The Hospitality or Retail Industry - Term Paper Example

Retail & Hospitality Among the most demanding jobs in the hospitality or retail industry are the so called front-line jobs. Employees are expected to be fast and efficient at executing operational tasks, as well as courteous and helpful in dealing with customers. In fact, these frontline employees are a key input for delivering service excellence and competitive advantage. Behind most of the successful organisations in hospitality or retail industry, stands a firm commitment of effective management of human resource, includes recruitment, selection, training motivation, and retention of employees. Organizations that display this commitment are also characterised by a distinct culture of service leadership and role modelling by top management. It is probably more difficult for competitors to duplicate high performance human assets than any other corporate resource. In both the industry, the way service is delivered by this human resource can be important source of differentiation as well as competitive advantage. In addition, the strength of the customer/frontline staff relationship is often an important driver of customer loyalty (Bove & Johnson, 2001). Service staff plays a key role in anticipating customer's needs, customizing the service delivery, and building personalized relationships with customers with ultimately lead to customer loyalty. Highly motivated employees remain at the core of service excellence and becoming a key variable for creating and maintaining competitive positioning and advantage (Hemp, 2002). The important impact of service staff on customer loyalty was integrated and formalized by James Heskett and his colleagues (1994) in their research on the service-profit chain. The authors demonstrate the chain of relationships between; 1. Satisfaction, Retention and Productivity 2. Service value 3. Customer satisfaction and loyalty 4. Revenue growth and profitability Unlike manufacturing, all the service staff in hospitality or retail industry remains in continuous contact with customers and Schneider & Bowen (1993) shows that employee satisfaction and customer satisfaction are highly correlated. Organisations have opted various HR tools and practices over the year to attain the success. Attractive compensation packages are used to attract good quality staff. Broadened job designs are accompanied by training and empowerment practices that allow frontline staff to control quality. With more focussed recruitment, more intensive training, and better wages, employees are likely to be happier in their work and to provide higher quality, customer pleasing service. Regular customers also appreciated the continuity in service relations resulting in lower turnover and so are more likely to remain loyal. Profit margin tends to be higher and the organization is free to focus its marketing efforts on reinforcing customer loyalty through customer retention strategies (Price & Brodie, 2001). HR strategies can help hospitality or retail sector firms to move in the direction of success. Now we will discuss how hospitality or retail sector can hire, motivate and retain employees through present HR strategies. Both these sectors are highly contact services with the customer. So customer satisfaction could only be achieved through employees who remains in direct contact with the customers and provide high quality service. A recent study showed that employee effort was a strong driver of customer satisfaction over and above employee satisfaction (Yoon, 2001). As Jim Collins (1999) said the old adage “People are the most important asset” is wrong. The right people are your most important asset “.Getting it right starts with hiring the right people. There is no such thing as the perfect employee, different positions are often best filled by people with different skill sets, styles and personalities. As one study of high performers observed that Energy – cannot be taught, it has to be hired. The same is true for chase for detail orientation, for work ethic, for neatness. Some of these things can be enhanced with on the job training or incentives but by and large, such qualities are instilled early on (Fromm & Schlesinger, 1994). In both the industry whether it is hospitality or retail, good manners, need to smile and eye contact and naturally warm personalities are the basic requirements for hiring. Here companies are looking for right attitude with a personality that fits into job requirement. So firms from hospitality industry or retail industry should devote great care for attracting and hiring the right candidates. To hire best candidates every organization has different ways to identify the best candidates in their applicant pool. They observe behaviour, conduct personality tests, interview applicants and provide applicants with a realistic job preview (Schneider & Bowen, 1995). Marks and Spencer (M&S) follows a well structured hiring process to identify and recruit the employee. First they go through an online assessment of candidate followed by exercises and personal interview. During the process screening has been done at the online assessment level. During the exercises and personal interview they check the quality of salesmanship ability of convincing the customer through in depth knowledge of the product and reading the behaviour of customer and extracting the requirements and needs of the customer. They go through mock exercises about real encounters with the customers and assess the communication and convincing skills of the employee to be recruited. They observe the service style (politeness, courteous and well spoken) in potential employees. In the personal interview, M&S people ask for willingness and conviction to do the job, communication skills etc. In hospitality industry, Ritz-Carlton hotels group hiring the employees who have almost all the quality mentioned above, but hospitality needs some additional quality. Employees in the hospitality industry need certain quality excessive of others i.e. Willingness to treat customers and colleagues with courtesy, consideration and talk, perceptiveness of customers needs, and ability to communicate accurately and pleasantly. The Ritz-Carlton Hotel group has been using personality profiles of all job application / applicants for the past 10 years. Staff members are selected for their natural predisposition for working in service context. Inherent traits (which are must for any hospitality industry) such as ready to smile, a willingness to help others and an affinity for multi-skilling, enable people to go beyond learned skills. All selection may not go through face to face interview rather than selected on the basis of telephonic interviews. Even for some of the jobs Ritz-Carlton prefers on the job to demonstrate the particular skills. When a firm has good people, investment in training can yield outstanding results. As Schneider and Bowen (1995) put it “The combination of attracting a diverse and competent application pool, utilizing effective techniques of hiring the appropriate people from the pool and then training the heck out of them would be gangbusters in any market”. In both the organizations studied Marks & Spencer or Ritz-Carlton Hotels, they start strong with new hires, focus on getting emotional commitment is the firm core strategy, and promote core values, such as commitment to service excellence, responsiveness, team spirit and mutual respect, honesty and integrity. In both the organization / industry training of interpersonal skills includes visual communication skills, such as making eye contact, attentive listening, body language and even facial expressions. Technical skills encompass all the required knowledge related to processes and rules and regulations related to customer service processes (Tansic, 1990). Product knowledge is a key aspect of service quality. In the retail sector especially for M&S employees must be able to explain product features effectively and also position the product correctly. Before providing training to employees M&S performs skills audit across all its store management teams. This allows employees to map their own competencies and the requirement for development. M & S also developed more and more tailored training programmes to help managers / management to enhance their skills. In 2007/08, M & S has completed improved training for almost 4000 section managers. M&S have built elements of training programme for new starters. For new starters, M&S graduate scheme is much popular. Most of the graduates’ has spent and intensive year working with M&S stores. M&S trained 1500 assistants to provide advice to customers on nutrition and proposed to train all its food hall teams in nutrition within three years (Annual Report, M&S, 2007). In the Ritz-Carlton has formulated employment needs discussing 20 basics every time. The management of Ritz-Carlton feels that “The relationship only lasts if you communicate. Good communication is the reason why things work”. All employees at Ritz-Carlton will successfully complete annual training certification for their position. So the training needs for retail and hospitality industry employees are a little bit different. As an employee, hospitality is more long term direct contact service than retail. In hospitality industry, more and more individualised and customized services are required whereas in retail different kind of services like timely payments, proper payments are more required. Long term relationship (personalized) is more required in hospitality to improve customer loyalty (Expert magazine, 2003). Basically all the organization in service trains its employees to do the right thing and empowers them to do so. Employees self direction has become increasingly important because in high contact services like hospitality or retail frontline staff frequently operate on their own, face to face with their customers, and it tends to be difficult for managers to closely monitor their behaviour (Yagil,2002). Research also linked that high empowerment to higher customers’ satisfaction (Bradley & Sparks, 2000). Employees in M&S are more empowered. About 3500 democratically elected employees sit is Business Involvement Groups (BIG) representing their colleague views on matters relating to work and employment. Apart from representation to employee M&S carried out annual surveys i.e. 'You say survey”' to provide employees on opportunity to air their views on various issues including job satisfaction and management performance, whereas in hospitality industry employee empowerment is more required. At Ritz-Carlton new employee can commit up to $2000 of hotel's fund to bring instant resolution to a guest's problem. Here employees are encouraged and empowered to solve the problem of guest immediately and even without consulting any one of his/her supervisor. Job descriptions become irrelevant when guest satisfaction is at risk (Expert magazine, 2003). Basic 20 is the guiding point for anyone at Ritz-Carlton and it incorporates Ladies and Gentlemen step outside boundaries and no one questions their right to act because they have an overriding obligation to settle the issues. So we can easily conclude that employee empowerment is more prevalent and required for hospitality industry than retail industry because employee remains more in touch with the customers and this long term personal relationship develops into customer loyalty (http://www.ritzcarlton.com/en/Default.htm). Hiring, training, empowerment and teams give us able employees, and reward systems are the key to motivation. Service staff must get the message that providing quality service holds the key for being rewarded. Motivating and rewarding strong service performers are the two most effective ways of retaining them. Nowadays we have seen high turnover rate of employees in both the industry whether it is retail or hospitality. To keep employee motivated and involved, both the organization follow certain rules. At Ritz-Carlton, comprehensive training programme developed a sense of belongingness for employees and customers as well. Ritz-Carlton Gold standards are part of employee job and everyday morning discussions keep employees involved with Ritz-Carlton philosophy at the centre of its employees mind. Dedicated employees at Ritz-Carlton have ample opportunity to grow within the organization. Ritz-Carlton executives encourage and reward employee feedback. Basic7 establish the framework of bilateral communication. Ritz-Carlton work culture creates pride and joy that affects them. In M&S almost 60% employees out of 75,000 employees stay more than 2 years and about 22% employees stay for more than 10 years (How we do business Report M&S, 2008). Clearly defined career paths, regular and comprehensive training to its employees, special training programme for people moving into senior management, providing great service awards to recognise outstanding customer care, listening and responding to their views motivate and retain the employees at M&S as preferred employer. Rewarding its employees through share schemes are the long established part to total reward package, encouraging and supporting employees to have share ownership. The equal opportunity policy promotes and environment free from all biases. Organisation is responsible to the needs of employee, customers and the society as whole. In both the industry and the discussed organization, we came across various HR policies and found that similarities of HR practices are the striking features but have some difference in intensity of services due to high long term contact with customers in hospitality in comparison to retail. Even empirical research also shows that hotel/hospitality industry needs more humane qualities. The research shows that behavioural integrity of a hotel's manager was highly correlated with employees, trust commitment and willingness to go the extra mile. Further more of all manager behaviours measured, it was the single most important factor driving profitability. In fact, and increase of a mere 1.8 in a hotel's overall behavioural integrity score on a 5 point scale was associated with a 2.5% increase in revenue and a $250,000 increase in profit per year per hotel (Simmons, 2002). Retail and hospitality industries are basically high contact services and need more and more trained human resource with lot of perfect behavioural skills includes communication skills. Both the services require mannered approach, listening and providing immediate solution to customer problems, anticipating needs of the customer, and proactive approach to reach out customers with the solutions. In hospitality industry the bonding or relationship with the service providers and the customer has a long lasting impact on future business. So in that way hospitality industry needs more intensive behavioural and cognitive skills. References: 1. All the information about Ritz-Carlton Hotel group has been accessed from the website http://www.ritzcarlton.com/en/Default.htm on 25th April 28, 2009. 2. Annual report (2007), Marks and Spencer accessed from the website www.marksandspencer.com/annualreport2007 dated 25th April 28, 2009. 3. Bove, Lilian L. and Johnson, Lester W. (2001), “Customer relationships with service personnel: Do We measure closeness, quality or strength?” Journal of Business Research, 54: 189-197. 4. Bradley, Graham, L. and Sparks, Beverley A. (2000), “Customer reactions to staff empowerment: mediators and moderators”, Journal of Applied Social Psychology, 30, No. 5:991-1012. 5. Collins, Jim (1999), “Turning goals into results: The power of catalytic mechanism”, Harvard Business Review, 77 (July-August):77. 6. Expert magazine (2003), “My pleasure” The Ritz Carlton Hotel Part II by Bill Lampton, Vol.3, Issue 6 accessed from the website www.expertmagazine.com/EMonline/RC/part2htm on 25th April 29, 2009. 7. Fromm, Bill and Schlesinger, Len (1994), “The real hero’s of business, New York: Currency Doubleday, 315-316. 8. Hemp, Paul (2002), “My week as a room-service waiter at the Ritz”, Harvard Business Review, June: 8-11. 9. Heskett, James L., Jones, Thomas O. Loveman, Gray W. Sasser, Jr., W. Earl and Schelesinger, Leonard A. (1994), “Putting the service profit chain to work”, Harvard Business Review, March-April. 10. How to do business report (2008), Marks and Spencer, accessed from the website www.marksandspencer.com/howtodobusinessreport2008 dated 25th April 2009. 11. Price, Reg and Brodie, Roderick J. (2001), “Transforming a public sector organization from inside out to outside in”, Journal of Service Research 4 No. 1:50-59. 12. Schneider, Benjamin and Bowmen, David E. (1993), “The service organization: Human Resource Management is crucial”, Organizational Dynamics, 21 No. 4 (spring): 39-52. 13. Schneider, Benjamin and Bowmen, David E. (1995), “Winning the service game”, Boston, Harvard Business school press, 115-126. 14. Simmons, Tonny (2002), “The high cost of low trust” Harvard Business Review (September):2-3. 15. Tansik, A. David (1990), “Managing Human Resource issues for high contact service personnel”, in Service Management Effectiveness, ed. D. E. Bowen, R. B. Chase, T. G. Cummins and associates, San Francisco: Jossy-Bass, 152-176. 16. Yoon, Mahn Hee (2001), “The effect of work climate on critical employee and customer outcomes”, International Journal of Service Industry Management 12 No. 5: 500-521. 17. Yagil, Dana (2002), “The relationship of customer satisfaction and service workers’ perceived control-examination of three models”, International Journal of Service Industry Management 13, No. 4: 382-398. Read More