The Organisational Change in the Hospitality Industry: the Competitive Global Market - Research Paper Example

Abstract The hospitality industry, just like the other industry, are challenged to adapt to changes that to survive the competitive global market of the 21st century. However, not everybody welcomes change. In fact, some people prefer to keep the status quo. Unfortunately, this cannot be maintained in the face of increasing demands for change and customer preferences. In light of this, the basic question of the report is How can peoples working in the hospitality industry be encouraged to accept, adopt and implement culture of change as a necessary approach for growth of the corporation in particular and the industry in general? The study aims to aims to identify reasons why some workers of the industry do not accept cultural change. Likewise, the paper aims to clarify the notion of cultural change within the context of the hospitality industry. Finally, the paper intends to present some recommendations as to how employees and managers may be encouraged in adopting and implementing cultural change. To answer the question of the paper, several databases like EConLit, Business Source Premier have been searched. The following are some of the findings of the paper (1) the urgency for organisational change in the hospitality industry rests on the supposition that all factors for change are working in the industry. (2) Organisational culture is intricate and needed, but it should not be used as barrier for change. Some recommendations of the report include (1) open dialogue, (2) give sufficient time for everybody to adapt to the changes. (3) Communication. 1.0 INTRODUCTION The hospitality industry is one of the largest and most industry in the world today (Pizam and Shani, 2009). Developments in the industry benefits large segment of the society and it affects not only the national government, but also the local governments as well (Pizam and Shani, 2009). In fact, “leisure and hospitality industries weighed in with a ten percent increase in the total number of jobs so far during the current decade”(Jinzhao, 2007: 59). This continued growth in the industry is expected as the condition of globalisation, which opens the freer movements of goods, capital, services, people and even culture (Soros, 2002; Balakrishnan, 2003; Suarez-Orozco and Qin- Hilliard, 2004) sustain and contribute to the increasing “temporary movement of people from one area to another for activities related to – leisure, pleasure, social, educational, knowledge-seeking, medical, religious, business” (Dugar, nd: 41). In the face of these developments, the hospitality industry is face with the challenge of continuously improving the quality of services that they provide as the global market becomes more competitive. In lie with this, corporations involve in the industry have responded to the challenge by focusing more on the ‘intangibles’ (Baum, Amoah and Spivack, 1997) where the human factor plays an integral role. This means that the ‘people focus’ of the corporations require the participation of the hotel staff in providing quality services to the clients via meeting the expectations of the customers and if possible, go beyond (Baum, Amoah and Spivack, 1997; Enz and Siguaw, 2000). However, to create the experience of ‘wow’ among customers, it demands the concerted effort of all members of the organization, a cultural change that involves from top down and, the willingness to embark in long process (Mahesh, 1994). These are all necessary because change does not happen after a specific enhancement-training programme has been conducted (Baum, Amoah and Spivack, 1997). Unfortunately, in the hospitality industry there are people who shun cultural change and accept it only in theory but not in practise. This attitude puts into peril the organisation as poor quality service creates customer dissatisfaction, which is equivalent to monetary loss and increases the risk of failure for organisation. 1.1. RESEARCH QUESTION Recognising the significant role of cultural change in establishing ‘people focus policy’ in the hotel industry, the basic question that this paper seeks to address is How can peoples working in the hospitality industry be encouraged to accept, adopt and implement culture of change as a necessary approach for growth of the corporation in particular and the industry in general? 1.2. AIMS OF THE STUDY As the hospitality industry continues to be one of the most dynamic industries in the contemporary period and the important contribution of cultural change in sustaining the growth of the industry, this study aims to identify reasons why some workers of the industry do not accept cultural change. Likewise, the paper aims to clarify the notion of cultural change within the context of the hospitality industry. As a final point, the paper intends to present some recommendations as to how employees and managers may be encouraged in adopting and implementing cultural change. 1.3. SIGNIFICANCE OF THE RESEARCH This study is important because (1) cultural change is acknowledged as an essential element in harnessing ‘people focus’ policy of the hospitality industry (Baum, Amoah and Spivack, 1997; Enz and Siguaw, 2000; Mahesh, 1994). (2) The study addresses the issue of cultural change within the context of hospitality industry. This is important considering that most of human resources discourses are derived from the manufacturing industry (Legge, 2001). (3) Finally, the study is significant as it can contribute to the conceptual clarification of cultural change and establish some approaches that may be used to encourage managers and workers alike to carry out cultural change in the industry. 1.4. METHODOLOGY In tackling the query of this research, the electronic databases EConlit, Academic Source Premier, Business Source Premier, Google Scholar and Jstor were searched and the following key terms were used: hospitality industry, globalisation, cultural change, people focus, organization, service sector, human resource management and corporate change. Articles written only in English and published in journals from the period of 1995 until 2010 were selected. Correspondingly, excluded in the selection were editorials, position papers, pamphlets and monographs. The reference list of the articles was searched to identify additional relevant publications. 2.0. LITERATURE REVIEW Globalisation opens the internationalisation of the service industry (Maxwell, Watson and Quail, 2004). This context has created an “age of service competition”, which has at its centre customer satisfaction (Grönross, 1994). As this is the contemporary context wherein corporations of the hospitality industry is thriving, understanding and satisfying customer preferences necessitates a change not only in policies and structures, but also in the orientation and nature of organizations in the hospitality industry. Grönross (1994, 7) has noted five key factors that are necessary for hospitality industry to adopt if it intends to respond to the changing preferences of the customers. These are (1) It is an overall management perspective, which should guide decisions in all areas of management; (2) It is customer driven or market driven; (3) It is a holistic perspective, which emphasizes the importance of intraorganisational, cross-functional collaboration; (4) Managing quality is an integral part of service management; and (5) Internal development of the personnel and reinforcement of its commitment to company goals and strategies are strategic prerequisites for success Noticeable in the key factors, which Grönross (1994) identified is the participation of the personnel in the attainment of the goals and implementation of the strategies. This factor is a clear manifestation of the contemporary view that the employees are not just tools for the attainment of the goals of the corporation but are deemed as an integral asset of the organization as the employees see the goals of the organisations as their goals and its vision, their vision (Avery, 2004; Westley and Mintzberg, 1989). In this regard, employees are considered as necessary members of the corporation and not as dispensable tools for the success of the corporation. Nonetheless, there are instances wherein employees and even managers are resistant of changes in policies, structures and strategies that the organization are carrying out. However, it should be noted that resistance to change is not all bad (Hodgetts and Hegar, 2004). Employees resistance to change helps the organization to carefully weigh the pros and cons of the plan change and as such corporations takes a deep look before any changes are implemented (Hodgetts and Hegar, 2004). Nevertheless, the ethos with which change in the organization is undertaken is the premise that it is the good of the organization. 2.1. ORGANIZATIONAL CULTURE Organizational culture is “made up of the shared belief, values, attitudes, and experiences of the organization, acquired through social learning, that control the way individuals and groups in the organization interact with one another and with parties outside it that are passed on to all within the organization” (Davidson, 2003; Serrat, 2009). Likewise, it is “comprised of the norms, feelings, hopes and aspirations of an organisation’s members. Its function is to transmit learning, handle strong emotions, and to unite and provide meaning” (Mwaura, Sutton and Roberts, 2008,p 213). It is “deep rooted and is shaped overtime by many organizational processes” (Davidson, 2003,p 206). As such, organisational culture allows employees to understand their workplace, making sense of work activities and relating them to daily events (Porter, 1990). There are several components of organizational culture. It includes “culture, norms, ceremonies, events, rules, policies, goals, measurements, management behaviours, rewards, recognitions, learning, developments, communication, operational structure and physical environment”(Serrat, 2009). Furthermore, organisational culture can be either strong or weak. Strong when the employees respond positively to the culture because of the alignment between organisational culture and personal culture. Conversely, it is weak when there is no alignment between the two and that control is carried out through administrative rules (Serrat, 2009; Hodgetts and Hegar, 2004; Porter, 1990). In this scenario, organisational culture is perceived as dynamic, multifaceted and layered (Ogbonna and Wilson, 2003). Organisational culture is integral in the organisations as it creates meaning and helps stipulate purpose and relations between one’s personal values and insights vis-á-vis the organisation’s culture. Although this facet of the organisation is without controversy, what is important is that both academicians and practitioners recognise the truism that organisational culture is one of the necessary ‘elements’ that help organisations adapt to the rigours and challenges of external situations or environment (Serrat, 2009). 2.2. ORGANISATIONAL CULTURE AND CHANGE Organisational culture acts as a form of social cohesion that connects the individual with the organisation. Moreover, it distinguishes one organisation from another as it creates identification for the organisation. Likewise, it facilitates a sense of belongingness as it establishes schemes attitudes and behaviours of the employees are shaped (Kotter). As such, as noted organisational culture is an important gradient in understanding the life of the organisation. However, organisational culture raises important barriers even if it enhances employees commitment and attitude. Organisational culture is a barrier to change, barrier to diversity and barrier to mergers (Serrat, 2009). In this context, organisational culture is seen as a liability, especially in the condition of change. Change is inevitable. In the contemporary period, there are many factors that act as the catalyst of change and organisations have to respond to these mechanisms if it intends to survive in the 21st century global market. These factors are The nature of the contemporary workforce has now changed (Davidson and de Marco, 1999). Diversity of work force is now a reality so much so that “dimensions of workplace diversity include, but are not limited to: age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background, geographic location, income, marital status, military experience, religious beliefs, parental status, and work experience” (Jinzha0, 2007, p. 60). Fast phase developments in computer and information technology has changed not only the manner with which businesses are being conducted but it has changed the value of information vis-à-vis business transactions and activities (Calder and Watkins, 2008; Davidson and de Marco, 1999). Globalization has transformed the world not only because of the removal of the economic barriers that are exiting between nations but also because it has allowed for a freer movement of ideas, knowledge, information, capital and most especially people (Soros, 2000; Suarez- Orozco & Qin- Hilliard, 2004; Davidson and de Marco, 1999). A more competitive market has resulted out of globalisation (Balakrishnan, 2003; Davidson and de Marco, 1999). The inception of transnational corporations and multinational corporations in lieu of globalisation and mobility of people (Soros, 2002). Change in social trends like aging population, social networking and increase attraction to urban living. The continual change in the economic and political dimensions of the global society (Davidson and de Marco, 1999). Changing customer preferences and demands (Mehta, 1994; 2000; Davidson and de Marco, 1999) These changes are part of the contemporary condition with which the global market is thriving. As such, organisations have to come up with frameworks that will help them hurdle these challenges. 2.3. CHANGE AND THE HOSPITALITY INDUSTRY Hospitality industry is gripped by the demands of change. As corporations in the industry have become transnationals and multinationals (Burgess et al, 1995). In this regard, it has employed diverse workforce to respond to the variegated culture and norms of the country where the organisation is located (Jinzhao, 2007). Moreover, as globalisation opens the global market, it establishes tougher competition not only among transnational and multinational corporations but also among local service providers. This is the reality of globalisation (Soros, 2002). Furthermore, as the population grows old, retirement age is increased, and, more people from various countries and cultures take temporary mobility for various purposes (Dugar,nd), the need for hospitality industry has to established policies and approaches that caters to the varied preferences, culture and demands of customers. In addition, developments in technology is not only felt in the internal organisation of the corporation but it is used by firms in the industry as a powerful medium to communicate with possible customers like internet chat or surfing, online booking and other similar processes. Additionally, there is an increasing demand among scholars and practitioners of hospitality industry to undertake an authentic shift in the kind of leadership and management style that is being implemented in the industry. Several studies have shown that current trends in management and leadership is more autocratic and that the transition toward a more democratic leadership and management style has been slow (Deery and Jago, 2001; Gursoy et al, 2008; Pizam and Shani, 2009). In this sense, it can be deduced that as changes continue to plague the industry, the urgency to adapt to the demands of the changes becomes necessary for the survival of the firms in the industry. Unfortunately, as change is a reality that organisation in the industry have to deal with, it is also a fact that there are employees and even some managers who resist policies and organisational changes intended in addressing the multifaceted demands of change. Workers do not reject change right away or accept it without questions. Factors that prod employees to reject or resist changes in the organisation include 1. Obsolescence of job skills. An example is the computerisation of bookkeeping functions of the organisation. 2. Fear of economic loss. Sometimes, workers find themselves fired, replaced or placed in a dead end jobs. 3. Ego defensiveness 4. The comfort of the status quo 5. Short-sightedness. The focus is only on the short term effect of the change 6. Peer pressure. When employees are pressured by other employees to reject the organisational change. 7. Lack of necessary information that will the workers understand the rudiments of the organisational change 8. Social displacement SOURCE: Hodgetts and Hedgar, 2004 In the literature review, it has been presented that hospitality industry is not free form the challenges of the period. In the face of these challenges that necessitate changes, firms in the industry have to adapt certain schemes for it to survive the competitive 21st century global market. At the same time, it is recognised that organisational culture and employees are very important elements in the success of the organisation. However, as organisational culture becomes a barrier for change and diversity, employees themselves become resistant of change. The resistance to change can lead to poor quality service, which leads to failure for the organisation in the hospitality industry (Grönross, 1994; Pizam and Shani, 2009; Priporas and Poimenidis, 2008) In light of this truism, what can be done? 3.0. FINDINGS AND RESULTS The following are the findings and results of this study. First, continual change is a challenge that organisations in the contemporary period experiences. The hospitality industry is not immune from this. In light of this condition, one important approach is to incorporate organisational changes so that the organisation can survive and create a niche in the competitive global market (Serrat, 2009; Hodgetts and Hegar, 2004; Davidson, 2003; Baum, Amoah and Spivack, 1997; Enz and Siguaw, 2000). However, the reality of employees resisting organisational changes is also undeniable. Fig. 1 Diverse workforce Globalisation Developments in ICT Social Trends TNCs and MNCs CHANGE Customer preferences Competitive global market SOME MANAGERS & EMPLOYEES RESISTANCE - Obsolescence of job skills - Fear of economic loss - Ego defensiveness - The comfort of the status quo - Short-sightedness RESULT - Lack of necessary information POOR QUALITY SERVICE - Peer Pressure -Social displacement FAILURE Figure one shows the connection of all the factors that play an important role in understanding hospitality industry, organisational culture, organisational change and resistance of some employees and managers to organisational change. As shown there are several factors that act as catalyst for change and in teh face of these changes, organisations have to respond by undergoing organisational changes that will equip them in meeting the demands and challenges of the aforementioned changes. However, inherent in organisations is organisation culture. Culture is important but it becomes a liability if it use as a barrier for change. Unfortunately, some employees and managers use it as one of the reasons in resisting organisational change even if it is necessary for the survival of the organisation. There is urgency in addressing this situation primarily because of the following reasons 1. The hospitality industry is a service industry and the product is the service. Practitioners in lieu of the fact that they cannot make any mistakes in the service consider it as a high-risk industry (Pizam and Shani, 2009; Worsfold, 1999). This is because a poor quality service will ruin not only the experience of the customer but also the reputation of the hotel. As such, the hotel losses the chance not only of establishing a congenial relation with the customer that may open the possibility of loyalty but it also fails to capitalise on the possibility of free advertisement through word of mouth testimonial/advertisement from the customers themselves. 2. Moreover, if there is no cohesion and congruence between the firm and the employees the quality of service goes down (Pizam and Shani, 2009; Priporas and Poimenidis, 2008). Then it creates the chain, POOR QUALITY SERVICE CUSTOMER SATISFACTION NOT ACHIEVED SALES GO DOWN LAG BEHIND COMPETITORS INCREASE RISK OF FAILURE This scenario highlights the reality that the hospitality industry is one of the most vulnerable industries in terms of factors that act as catalyst for change (Burgess et al, 1995, Maxwell et al, 2000; Jinzhao, 2007; Davidson, 2003; Mwauri et al, 1997; Dugar, nd). As such, the necessity for organisations to undertake organisational change in order to respond to the demands of global market becomes essential. 3. The third finding of this study pertains directly of the report. There are suggestions coming from numerous literatures of human resource management (eg Hodgettes and Hedgar, 2004; Avery, 2004). Using these literatures the following are seen as some of the appropriate approaches for the question. Establish a leadership and management style that is democratic. In the research conducted, democratic leadership and management encourages employees in giving the company their best (Dreery and Jago,2001). Although this may be considering the structured and hierarchical organisational framework of firms in the industry (Dreery and Jago,2001) but it still essential for the 21st century hospitality industry. Slowly change the image of the industry from work over load and low pay into ‘employee friendly’ industry by empowering the worker through measures such as incentives, venues for learning, participative leadership, mentoring, a three- person system that will help them determine their own work patterns as done in The Boulder Resort, implement programmes and trainings that will further harness employees’ skills and knowledge (Teare, 1995). Open lines for communication. This is essential in all business organisations. Establish team building. 4.0. RECOMMENDATIONS The researcher is currently connected in a hotel wherein organisational changes are not followed by employees and even some mangers. In light of this experience together with the theoretical discussion undertaken in this report, the following are recommendations to curb the stagnation that is happening in the firm due to resistance to change. Organisational change should be top down. Managers should not just be agents of change but that they too should be the target of change. As such, any changes should be well thought of and deliberated through consensus. This is important to get the initial sentiments and opinions of everybody as all members of the firm are stakeholders of the proposed change. Create a consultative team that will collate all the ideas and present it to the organisation so that alternative options may be opened. Communicate the necessary information that all the members of the organisation should know about the change. Create a monitoring team that will help in the implementation of the change. Create a buddy system so that the employees and managers can support each other as the organisational change is being implemented and not yet fully integrated in the organisational culture. Open a dialogue for those employees who are staunchly resisting the change. Give sufficient time for everybody to adapt to the change. 5.0. CONCLUSION Hospitality industry has to embrace organisational change for it to create leverage for the organisation in the competitive global market. It should not be seen as threat, rather it should perceived as a venue for growth. Although not all resistance to change are bad, but most are counter –productive and detrimental for the corporation in the long run. (3,499 words excluding abstract and references) REFERENCES Avery, G.C. (2004) Understanding Leadership: Paradigms and Cases. London: Sage. Balakrishnan,P. (2003). Globalisation, power and justice, Economic and Political Weekly, pp 3166 – 3170. Baum, T., Amoah, V., and Spivack, S. 1997. Policy dimensions of human resource management in the tourism and hospitality industry. International Journal of Contemporary Hospitality Management, vol. 9, no 5/6, pp 221 -229. 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