Human Resource Management in the Hotel Industry

Strategy, Innovation and Performance

Kim Hoque

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781134620029
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Over the last decade, human resource management has come to be viewed as the dominant paradigm within which analyses of the world of work have been located. This volume examines the nature and assesses the impact of HRM within a highly under-researched division of the service sector, namely the UK hotel industry.Common perceptions of management practices in the hotel industry typically include work intensification, high labour turnover, lack of training and poor career prospects, and casualised terms and conditions of employment. Using data from a survey of over 200 hotels, this book challenges such stereotypes by demonstrating that this part of the service sector is just as likely to have experimented with new approaches to HRM as the manufacturing industry. It suggests that primary influences on managerial decision-making in the hotel industry are no different from the primary influences affecting decision-making elsewhere, countering the argument that mainstream management theories are inapplicable within the hotel industry. Furthermore, where hotels emphasise the importance of service quality enhancement and where they introduce HRM as an integrated, mutually supporting package of practices, a strong relationship between HRM and organisational performance is proposed.

1 Introduction and framework for analysis

By mid-1998, the proportion of the UK employed population working in service sector jobs had grown to 75.7 per cent. The comparable figure in mid-1986 was 68.3 per cent. Over the same period, the proportion of the employed population working within production industries fell from 25.2 per cent to just 18.4 per cent (Office for National Statistics, 1999). These figures clearly demonstrate the size, the growth-rate and the ever-increasing economic importance of the service sector.

The growing importance of the sector is further demonstrated by the enormous power now wielded by service firms worldwide. For example, as noted by Quinn (1992:17–20), Toys R Us now earns three times the revenue of the world’s largest toy manufacturer and they are in a position to be able to dictate the products which reach the marketplace, how they are packaged, designed and transported. Such is the power of McDonalds that the butter and fat markets collapsed when they took the decision to switch to healthier products.

Trade in services is now the fastest growing element of international trade, with 20 per cent of world trade and 30 per cent of US exports now being service based (Mathe and Perras, 1994). Several key forces have encouraged this process. Firstly, cultural homogenisation has led to the development of key similarities in consumer preferences across nations. Secondly, electronic point of sale (EPOS) technology is now capable of capturing the data necessary to engage in sophisticated international marketing practices. Thirdly, the deregulation of world markets has led to a loosening or lifting of restrictions on foreign ownership (Segal-Horn, 1994). Service products are becoming increasingly sophisticated, internationally tradable and capable of generating a tremendous amount of wealth, and service sector globalisation has become a reality.

This globalisation will inevitably provide UK service providers with overseas export opportunities. However, UK service providers will also have to cope with intensified competition from overseas. In retailing, for example, incursions by European food retailers such as Aldi into UK domestic markets have caused concern (Knox and Thompson, 1994). If the UK is to compete effectively within increasingly globalised service markets in the face of such pressure, developing an understanding of the factors that enable service providers to generate and sustain competitive advantage is a must.

A lack of service-based empirical research?

At odds with the growing economic importance of services is the lack of empirical research undertaken within the sector. As far back as 1948, Whyte, in his book ‘Human Relations in the Restaurant Industry’ stated that human relations had only ever been studied in a manufacturing environment and that more attention should be paid to the ever-increasing service industries. Replace ‘human relations’ with ‘human resource management’ and Whyte’s statement would be as true as we approach the millennium as it was in 1948. Gabriel (1988:6), Rajan (1987:2) and Shamir (1978:295) all make the point that the services remain ever neglected, with there being a scarcity of systematic fieldwork, when compared with the wealth of research undertaken in manufacturing industries. Lucas and Wood (1993) make similar assertions concerning the hotel and catering sector, stating that although today’s position is an improvement on ten years ago, there is still precious little published. What there is tends to be removed from the mainstream and confined to specialist journals such as the ‘International Journal of Hospitality Management’, which probably remain unheard of amongst mainstream management academic circles. The importance of services and the extent to which that importance has increased, is yet to be reflected within empirical research, despite the fact that it is studies of the service sector that will shed the greatest light on the future employment relationship.

By contrast, the wealth of empirical research conducted within manufacturing has revealed evidence of not inconsiderable change in recent times, with companies—sometimes drawing inspiration from Japanese transplants, or from exemplar American companies such as IBM—having experimented with new communication techniques, teamworking, Total Quality Management and new organisational cultures, for example. Whether the same level of experimentation has occurred within the services remains very much open to question.

HRM theory: rooted in manufacturing?

Not only is there a scarcity of empirical research conducted within the service sector, but also the theoretical concept which Storey (1992:2–3) notes has been used to ‘make sense’ of recent developments—Human Resource Management (HRM) —is entrenched within a manufacturing paradigm. For example, Walton’s (1985) highly influential paper, which laid out the differences between commitment and control approaches to the management of human resources, focused entirely on factory workers—service sector workers not meriting a mention. Similarly, the tendency for the services to be overlooked in HRM and industrial relations research is now seemingly being replicated within the emerging debate concerning the impact of HRM on performance. However, the sheer size and economic importance of the service sector relative to the numbers employed in manufacturing, in particular the number of people who actually work on production lines themselves¹, calls into question whether it is any longer, indeed, whether it has ever been, valid to treat factories and the production line as the dominant paradigm by which HRM is conceptualised. Indeed, it is becoming increasingly important for the future validity of HRM to demonstrate that HRM theory, developed within a manufacturing sector ‘production line’ paradigm, is also relevant within the service sectors of the economy. What future is there for HRM as a theory if it is not seen in the services, within which almost 76 per cent of the working population are employed, as a credible approach? By providing a test of the applicability of HRM in a service environment, this is a key focus of this book.

The problematic nature of service sector research

Researchers are faced with a major definitional problem when looking at services, namely what exactly is meant by the term ‘service sector’? This question can be answered superficially by arguing that any firm which is included within Standard Industrial Classification categories 6 to 9 is a service sector firm. SIC sector 6 comprises hotels and catering and distribution (both retail and wholesale), 7 comprises transport and distribution, 8 comprises banking, finance, insurance, business services and leasing, and 9 comprises ‘other’ services. Immediately, the heterogeneous nature of the service sector becomes apparent. This heterogeneity makes generalisations about the services difficult within empirical analyses, unless care is taken to use accurate industry controls and a sample representative of all service sector firms. To complicate matters further, as Quinn (1992) states, a great number of people working for manufacturing companies are in fact performing ‘service’ related functions, such as personnel, sales and marketing, finance, legal work, secretarial work, cleaning and catering. Indeed, Quinn estimates that as much as 65 to 75 per cent of the activity within ‘manufacturing’ firms is actually service related. The definition of a service based firm or a service based job, is therefore not as straightforward as it first appears.

However, the heterogeneity of the services does not automatically lead to the conclusion that a sector-by-sector approach to research will be preferable. Armistead (1994:28) argues, for example, that industry-level analysis will provide too narrow a basis on which to develop generic propositions concerning the ‘service sector’ as a whole, and it is therefore preferable to focus on jobs across the services with a similar content. However, this approach would be unable to take into account the impact of industry or sector-specific environmental factors such as product and labour markets, on approaches taken to HRM. For example, the specific seasonal nature of demand experienced in hotels and catering is unique to that sector and is not found in banks or insurance. There may be superficial similarities between the job of a hotel receptionist and that of a bank clerk, but different market and environmental contingencies faced by banks and hotels may result in different approaches to HRM being taken. In testing the impact of a range of external contingencies such as product and labour markets on policy choice, a generic ‘lumping together’ of service firms could easily result in generalisations, oversights of industry-specific contingencies and a loss of analytical clarity. In terms of operationalisation for research purposes, the ‘service sector’ is best seen as a generic term encompassing a diverse range of heterogeneous constituent parts. As such, it is preferable to analyse individual parts of the sector rather than services as a whole.

Reflecting this approach, the focus within the analysis to be undertaken here will be on one of the service sector’s constituent parts, namely the hotel industry. The hotel industry has seen considerable growth in recent years, with the total numbers employed rising from 279,500 in June 1988 to 318,700 in June 1998 (Office for National Statistics, 1998). However, as Lucas (1995: 14) states, there remains a remarkable dearth of information on human resource management issues in the industry, which, she argues, is all the more surprising given the oft-quoted phrase within the industry that ‘people are our most important resource’. The analysis within this book therefore aims to help to fill this gap.

Tests of the relevance of mainstream HRM theory within hotels have several important implications where hotel industry research is concerned. As stated by Lucas (1995:14), a body of literature has developed showing the sector to be somehow ‘different’, being characterised by ad hocmanagement, a lack of trade unions and high, possibly unavoidable labour turnover. A view commonly expressed among hotel managers according to Mullins (1993:1), is that these key fundamental organisational differences render inappropriate the general principles of management developed in other industries, as they fail to take into account the unique contingencies facing managers within the hotel industry. Also, the argument that the industry is somehow ‘different’ is often used to explain why hotel management research tends to be channelled into industry-specific journals and excluded from the mainstream.

However, Mullins (1993:7–8) believes that the only substantive difference between hotels and manufacturing is that the customer is inextricably involved within the process itself, rather than simply being the recipient of the product at the end of it. While it is true that the hotel service cannot be stockpiled and production smoothed out to cope with demand surges, and that it is more difficult to achieve economies of scale because site selection is determined by consumer demands, these differences are, according to Mullins (1993), merely contextual. Everything else that hotel managers have to do, for example, the planning of objectives, strategy-making, ensuring legal requirements are met, and organising, directing and controlling staff, is common to firms in all other sectors. Therefore, the theoretical understanding of ‘management’ should not be any different in hotels than in the rest of the economy. Those who argue otherwise, suggests Mullins (1993:15), are providing an excuse for lack of improvement. Gilbert and Guerrier (1997) support this position, claiming that there is an increasing realisation of the generalisability of hotel management principles, with managers moving both to and from other sectors of the economy. They also highlight the increasing recognition of the importance of general management qualifications as opposed to industry-specific qualifications. Moreover, given that much of the excellence literature focuses on the individual, it may well be more suited to the hotel industry, where collective relationships are at a minimum.

By analysing the role of HRM within the hotel industry, this book is able to test the assertions made by Gilbert and Guerrier (1997) and Mullins (1993). If it is found that HRM theory provides a suitable framework within which to locate analyses of the hotel industry, there will no longer be any justification to either marginalise hotel industry research into specialist industry journals, or to ignore HRM theory within hotel industry empirical analyses.

The human resource management model

As the aim of this book is to assess the relevance of HRM within a hotel industry context, it is necessary at the outset to provide a definition of HRM. The definition used here draws strongly on the models presented by Beer et al. (1984), Guest (1987) and Walton (1985). These models typify the prescriptive solutions offered in response to new challenges it is argued that companies have faced since the end of the 1970s and the early 1980s. As stated by Piore and Sabel (1984), the conditions that enabled stable, mass production systems to thrive in the past, no longer exist. For example, global competition has increased, product life-cycles have shortened, product markets have become increasingly differentiated and increasingly turbulent, and consumer tastes have become increasingly sophisticated. In addition, competition from low-wage developing countries now precludes the possibility of competition on price or cost factors (Beaumont, 1993:24).

As such, it is argued that Western companies have been under increasing pressure to seek a new approach, involving a re-focusing of activities onto the production of hi-tech, high value-added products. Rather than focusing simply on productivity and cost factors alone, companies must now ensure high quality production, a high level of innovation and production flexibility, in order to be able to take advantage of higher value-added new market niches, as and when they emerge. The new approach to HRM that companies would have to adopt in the face of these challenges is encapsulated within the Beer et al. (1984), Guest (1987) and Walton (1985) models.

Implicit within these models of HRM is that if organisations are to achieve the requisite levels of innovation, organisational flexibility and product quality to be able to compete in increasingly turbulent product markets, traditional Taylorist ways of managing and working, well suited to production of standardised goods for large and stable markets, will no longer be adequate. It is no longer sufficient to view workers as unthinking automatons following orders laid down by management. Hence, all of the models of HRM stress the need to generate employee commitment to quality, to encourage workers to take responsibility for quality, to develop systems through which employees can contribute to the process of continuous improvement, and to create an environment where workers feel confident to be innovative and creative. The emphasis is increasingly on what Blyton and Turnbull (1992:4) refer to as ‘releasing untapped reserves of human resourcefulness’, and getting workers to go ‘beyond contract’ —going the extra mile for the company. Getting the ‘people’ side of the organisation right is therefore seen as the key to the achievement of competitive advantage.

A further source of potential competitive advantage is provided by the inimitability of human resource systems. As they must take into account complex issues of power and resistance to change, effective human resource systems are extremely difficult to copy. By comparison, other resources available to the firm, such as technology, marketing, engineering and financial systems, are all replicable (Becker and Gerhart, 1996:781). If competitive advantage is generated along any one of these dimensions, gains would be short-lived as competitors would be able to copy the systems developed. Being more difficult to mimic, human resource systems are therefore capable of providing sustained competitive advantage.

The centrality of the manner in which human resources are managed in terms of the achievement of competitive advantage has two major implications. Firstly, it becomes essential that HR concerns and HR decision-making become senior management priorities, and not the responsibility of a separate, sub-board level specialist function (Beaumont, 1992:21, 1993:1, 17; Storey, 1992:26–7). This is one element of what Guest (1987) refers to as ‘strategic-integration’. Guest (1987) states that as human resources are the most variable resource a company possesses, and the most difficult to understand, they are unlikely to lead to competitive advantage unless fully integrated into the strategic planning process. A boardroom focus on marketing, finance or production for example, will fail to take into account the more complex issues of values, power and company culture. As such, HRM has a rightful place alongside other core management roles at boardroom level.

Secondly, the centrality of human resources to the achievement of competitive advantage results in a philosophy that the precursor of high performance will be the achievement of a set of HR outcomes or goals. HR policies and practices within the organisation should be geared towards the achievement of these goals. The models presented by Beer et al. (1984), Guest (1987) and Walton (1985) all make this point. For example, Walton (1985) states that central to the HRM philosophy should be the belief that employee commitment will lead to enhanced performance. The importance of eliciting workforce commitment is also one of the HR outcomes stressed within the model presented by Beer at al (1984). This model also stresses the importance of competence (in terms of attracting, keeping and developing people with requisite skills and knowledge), congruence (the minimisation of conflict between interest groups) and cost effectiveness (both for the organisation, the individual and society as a whole). The HR goals within the Guest (1987) model are—once again—high commitment, functional and organisational flexibility, high quality (in terms of recruiting and retaining skilled and motivated employees, public image and job performance), and finally, strategic integration (the high profile accorded to HR issues within the business strategy and the incorporation of an HRM perspective within line management decision-making). This latter issue is also stressed by Storey (1992:27), who states that line management should recognise the importance of HRM and engage in behaviour and decision-making which reflects this. HRM should be the intimate concern of line managers. They should ‘own’, implement and act in accordance with HRM principles.

The HR outcomes are therefore seen as the primary or first order goals of the organisation, which, if achieved, will lead to a considerable organisational payoff. Looking first at the goal of commitment, Guest (1987) argues that committed employees will be more satisfied, more productive and more adaptable, more willing to ac...

Table of contents

• Cover
• Half Title
• Routledge Studies in Employment Relations
• Full Title
• Copyright
• Dedication
• Contents
• List of tables
• Acknowledgements
• Preface
• 1 Introduction and framework for analysis
• 2 Is there a role for HRM in the hotel industry?
• 3 New approaches to HRM in the hotel industry: a comparative analysis
• 4 Influences on HRM in the hotel industry
• 5 HRM in practice in the hotel industry
• 6 HRM and performance in the hotel industry
• 7 Conclusion
• Bibliography
• Index