity, values, and goals as a means for reacting to and anticipating market conditions that affect their firm's competitiveness. These choices can have a significant impact on operational quality, customer satisfaction and loyalty, and profitability. So rather than accept the fates of the environment, it is critically important that executives and managers take considered, purposeful, and sometimes bold actions that not only respond to competitive forces, but anticipate market influences in order to create value, gain the upper-hand in competitive position, and achieve long-term strategic objectives.

One of the key considerations for creating alignment is an understanding of the role that human capital plays in delivering value and sustaining competitiveness. Managing people is arguably one of the most vexing challenges in the hospitality industry. Indeed, human resource concerns top the list of the most critical managerial challenges in our industry. Tight labor markets, increasing and rapidly changing labor legislation, and high turnover are among the numerous problems that pose serious threats to maintaining a strong competitive position. Therefore, rigorous efforts must be taken to make sure that the policies, procedures, and systems for attracting, selecting, developing, and retaining the best employees are consistent with the firm's business strategies and account for the dynamic conditions within the firm's competitive markets—in other words, support strategic and functional alignment (cf. Wright & Snell, 1998; Way, 2006; Way & Johnson, 2005).

The outline of this chapter is as follows. We will begin by presenting some of the realities (at least a sampling thereof) about HR in the hospitality industry, followed by an overview of the resource-based view (RVB), one of the most predominant frameworks that has been developed for explaining how HR can enhance firm performance and sustainability. We will then extend this framework and present a discussion on flexible HR systems and the associated policies and practices that support such systems which may enhance the capacity of hospitality firms to achieve their strategic objectives and gain sustainable competitive advantage.

Some of the realities

While HR remains one of the top concerns in the industry, this function is often viewed as a transactional-based, administrative part of business and not an integral part of the firm's strategic decision making and planning efforts (Tracey & Nathan, 2002). The result is that the HR function is typically managed through the lens of efficiency and cost-minimization. This narrow view compromises the alignment between the HR function and the firm's overall business strategy and thus, creates significant competitive concerns. In a recent article, Tracey and Nathan (2002) argued that the lack of HR alignment exists on two levels. The first is on a strategic formulation level wherein HR priorities are not fully considered when business leaders formulate their firm's overall business plan. This is not to say that executives and managers place little value on the HR function. Rather (and to reiterate the point made above), the prevailing view is that HR is primarily an enabling function, and as such, does not—and should not—play an instrumental role in developing firm goals. However, failing to consider the role of HR in strategy formulation can have significant negative consequences. By way of example, a few years ago, the owners of an upscale independent hotel decided to get on the spa bandwagon. They earmarked almost US$20 million for a high-end, full-service facility. A significant amount of time and effort were spent on financing (e.g., decisions about the amount of capital that would come from reserves vs. debt) and design (e.g., number and types of treatment rooms), but very little emphasis was placed on HR considerations (e.g., sourcing and hiring a capable spa manager). The HR planning discussions were primarily limited to expenses associated with pre-opening training, as well as payroll and benefits costs. The implications for failing to examine the HR priorities became evident soon after the construction process had commenced. The opening was delayed by several months, in large part because the property was unable to recruit and select individuals for key positions in the new spa. In addition, there were significant operational and service problems during the first several months that the facility was open because the newly hired staff did not possess the knowledge, skills, and attitudes (KSAs) necessary to perform their roles effectively.. For the owners, the result was a much lower rate of return of invested capital. Many of the problems highlighted above could have been avoided if a comprehensive labor market analysis and staffing plan were completed during the planning stages of this effort.

The second level of disconnect resides in strategy execution. As noted above, many firms have adopted a transactional, administrative approach to managing the HR function. The primary focus is on record keeping, payroll and benefits administration, and employee relations. While these tasks are important, this type of work does not add much value to the firm—economic or otherwise (cf. Huselid, Jackson, & Schuler, 1997). Moreover, if HR professionals spend the bulk of their time managing administrative tasks, they are unable to fulfill other role responsibilities and engage more important value-adding activities that can help the firm achieve its strategic objectives. Part of this problem stems from a lack of infrastructure support that can be used to enhance the efficiency and quality of transactional work. Fortunately, many hospitality firms have adopted information systems and decision support tools that can save a significant amount of time and money on the administrative components of the HR function (e.g., maintenance of employee records, performance management support, benefits and payroll administration, etc.).

However, while efforts to incorporate technology for facilitating the administrative back-office work may be helpful, and even necessary, many firms still do not fully utilize the HR function as they should. HR departments routinely fail in helping operations managers execute the basic HR functions—hiring capable and motivated employees, providing relevant and timely training, implementing meaningful performance management programs, and delivering incentive schemes that stimulate extra-role performance. This concern stems in part from a lack of awareness among business leaders and HR professionals regarding the nature and scope of influence that HR can have on a firm's business strategies, as well as a lack of understanding about the specific needs of operational staff. In addition, HR professionals have not been able to provide clear and convincing evidence regarding how they can facilitate the achievement of strategically important goals. Thus, it is imperative that HR professionals gain a greater understanding of the strategic and operational needs of the firm, and use reliable and valid data for supporting strategy formulation and strategy execution.

A guiding framework: the resource-based view

Over the past several years, a number of frameworks and models regarding the roles of HR have been developed. The most predominant explanation is the RVB (Way & Johnson, 2005; Wright, Dunford, & Snell, 2001). This explanation focuses on factors within the firm (vs. factors outside the firm) as sources of competitive advantage and proposes a way by which internal resources may contribute towards developing and maintaining a competitive advantage (Barney, Wright, & Ketchen, 2001). One such internal resource is the firm's HR capital, which refers to the knowledge, skills, attitudes (KSAs), and behavioral repertories held by the firm's employees (cf. Becker & Huselid, 1998; Wright et al., 2001; Wright & McMahan, 1992; Wright & Snell, 1998).

Based on the work by Wernfelt (1984), Rumelt (1984), Dierickx and Cool (1989), and others, Barney (1991, 1995) presented what are considered to be the seminal RBV articles which describe the role of a firm's capital—which includes people—for creating and sustaining competitive advantage. Barney stated that for a firm's resources to hold the potential of a sustained competitive advantage, they must be valuable, rare, inimitable, and “there cannot be strategically equivalent substitutes” (1991, p. 106). Valuable resources are those that exploit opportunities and minimize threats, and can be linked in objective terms to a firm's key performance indices—financial and otherwise. Rare resources are those that are scarce and in high demand. For example, given a normal distribution of ability, individuals with high levels of ability are, by definition, rare and have prompted the “war for talent.” Non-substitutable resources are those that cannot be acquired or developed by competitors. For example, technology per se is not a source of competitive advantage, but the ways in which a firm uses technology may be a key driver for sustainability². And finally, inimitable resources are those that are difficult to replicate due to unique historical and contextual conditions, such as a firm's culture.

2 There may be exceptions to this claim. For example, firms that develop and hold patents on certain forms of technology may enjoy some degree of sustainable competitiveness. However, given the rather short half-life of technology and information systems, it can be argued that the degree of sustainability achieved by this type of resource will be short-lived.

Most of the RBV explanations within the human resources management literature are based on the assumption that a particular business strategy requires a unique set of people requirements, both in terms of employee knowledge, skills, and attitudes (i.e., human capital “stock” or the human capital “pool”), as well as HR policies, practices, and systems. That is, in order to create a source of competitive advantage, a firm's human capital must be characterized by high levels of skill, motivation, and high-performance behavior on the part of employees, and supported by a set of HR policies, practices, and systems that are unique, create value for the firm, causally ambiguous, and thus, inimitable. It is also important to develop an “alignment of interests” among employees. When employees have a high degree of consensus and commitment to the firm's objectives, and as a collective are capable of learning and growing, then the firm may be more agile and adaptable to the changes it faces during its lifecycle (Boxall, 1998). In addition, it is important to emphasize that some employees are more instrumental in creating competitive advantage, and as such, they need to be managed differently (Lepak & Snell, 1999). Therefore, a firm's HR strategy must account for the variance in employee contribution (which of course, changes over time), while providing a means for developing the talents and commitment among all employees. Therefore, a “best pr...