Aligning Business Strategy and Human Resources Management: Park Plaza Hotels and Ritz Hotels - Case Study Example

Aligning Business Strategy and Human Resources Management: Case Studies on Park Plaza Hotels and Ritz Hotels Discussion and Analysis Paper Title Name of Professor Date of Submission Abstract This is not a report about the pledge of top or senior managers, represented in such avowals as ‘people are our most important resource’ or ‘employee training and development is the heart of our employee relationship’. This is not a discussion of a body of idealised portrayals of how Glaxo Pharmaceuticals UK manages performance or a catalogue of change management practices at Hewlett Packard. This is a report about the application of human resources and business strategies in service-oriented organisations, specifically, Park Plaza Hotels and Ritz Hotels. This study attempts to understand how service-focused organisations improve or strengthen the relationship between business success and human resources strategy. Introduction New knowledge, information technology, the flourishing of knowledge workers, global competition, and a multitude of other changes in the business environment are encouraging organisations to regularly assess how they operate (Johnson, Scholes, & Whittington 2008). In several instances, organisations are adopting innovative strategic programmes and basically reforming how they operate. They are restructuring, utilising new technologies, and enhancing work procedures to respond to a more and more global and demanding customer base (Eigenhuis & Van Dijk 2007). These programmes require deep-seated change that has important repercussions for the human resources management and the HR function in organisations. It is evident that practices in HR management should be an essential component of the strategy of any service-oriented organisation (Hitt, Ireland, Hoskisson 2008). The yearly reports of numerous service sectors claim that their intellectual property and human capital are their most vital assets. Furthermore, in numerous service-focused organisations, one of the biggest costs is compensation (Lawler, Mohrman, Mark, Neilson, & Osganian 2003). In these organisations, compensation usually amounts to 70 to 80 percent of the overall expenditure of business operation (Lawler et al. 2003: 4). With training expenditures and other HR management outlays included to compensation costs, the HR function usually has accountabilities that have an effect on an organisation’s overall costs (Griever 2003). However, HR cost is not the single or even the most vital concern for numerous service-focused organisations (Burke & Cooper 2004). Even when HR represents particularly little of the cost of business operation, it can have a considerable effect on the performance of the organisation. Essentially, without efficient human resources, organisations are prone to have no or little revenue (Burke & Cooper 2004). Even the most mechanised production equipment or facilities need empowered, skilled employees to function. Knowledge work organisations rely on personnel to use, develop, and supervise their most essential resource, knowledge (Mcwilliams, Van Fleet & Wright 2001). Hence, even though an organisation’s human resources do not show on its balance sheet, it embodies to a greater extent large portion of market valuation of numerous organisations (Schuler & Jackson 1999). Impetuses for Change: Value-Added Organisation and Strategic Change The thrusts of global competition have released tremors that have left exceptionally few service-oriented organisations unaffected (Warren 2008). Continued existence in the contemporary world requires that organisations enrich the competencies to compete on several domains: new products, knowledge management, innovation, technology, service, quality, cost and speed, to specify a few (Foot & Hook 2005). Progressively more, the only viable and manageable competitive advantage is the capability of organising efficiently, act in response to change, and manage effectively (Boxall, Purcell, Burrell, Thompson, & Marchington 2008). The study of Lawler, Mohrman, and Benson (2001 as cited in Lawler et al. 2003) of the Fortune 1000 offers support of this, revealing a significant correlation between the implementation of new management practices intended to improve the organisation’s competencies and its financial outcome. An increasing collection of evidence suggests that HR can serve as a value-added component in organisations (Grundy & Brown 2003). One of the major attempts on the correlation between HR practices and firm performance has been carried out by Becker and Huselid (1998 as cited in Lawler et al. 2003). In their investigation of service-oriented organisations, they discovered that companies with the highest concentration of HR practices that strengthen performance had the largest market value per worker. They emphasised that HR practices are crucial in measuring the market value of an organisation and that enhancements in HR practices can result in substantial improvements in the market value of organisations (Lawler et al. 2003). They assume that the best organisations are capable of realising both strategic and operational superiority in their HR systems (Lawler et al. 2003). HR functions particularly, and staff functions generally, are embattled in organisations due to the fact that they are commonly viewed as restraining than contributing value and as not receptive to the needs for change that stem from operating divisions (Chanda, Sivarama, & Shen 2007). Staff functions are being instructed to offer professional assistance to the strategic programmes of the organisation and to make the most of technology and other models to provide more responsive and valuable services (Hendry 1995). Organisational design is, to a greater extent, being acknowledged as a major force that facilitates organisations in building competencies and thus to perform in ways that generate a competitive leverage (Mabey, Salaman, & Storey 1998). Organisations are implementing design aspects with an aim to the value they add, specifically, how they assist the organisation in realising its goals successfully (Sims 2002). All components of the organisation, staff functions and operating divisions alike, are being restructured to provide higher quality and value. For personnel groups, this necessitates designing a ‘business model’ that determines that type of value the personnel will provide (Sims 2002: 38). It has to clarify both how it will improve organisation performance and why the organisation should invest in it. It afterwards necessitates an organisational design intended for the support function that agrees with that business model (Sims 2002). Scholars have emphasised two major developments in organisational design (Robinson 2009). Primarily, design is being acknowledged as more important than structure; it involves components such as work processes, information systems, people systems, rewards, and management processes (Robinson 2009). These components should be in harmony with the strategy and with another for a company to successfully operate. The HR organisation should weigh up whether the components of its design generate a high-quality HR system, which is able to deliver utmost value while using up the smallest amount of resources (Holbeche 2009). This implies focusing on the way it manages to deliver regular practical services, strategic business support, and conventional HR systems development and administration (Holbeche 2009). The HR personnel should consider HR’s use of IT, rewards, management processes, competency development, customer linkages, and its own structure to ascertain that they most favourable organise their limited resources to provide value (Holbeche 2009). Besides ascertaining the HR function is most favourably designed, HR could also contribute value by assisting in designing the entire organisation and its business divisions (Armstrong 2003). Next, organisational designs are being recognised to include multifaceted contingencies and trade-offs, and that as an outcome one design does not go along with all organisations (Betz 2001). Innovative business models are developing, and numerous innovative strategies and organisational types are emerging to address the difficult demands that organisations should deal with (Kourdi 2009). These involve network organisations, customer-oriented designs, globally integrated companies, and complex partnerships (Kourdi 2009). Moreover, multinational organisations are acknowledging that various businesses exist in various markets and confront shifting needs. As a result, there is a growing difference in organisational design within multinational organisations and between businesses (Navarro 2006). This implies that one form of HR function does not agree with all circumstances. Various organisational types necessitate various forms of HR inputs and hence various HR designs and systems (Navarro 2006). Prospective Function of the HR Organisation The prospect of the HR function in organisations is extremely indecisive. On the one hand, if present developments persist, it may end up being mainly an organisational function that supervises an HR system that is IT-based (Salaman, Storey, & Billsberry 2005). On the other hand, it may become a catalyst of business strategy and organisational success. This prospect is present now due to the fact that several of the major drivers of competitive advantage rely on efficient human resources management (Salaman et al. 2005). More than ever before, organisational success relies on their capability of dealing with topics such as capability building, change management, and knowledge management, all of which may be classified under the area of the HR function (Storey & Ulrich 2008). In order to enhance their input to organisational success in the future, HR specialists should reassess their function’s programmes, services, and structure to deal with how it can contribute value in the present economy with its innovative business strategies and organisational forms (Storey & Ulrich 2008). HR confronts a difficult task just in assisting organisations in dealing with the human concerns that are created by major strategic change (Mazzucato 2002). To address these tasks successfully, HR has to concentrate on how it can contribute value and how it is managed; it should enrich its capabilities and in a number of domains design new ones (Hoque 1999). Several studies have dealt with the new capabilities needed as the HR function perseveres to be a business partner in this varying business environment and to adapt to the business (Schmetterer 2003). Naming these capabilities is merely the initial step. It has to be followed by managing the HR function to build these capabilities and to deliver services in a way that contributes value as organisations restructure their entire design and strategy (Ulrich 1996). To improve, the HR functions should break free from the control and audit responsibility and assume a management and development function. Lawler (1995 as cited in Lawler et al. 2003) emphasises this line of thought by claiming that the HR management model does not sufficiently perform in addressing business requirements. He claims that the HR function should implement a business partner model (Lawler et al. 2003). The business partner model stresses that the task of the HR function includes designing practices and systems to guarantee that the organisation’s workforce have the required capabilities and are empowered to perform well (Holbeche 2009). HR has a say when business matters are analysed, and it includes an HR point of view to these analyses (Wittmann & Reuter 2008). When it comes to developing HR practices and systems, the line organisation participates in the procedure so that they have possession of the systems. HR depends on the line to successfully put into practice majority of the HR practices (Wittmann & Reuter 2008); HR evaluates the value of these practices and concentrates on process improvements (Armstrong 2001). The business partner model evidently aligns the HR function as a value-added component of a company. In this model, the HR function adds to organisational performance by efficiently controlling the most vital capital of most companies, their human resources (Kourdi 2009). But even this could not be the model that encourages the HR function to contribute the most value possible. By turning into a strategic partner, the prospect is present for the HR function to contribute further value (Mcwilliams et al. 2001). Once HR is a strategic partner, its function involves assisting the organisation in designing its strategy, as well as changing and improving itself (Salaman et al. 2005). In the knowledge economy, the strategy of an organisation is directly related to its HR function (York 2009). An HR function that is designed and aligned as a strategic partner takes part in strategy formulation and implementation because knowledge in recruiting, staffing, retaining, organising, and empowering human resources is crucial to both (Holbeche 2009). In principle, the HR function is proficient in organisational and work design concerns and well-informed about the business, thus it can assist the organisation in developing required organisational competencies and change quickly as new prospects become obtainable (Robinson 2009). Focus of Study There has been much argument about transformation in the HR function. A current Human Resource Planning Society’s report claims that an agreement now is present about what HR organisation must turn out to be but that the functions has been sluggish to build the competencies to implement that idea (Lawler et al. 2003). The core emphasis of this study is on how service-oriented organisations, such as Park Plaza Hotels and Ritz Hotels, are changing in response to the organisational and strategic programmes that organisations are embarking on. This study examines the commonness of the practices that embody the new paths that HR organisations must assume to go along with the strategic changes that are taking place in the wider organisations they serve. Finally, this study examines the effect of reforms in the HR function on its value, as viewed from within the function. This provides an understanding of the emerging belief systems and business models within the HR function about what makes up capable HR practices, whether completely aligned or not. Case Studies: Human Resource Management and Business Strategy of Park Plaza Hotels and Ritz Hotels Overview of the Organisations Park Plaza Hotels and Ritz Hotels invest in customised service-oriented strategies supported by their people development programme (Walker & Miller 2009). As quality of employee satisfaction and service standard persists to be elevated on the strategic business plan at Park Plaza Hotels, the organisation has undertook a series of customised training assemblies for each of its staff, involving all guest-facing personnel (Nickson 2007). Park Plaza Hotels conduct a series of compulsory communications and trainings under the organisation’s new programme (Nickson 2007). The custom-built programme was developed to further improve the organisation’s workforce and the company to consistently surpass the expectations of guests, develop employee performance and generate inimitable service solutions through role play, computer graphics, learning and employee communication at every level (Walker & Miller 2009). The programme defies the conventional service approach and examines the advantages of ‘inverse reflection’ where the targeted guest experience is taken into account before the working environment, behaviours, and leadership approaches can be examined. The programme is developed around the reality that every communication with guest provides a prospect to expect their requirements and surpass their expectations (Boella & Goss-Turner 2005). The introduction of the organisation’s programme functions as a perfect round-table to train and educate all newly-hired employees about the organisation’s values, vision, and mission statement, with a chain of branded items and posters to rejuvenate and strengthen the promise (Boella et al. 2005). All newly hired employees are required to take part in trainings and the success of the programme is determined in employee satisfaction and guest satisfaction scores (Walker & Miller 2009). This new agenda for commitment and communication to regular training for all employees, involving part- and full-time as well as temporary and casual staffs, is evidence to the value of their human capital. They are the keystone of their business and their commitment, development and satisfaction is very important to the achievement of Park Plaza Hotels. The programme has been well recognised by the employees which is also supported by the reality that the training is fully carried out by the own employees of Park Plaza Hotels. Likewise, in Ritz Hotels quality management was embarked on by their top management. The President and other affiliates of the senior management made up the top quality management group (Walker & Miller 2009). This group regularly convene every week to evaluate the quality of their product and service and satisfaction of guests all over the chain, as well as to evaluate aspects such as market growth, competitive standing, and profitability (Nickson 2007). This group served a double function, and in its function as the corporate steering working group, it was accountable for designing the general strategic agenda for the organisation every year, and also as determining and checking performance objectives (Nickson 2007). All hotels had skilled and knowledgeable leaders who were accountable for guiding the quality improvement attempts. The proficient leaders provided guidance and direction to the various work groups in designing and putting into effect their quality agendas (Brewster & Larsen 2000). All the work domains within the Ritz hotel system were checked on a daily basis, and the performance gauges were documented in daily accounts. These accounts were organised to give early advice of problems in quality and service (Brewster & Larsen 2000). All hotels also evaluated and documented constraints such as ‘guest-room preventive-maintenance cycles’ annually, time consumed servicing a guest and cleaning a room, portions of check-ins without lining up, etc (Nickson 2007). Ritz Hotels’ quality management processes made up the cornerstone of the organisation’s outstanding service culture. The organisation’s objective was not merely to please guests, but to surpass their expectations with regard to service delivered (Walker & Miller 2009). Ritz Hotels also aimed to deliver an equally high quality service, thus guests were constantly aware of what to anticipate from the hotel, regardless which Ritz hotel they checked in (Nickson 2007). In order to ascertain that the hotel carried on in providing excellent service, Ritz Hotels thoroughly monitored customer information (Nickson 2007). The organisation referred to this as ‘customer customisation,’ and the goal of this process was to guarantee that each guest experienced excellent service (Walker & Miller 2009). The personnel of Ritz Hotels, regardless which division of the hotel they served in, were required to take note of the preferences given by guests. For instance, they could note down a guest’s preferred position of room fixtures, favourite food or beverages, preferred readings, etc (Brewster & Larsen 2000). These likings were afterwards stored into an organisation wide database, which all hotels in the chain can access (Brewster & Larsen 2000). Arguments Due to the change in the business environment, it is sensible to anticipate that service-oriented organisations, such as Park Plaza Hotels and Ritz Hotels, have modified the level of emphasis it gives on different HR activities and roles. A primary focus of this study is the extent to which the HR function of service-focused organisations is turning out to be a strategic partner and on particular HR practices and organisation designs related to this. Both organisations increased their concentration on strategic services, specifically on organisation design and development. Both organisations also focused on determining the extent of change that has transpired in the emphasis on conventional HR functions such as recruitment, staffing, and planning. Due to the number one role of HR function in the balance between effectiveness and advantage and customer-oriented support, Park Plaza Hotels and Ritz Hotels focus comprehensively on the implementation of shared services. These organisations built these divisions so as to acquire economies of scale and enhance knowledge. These strategies were especially effective when the organisations had diverse business divisions; they acquire economies of scale and had the capability of acquiring knowledge by having components of the HR function that operate in all hotels. The HR of both organisations had the capability of completely changing the way their services are provided and supervised. They used computer systems such as databases to monitor employee and guest satisfaction. This use of technology positively influenced the organisations’ employee commitment, satisfaction, business success, and the evaluation of strategic data. Also, the organisations increasingly competed for human resources. Obviously, they also successfully managed their talents. They singled out staffs with high capability and trained those with potential. A crucial concern in the success of Park Plaza Hotels and Ritz Hotels’ HR function is the capabilities of their HR professionals and personnel. Both organisations were satisfied with the talents of their HR professionals in serving as genuine strategic and business partners. Conclusions Most HR experts have the same opinion that the HR function has to be a strategic partner, and HR managers are concentrating on and reflecting on new means of adding value. But is HR function really changing? Several major changes have taken place in how HR functions of service-oriented organisations, such as Park Plaza Hotels and Ritz Hotels are managed and how they provide services. The most significant are the following: 1) HR is more prone to employ service groups to serve and support business divisions; 2) HR is more prone to have independent HR professionals who support business divisions; 3) HR is giving more consideration to recruitment and staffing and less consideration to benefits administration. It is giving increased consideration to employee training and development, and organisational design and development. 4) Managers and employees are more and more helping themselves with database systems that provide employee satisfaction and guest satisfaction information. 5) HR managers have higher satisfaction with the HR effective capabilities and the organisational competencies of the HR personnel. In general, this study discovered that even though numerous of the changes embarked on by Park Plaza Hotels and Ritz Hotels are major and critical, the level of change is astonishingly insignificant. Given the enormous level of consideration that has been given to the value of HR being a value-added component, turning out to be a strategic and business partner, and contributing value in several innovative ways, this study anticipated much more change. In spite of compelling claims confirming HR management as a major strategic concern in most service-oriented organisations, HR managers usually are not strategic partners. Rather, the HR function is mainly an organisational function led by people whose tasks are concentrated on administrative activities and cost control. If anything, it is more intensely felt today the value of transformation in the HR organisation. The developed world is more and more dominated by organisations with a greater and greater portion of workers performing knowledge task. Human resources is becoming more and more essential as a determinant of competitive advantage, similar to intellectual capital. The case studies on Park Plaza Hotels and Ritz Hotels evidently show that when companies concentrate on building their capabilities, competencies, and knowledge resources, particularly when they merge these with a well-built emphasis on their performance competencies, they establish HR much more of a business and strategic partner, and they initiate reforms in the HR function. Hence, this study has good rationales to trust that HR will change. Recommendations The following recommendations embody the possible attempts that service-oriented organisations can use: 1) An inclusive competency model now offers the basis for an internally sound and reliable HR system; 2) Innovative job descriptions that are based on competency for all professional employees should be drafted. For local employees, job descriptions should be updated. This enables the assessment of candidates. 3) Selection boards should be evaluated in order to present a more effective way of recruitment and staffing. 4) Personnel should be segregated without interruptions in operations or consequences on employee morale. HR function should be effectively put into effect in order to realise the targeted skills mix. 5) A department that assessed existing technological and practical training to assist a learning organisation adjusted to business needs should be built. 6) A double-career ranking acknowledging the importance of technological or practical knowledge should be initiated. Bibliography Armstrong, M. (2003) A Handbook of Human Resource Management Practice, UK: Kogan Page. Armstrong, M. (2001) Strategic Human Resources Management: A Guide to Action, UK: Kogan Page. Betz, F. (2001) Executive Strategy: Strategic Management and Information Technology, New York: John Wiley & Sons. Boella, M.J. & Goss-Turner, S. 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(2009) Applied Human Resource Management: Strategic Issues and Experiential Exercises, London: Sage Publications, Inc. Read More