Hospitality MNCs - HRM Transfer - Assignment Example

Hospitality MNCs - HRM Transfer Introduction Under conditions of the modern process of globalization, international community becomes interconnected and integrated on many different levels. Multinational companies currently have a lot of difficulties of correct strategic establishment of human resource practices. In order to consider this vivid topic, German and British hospitality MNCs will be discussed in detail. With regard to modern process of globalization, employee-manager relationship is being transformed on the direction to convergence. The discussion of relationship between globalization and HRM practices which have to be transformed is a relevant and vivid issue of modern HR management. Generally, managers develop their strategies with regard to the needs of diverse employees. Religious, ethnic and cultural differences should be treated not as preventive factors of successful cooperation between managers and employees, but as a helpful tool of enrichment of their skills and experiences. Thus in order to develop proper cross-cultural HRM strategies it is necessary to modify considerations about and attitudes to national peculiarities of employees. This research paper discusses similarities of HRM in European countries and there is an attempt to define whether there is an integral, international or European model of HRM or there are still differences in attitudes to HRM in Europe. Britain and Germany are European countries and managerial strategies have common trends there. Both of these two countries belong to countries with cultures of “high repertoire”. It means that HR managers have a lot of abilities to propagate their ideas and develop creative thinking applied to employees. Moreover, German and British hospitality MNCs are known world-wide. MNCs worldwide are known as “dominant actors in the global economy”. On the one hand MNCs reflect culture and traditions of their culture of origin but on the other hand they should perform in the international arena in compliance with international standards and regulations. Consequently, it is necessary to pay a proper attention to HRM practices development in diverse contexts (Ferner, 1997). Cross-national transfer of HRM practices should be studied in accordance with the following points: structural change and staffing; staffing philosophy; convergence and divergence; framework and key concepts; UK labor market; German labor market; elements in an international compensation package; current compensation trends. Key concepts of HI In accordance with Selwyn, “The basic function of hospitality is to establish a relationship or to promote exchange of goods and services, both material and symbolic, between those who give hospitality (hosts) and those who receive it (guests)” (Lashley and Watson, 1999, p. 19). Selwyn describes the main function of hospitality as consolidation of recognition that guests and hosts live in the same moral environment. This concept should be a core issue for consideration for MNCs. The only additional point for MNCs in the international arena is their proper attitude to their diverse personnel. Thus this concept can be extended to the following degree of consideration: MNCs of hospitality industry should develop professional relationship between managers and employees on different levels, taking into account diverse cultural background of global hospitality industry. Staffing philosophy MNCs of hospitality industry are mainly focused on general competence of their employees, presence of specialized skills and knowledge. Therefore in order to develop the required demands among their employees, HI MNCs have to make their decisions step by step with regard to every aspect of hospitality industry, focusing on the needs of their employees. Low salaries, inefficient system of compensation and other drawbacks should initiate innovations in staffing philosophy. Further on, there will be evidence that in spite of the drawbacks, employees in British HI are satisfied with their working conditions. Convergence/divergence A relevance of convergence/divergence is a striking issue of modern managerial practices. On the one hand, a process of globalization makes managers to work out similarities in their approaches and strategies; on the other hand, it is next to impossible to work out equal strategies of manager-employee relationship in the diverse context. Therefore it is possible to discuss similarities and differences of British and German MNCs in HI. A core issue of British and German MNCs of hospitality area is mainly discussed in the paradigm of a global-local dilemma (Ferner, 1997). The main goal of these companies is to work in order to reach “internal equity and consistency” (Allin, 1999, p. 319). Moreover, host country can also cause effects on strategic development of company’s HRM practices. British HRM practices have also been rarely discussed. The reason is the same as in case with Germany: too strictly regulated HRM practices. As a matter of fact, managers in British MNCs are concerned about direct communication with their staff. Certain data witness that this kind of approach is of a more theoretical character, than of a practical one. Only 11% of managers in British hospitality MNCs had a direct communication with their employees (Allin, 1999, p. 320). The countries chosen for this research, Britain and Germany, have been rarely discussed, concerning the issue of HRM practices especially in hospitality industry. German labor system may have to be often misinterpreted by different researchers as too strongly regulated. Thus researches conducted on transfer of foreign HRM practices could hardly be studied on the example of this country (Royle, 1999c, p. 541). Nevertheless in this research paper there is made an attempt to discuss HRM practices transfer on the example of German hospitality industry. It is possible to provide the following interesting comparison of personnel and public goods: “workers cannot consume personnel policy according to their individual tastes” Royle, 1999c, p. 542). There is a standard packet of HRM practices, which should be adopted by individuals. Another suggestion is to introduce various HRM policies in different parts of MNCs: “It might be harder for the organization to build up a unifying corporate culture and to lead the MNC towards commonly accepted goals” (Gooderham et al., 1998). British MNCs have another challenge. It is the recruitment. Hospitality area recruitment is focused in British MNCs on personal skills, experiences and availability of a potential employee. Moreover, recommendations from previous job places are of high importance for hospitality employees. There is an essential drawback of HRM practice in British hospitality area: a system of rewards is available for administrative staff and not for ordinary employees. Personnel transfer may be influenced by numerous variables of economical, cultural, institutional and other factors (Kamoche, 1996; Takeda, 1998). The majority of conducted studies show that there is no the best way for managing HR on the global level. In accordance with different factors, HRM practices may be developed and established in a different way. Structural change and staffing Structural change is required in British HI industry and MNCs, because board level HRM responsibility, active participation of line managers in HR issues prevails. Moreover, “The management approach is highly individualised and controlling, and employees have few means of collective union and non-union representation” (Royle, 1999a, p. 160). Such kind of conditions can be destructive for MNCs. On the one hand HRM practices in hospitality industry in Britain can be considered to be underdeveloped because of the reason that low pay and poor conditions of employment still occur in this sphere. A need for development of HRM practices in HI in Britain can be explained by the need to shift accents from “hard” approach to a more flexible approach. A fact that employees of this industry were satisfied with their managers, may be interpreted in a different manner: the answers were collected on the basis of questionnaires filled in by employees, but the majority of questions concerned the work of employees. Thus no specific questions with regard to employee-manager relationship were covered. Moreover, employees who quit the MNCs didn’t specify the reasons for their quit. Nevertheless it is also possible to claim that HI employees voluntarily show their satisfaction with managerial practices in HI. Thus it is possible to claim that managerial practices should be further developed and transformed in accordance with global trends. German HRM practices are also strictly regulated. German MNCs have the following requirements to their future employees, which are relevant to international labour market: two languages knowledge are required. The majority of the MNCs give an opportunity to their foreign employees to take courses of German language. On the example of McDonald’s fast food MNC it is clearly seen that German MNCs have a tendency to create particular agreements relevant to their employees, unlike previously used collective agreements. In McDonald’s there is an established federation Bundersverband der Systemgastronomie (BdS) having a specific agreement with the Gewerkschaft Nahrung Genuss Gaststatten (NGG) (Royle, 1999a). Newly introduced collective agreements in hospitality industry in Britain include “pay in lieu, overtime, sick pay and the washing of uniforms”. Royle (1999) underlines a gradual tendency of works councils and NGGs creation. British employment in HI has numerous peculiarities in comparison with British employment in other industries. In HI employment a psychological contract is used. British employment in HI is called “vulnerable” employment. Low payment and employment conditions also leave much to be desired. Moreover, “HI employees have less access to family-friendly measures, comprehensive induction and training, performance appraisal and a healthy and safe environment” (Briscoe, Randall, Schuler, 2004, p. 23). Disciplinary sanctions are wide spread as well. HI employment conditions in Britain are described as 'bleak house' and 'black hole' scenarios. Moreover, British managers have to make their decisions basing on their own ideas and avoiding consultations with unions or employees. Thus in British HI a concept of the 'unbridled individualism' thesis occurs. It means that managers deal with employee relationship transfer with regard to a unitary perspective. Furthermore, taking into account the fact that employment in MNCs is multi-sided, there is a need to work out strategic integration of managerial decisions. MNCs are not always positive companies with a favourable working policies and practices: the main controversies in British labour market are caused by the following facts: “The clear implication is that big firms are not necessarily good firms, where employment policies and practices in HI workplaces within a cost-control framework continue to contradict the conventional notion 'good' employment relations” (Allin, 1999, p. 320). On the example of MNCs from hospitality industry, focused on food service industry, there is a support for a cost-control 'low road' and transactional strategy though there is no exact managerial rationale or motive. Challenges, which may occur in the process of employees’ transfer, are the following: “the lack of representation, consultation and grievances are likely to be a function of managers working in close proximity with employees with whom close personal bonds develop where customers are ever present” (Royle, 1999c, p. 542). This has caused the occurrence of a “relationship of affiliation” where the core issue is providing the customers with high quality services. Compensation systems in Britain and Germany Current compensation trends are not well-developed in British hospitality industry. For example, “half the HI employees needing a day off at short notice would be required to take unpaid leave compared to less than one-fifth in AIS” (Royle, 1999, p. 135). A low payment of employees in this industry (earnings are less than £3.50 an hour), a bad provision of employees with health insurances, paid laves etc signify the necessity of changes in hospitality industry in Britain. “HI employees are considerably lower paid, with 33 per cent of workplaces having 50 per cent or more of HRM practices in British hospitality area are also complicated by managers-employees’ relationship” (Allin, 1999, p. 325). As a matter of fact, British employees are proud of their managers and claim that they understand and fulfil all their needs. The following criteria are fulfilled by British managers: “keeping everyone up to date about proposed changes, providing everyone with a chance to comment on proposed changes, responding to suggestions from employees, dealing with work problems, and treating employees fairly” (Allin, 1999, p. 325).Therefore in spite of the abovementioned drawbacks of HRM practices in Britain, there is an evidence of personnel satisfactions with their working conditions. Employees of hospitality industry feel safety and satisfaction with their jobs. British managers are worth to be appraised for creation of such kind of conditions, when an employee can feel needed and experience his achievements. Compensational system in MNCs is another challenging issue, because it is rather hard to develop compensation systems with regard to international regulations. For example, interpersonal communication is of high importance in McDonald’s. Thus this skill has to be developed and properly compensated. Milkovich and Newman (2008) claim that “compensation systems in the international arena require a more global approach which must move between two main objectives: (1) strategic alignment-compensation systems must be adapted to the organizational context to support and improve the corporate aims; and (2) adaptation to the institutional and cultural context – compensation systems must be adjusted to the local contexts within which international firm is working” (p. 125). These strategies make an emphasis on compensation as the main condition for the international success of the organization. Compensation system allows motivation growth among employees thus increasing their competitiveness in the international labor market. Milkovich and Newman (2008) consider possible strategies of employee compensation development and define four main factors such as – institutional, economic, organizational and individual. Organizational changes may influence in a different manner on this system. Milkovich and Newman (2008) claim that “a compensation system in the international arena should be focused on the following issues: contracts of social sphere; presence of trade unions; capital markets and structure of ownership; management autonomy; institutional and cultural background” (Milkovich and Newman, 2008). The importance of these aspects has been approved by practical implementation in global compensation systems. With regard to the study conducted by Brotherton (1999), the United Kingdom applies highly decentralized compensation systems with lowest degree of governmental intervention. Unlike Britain, Germany develops “compensation systems of average centralization since they are managed by the sector to which the company belongs”. Moreover, UK has a few legal requirements in the sphere of employment: the absence of minimum salary and maximum number of hours and the absence of formal methods of active involvement. Germany is known by the strictly regulated social payment systems. Labor costs and social costs are integrative elements of payment system (Brewster and Harris, 1999). Therefore compensation systems of Germany and Britain should be focused on labor costs and, social costs and international organizational costs (Brewster and Harris, 1999). It is possible to make a general suggestion that well-developed compensation system guarantee multi-sided development of manager-employee relationship. Conclusion Hospitality and tourism industries are widely recognized around the globe. The main drawback of MNCs is a low payment. This fact can be explained by a tendency of recruitment of foreign citizens and their agreement to work for low payment. Nevertheless MNCs can not always benefit from low-payment workforce; traditionally such kind of personnel is unskilled. Prevalence of female staff and young people, migrants is not beneficial for MNCs as well. Moreover, another similar drawback of German and British MNCs is a part-time and uncommon employment. All these facts witness the necessity to create more flexible working conditions in hospitality industry. Another problem concerns recruitment and retention, which is rather is particularly problematic especially for unskilled managers (Brewster and Harris, 1999, p. 37). With regard to the abovementioned facts, it is possible to claim that there is a tendency of “vulnerable” employment occurrence. Employment conditions should be considered on global level, introducing introduction of such kind of issues as “minimum wages, equal pay and working time” (Brewster and Harris, 1999, p. 40). Nevertheless, a broad context of recognition of lower minimum rates for young workers and unequal pay is worth to be developed. British and German MNCs of hospitality industry should mainly work in compliance with various economic, social, legal and political aspects. Once company is in the international arena, it has to develop broader employment norms. Thus Germany is focused on development of specific collective arrangements. General tendency for flexibility and innovative regulations of labour markets is another important feature of modern labour markets. MNCs often come across cultural barriers, which may hamper development of non-discriminative measures. Labour markets of Britain and Germany under conditions of current process of globalization experience turbulent changes and uncertainties. Managers have to develop their knowledge and skills in order to deal with the influence caused by “constraints and choices related to product and labour markets, organizational status and structure, size of workplace and culture” (Allin, 1999, p. 321). The main drawback of managers in HI MNCs is their focus on labour costs and not on labour efficiency or employment. British and German MNCs have examples of both positive and negative employment practices in hospitality industry. Works cited 1. Allin, P., 1999. Is the UK hotel sector out of trouble? The International Journal of Contemporary Hospitality Management 11(7), pp. 318-325. 2. Brewster, C., Harris, H., 1999. International HRM: Contemporary Issues in Europe. Routledge. 3. Briscoe, Randall S., Schuler, 2004. International Human Resource Management: Policy and Practice for the Global Enterprise. Routledge. 4. Brotherton, B., 1999. Towards a definitive view of the nature of hospitality and hospitality management. International Journal of Contemporary Hospitality Management, 11(2), pp. 165-17. 5. Ferner, A. and Hyman, R., eds., 1998. Changing Industrial Relations in Europe. Oxford: Blackwell. 6. Lashley, C. and Watson, S., 1999. Researching human resource management in the hospitality industry. International Journal of Tourism and Hospitality Research, 1 (1), pp. 19-40. 7. Milkovich and Newman, 2008. Compensation. McGraw-Hill/Irwin 8. Royle, T., 1999a. The reluctant bargainers? McDonald's, unions and pay determination in Germany and the UK. Industrial Relations Journal, 30 (2), pp. 135-50. 9. Royle, T., 1999c. Recruiting the acquiescent workforce: a comparative analysis of McDonald's in Germany and the UK. Employee Relations, 21 (6), pp. 540-55. 10. Royle, T., 2000. Working for Mcdonald's in Europe: The Unequal Struggle? Routledge. Read More