Analysis of Management of Culture Diversity in Hospitality Industry - Assignment Example

Why cultural diversity is important in the hospitality industry TABLE OF CONTENTS Introduction.............................................................................................................. Training for competitive advantages........................................................................ Recruitment.............................................................................................................. Conclusion................................................................................................................ References................................................................................................................ Why cultural diversity is important in the hospitality industry Introduction Increased prevalence of globalisation and countries that provide incentives for foreign direct investment has created a professional environment where multinational organisations are sustaining workforces with labourers hailing from different nations, a culturally diverse workforce (Groschl 2011). Such organisations have complex cultural disparities within their workforce team members, making it necessary for multinational firms to consider development of diversity policies so as to create a cohesive organisational culture and inject diversity into that culture (Friday and Friday 2003). Culture is defined as being an integrated process of various learned behaviours that stem from society’s norms and social practices which are not produced by inherent biological factors (Henslin 2005). Culture is considered to be a set of shared values, beliefs, and norms that serve as influence in how organisational members think and behave. Culture is also recognised as being common meanings and symbolisms that build a set of shared social rules that govern the cognitive or emotional parameters of what constitutes group membership (Kunda 1992). Culture, according to Fullan (2001, p.166), is essentially “how the organisation does things around here”. Organisations, over time, establish certain behavioural and procedural norms and employees are expected to perform according to these established guidelines. This is referred to by Alvesson (2002) as cultural enculturation where employees with diverse cultural backgrounds and social ideologies are expected to conform to a singular set of values and beliefs, known as organisational culture. Organisational culture, as iterated by James and Connolly (2009), is a set of rules which dictate in-group membership within the organisation that should be agreed-upon by all organisational staff. The problem with establishment of a cohesive organisational culture and achieving agreement is why organisations should be considerate of cultural diversity. When organisations have many different employees sustaining radically different cultural beliefs and values, it can become difficult to build a singular culture that is cohesive and unified. For example, employees hailing from China come from a collectivist culture where loss of face (reputation) is considered unacceptable in front of others. In the same organisation, employees from a country such as the United States are less considerate of this factor and are willing to accept more social risk in decision-making processes. These differences can conflict building a singular culture and can lead to resistance to accepting the prevailing norms that drive group membership. This is why organisations must be considerate of diversity. Diversity is representative of many differences of organisational members including culture, age, values, disabilities and even gender (Miller and Rowney 1999). Managing diversity is important for enhancing organisational productivity and performance as this process ensures that conflict and friction occurring between disparate workers are reconciled. It is common for members with different attitudes and cultural backgrounds to find disagreement when working in collaborative teams. Diversity management, when considering the importance of building a cohesive organisational culture, then becomes a value-added ideology which enhances worker performance and establishes a foundation for better inter-group collaboration. Several empirical studies have found that groups with heterogeneous members improve the quality of ideas produced in teams and enhance creativity outputs (O’Reilly, Williams and Barsade 1997; McLeod and Lobel 1992). Klein and Harrison (2007) support this, finding that groups with highly diverse members produce better insights and have greater volumes of tools to handle tasks assigned to the group as compared to groups with homogenous cultural characteristics. In the hospitality industry, one that requires dynamic change and ability to respond to many customers with wide-ranging cultural values, the management of diversity is becoming a primary objective to ensure better cooperation, enhanced decision-making competencies and improve general organisational performance. This report highlights why cultural diversity is important in the hospitality industry. Training for competitive advantages In the hospitality industry, if diversity is not considered by the organisational leadership and managed productively, this failure creates many negative costs to the organisation. Such costs include ongoing group conflict, higher turnover rates and poor communications structures and outputs (Cox 1991). One can consider the Four Seasons hotel chain as a relevant example of why managing diversity is an imperative to sustaining competitive advantage. The Four Seasons caters to the luxury segment, consisting of customers that hail from many different nations and sustain radically different cultural beliefs. This luxury hotel chain operates in a highly saturated international market and must innovate and provide service excellence in order to remain competitive and achieve important loyalty from its customer segments. Luxury tourists are very hedonistic, defined as seeking to maximise personal utility as a primary goal, a set of self-indulgent and oftentimes egocentric values (Mees and Schmitt 2008, Lemos 2004). A recent survey conducted by the Affluence Collaborative targeted luxury tourists that maintained an income between $200,000 and $500,000 to determine their beliefs and attitudes regarding what makes superior hospitality services. The survey found that 32 percent of respondents wanted surprises which would create a unique and once in a lifetime travel experience (Four Seasons 2012). Yet another 32 percent of survey participants believed that service innovation was most important to create a unique experience. “Companies must learn from the people they serve” (Kundu 2001, p.1). Hence, the Four Seasons is highly reliant on the talents, opinions and activities of the organisation’s very diverse employee population to provide luxury tourists with the type of service-related experiences they are demanding in order to remain viable in the competitive market. When conflict occurs interpersonally between team members that have very different cultural values, the ultimate outcome is diminished service quality and lack of innovative ideas production. Diversity management serves to reconcile these differences, creating a unified culture that is dedicated and motivated to achieving better service outcomes and producing new ideas for innovating service dimensions that are so critical to satisfying customers. Employees in this particular model must work collaboratively in order to create positive service outcomes and provide travellers with the personalised service they demand. When cultural differences conflict team effectiveness, this particular hospitality organisation cannot achieve its mission of superior service delivery. In this sense, diversity training is quite valuable for reconciling conflict occurring as a result of disparate cultural differences. Lim and Noriega (2007) believe that it is critical to reduce culturally-related ethnocentrism to build a more cohesive organisational culture. Ethnocentrism is the process of making judgments about another culture based on one’s personal cultural values and ideals (Omohundro 2008; Hammond and Axelrod 2006). It is up to human resources or other leaders in the organisation to educate employees to respect the religious-based, ethnic, and social differences of other team members. This focus will improve awareness of differences and enhance tolerance and sensitivity of the differences inherent to other team members (Baum, Devine and Hearns 2007). If training processes are effective in rectifying the foundation for what causes ethnocentric-based disagreements, employee productivity is improved and future conflicts reduced (Bhatia and Chaudary 2003). Dedicated, motivated and team-focused members, as a result of diversity training, provide hospitality firms with significant competitive advantages, especially in organisations that require excellence in service delivery dependent on team functioning and consultation. Yet another important advantage of diversity training in the hospitality industry is that it produces perceptions of equity and fairness among team members (Overmyer-Day 1995). This has the advantage of speeding up the process of handling disputes when they occur among diverse team members and also improves motivation and job satisfaction. Perceived organisational justice deals with actions that people perceive as being morally sound and ethically correct. When injustice in the organisation is perceived, it depletes motivational activity and less organisational commitment. Hospitality companies that provide equal opportunities for promotion, by giving all members the same level of training regardless of their cultural disparities, it illustrates both social responsibility and equality. Hence, training packages that are available to all diverse employees can build trust in the organisation and its leadership whilst also enhancing job satisfaction which is so critical in the hospitality industry to achieve positive work-related performance and productivity. Effective training in diversity also has the advantages for improving the quality of leader/member exchanges that is also known to improve motivation and organisational commitment (Harris, Kacmar and Witt 2005). Engaging all employees, regardless of their cultural backgrounds and characteristics, illustrate that leadership legitimately cares about the development needs of all work team members. This is important in the hospitality industry where interpersonal relationship development between leaders and followers is critical to building a team philosophy and enhancing job satisfaction. Showing that all diverse members of the organisation have the same rights and opportunities for personal and career growth with an emphasis on enhancing team diversity builds conviction that translates into better job performance. Hospitality companies must have employees that are dedicated to achieving high quality work outputs and diversity training as a mechanism for improving communications and removing ambiguity sustains many different advantages for the hospitality organisation. Recruitment It is becoming recognised that recruitment of diverse individuals into the organisational model brings significant advantages. When the Avon Corporation hired more Hispanic and African-American representatives, Avon experienced significant profit increases. Unprofitable markets within the inner-city regions responded more substantially to the company and its products when approached by Avon representatives that shared ethnic traits of the customer segment (Cox and Blake 1991). The company Hoechst Celanese had experienced 18 consecutive years of losses in its polyester textile business unit until recruiting an African-American director and diverse business team members. Substantial profitability occurred as a result of this new diversity focus in recruitment (Rice 1994). The aforementioned case studies clearly iterate that diversity in recruitment provides ample profit and/or competitive advantages. Companies that genuinely value diversity have much lower recruitment costs (40 percent less) as compared to companies that do not consider the value of diversity from a human resources perspective (McEnrue 1993). Companies that do not have diversity focus in their recruitment tactics experience higher levels of absenteeism and turnover rates (Cox 1993). Singal (2014) found that hospitality and tourism companies that have a focus on diversity in their recruitment activities achieve substantial profit improvement and financial performance as well as improved credit ratings. So, what is providing these success statistics for companies that consider diversity management in their recruitment processes and ideologies? Much of this advantage comes from the public relations aspects of diversity-based recruitment. Diverse Workplace (2003) suggests that when a company has experienced advantages as a result of having diverse work groups, they should actively share these stories in public mediums. It was discovered by Wright, Ferries, Hiller and Kroll (1995) that when organisations are given public praise by shareholders and other stakeholders for having voluntary diversity policies, stock prices usually increase. Culture is becoming an incentive for investors which serves as a predictor of a strong and cohesive organisation. By publicising successes pertaining to diversity-based recruitment, the long-run competitiveness of a hospitality firm is perceived to be enhanced. This is supported by Grunig (1992) who believes that such public announcements illustrate a firm’s emphasis on corporate social responsibility which makes the firm appear to be more relevant and successful. Clearly, there are economic and labour-related advantages for hospitality firms by having an emphasis on diversity in their recruitment methodologies. Not only are these advantages internal, but provide to stakeholders the perception of a more viable and stable organisation. Using Avon as the relevant example, which found higher profitability by having ethnically-diverse representatives approach customers with homogeneous ethnic traits, it explains how today’s hospitality organisations achieve advantages through diversity management. A study of 142 different hospitals in the UK found that patient satisfaction was enhanced when they worked with members of the organisation sharing their own ethnic behaviours (King, et al. 2011). Why is this? Tajfel and Turner (1979) found that there is an unconscious psychological dimension of human behaviour that creates more favour toward individuals who share their ethnic or social characteristics. This is why diversity management in the hospitality industry brings such significant competitive and financial advantages. In industries such as the hotel industry, the diversity of travellers is substantial. Having members of the work force that share these ethnic traits will improve the quality of engagement and socialisation between team member and tourist that shares the same cultural or ethnic backgrounds; as supported by psychological theory. Hence, it is advantageous to have a diverse mixture of employees and managers and could, as in the case of the Four Seasons hotel chain, provide the foundation for that one-of-a-kind experience that tourists are demanding and expecting from service delivery. When service delivery and service superiority are fundamental requirements to achieve better competitiveness, a hospitality company that does not consider the many benefits and values of cultural diversity will be short-changing its long-run competitive advantages. Conclusion As illustrated by the research, cultural diversity in the hospitality industry is absolutely critical to improving competitive and financial advantages with contemporary hospitality firms. Internally, the benefits of improved decision-making, innovation production and general creativity give a hospitality organisation opportunity for growth, strategic improvement and better cultural cohesion that is vital in an organisation dependent on collaboration and cooperation between team members. By training disparate and diverse team members with adequate training that emphasises sensitivity and tolerance toward the differing values of others, it provides better outcomes for development of a loyal and motivated organisational culture that works together effectively to attain important goals and achieve objectives. Additionally, recruitment focus on bringing new and diverse talents into the organisational model provides financial advantages and other competitive advantages. The literature illustrated that group members with heterogeneous characteristics are more creative and have more tools with which to contribute more effective organisational outcomes and productivity. When organisations publicise their successes in their recruitment efforts, it has wide ranging advantages by pleasing stakeholders and shareholders and seems to make the organisation appear more worthy of investment, which was evident in the literature describing that share price increases in the stock market are directly correlated with sustaining a more diverse workforce. With the many different advantages that stem from having employees with certain ethnic or cultural characteristics interacting with customers sharing these attributes, it improves perceptions of service delivery and competency since this is a phenomenon of human psychology. For companies like the Four Seasons and other firms catering to diverse customer segments, the financial and loyalty achievement benefits cannot be dismissed or under-valued. Cultural diversity management, therefore, for hospitality firms is absolutely paramount for creating competitive and financial advantages. Hospitality organisations that focus on more diverse recruitment methodologies and provide adequate training on cultural diversity are likely to be the most successful organisations in their established markets. References Alvesson, M. (2002). Understanding organizational culture. London: Sage. Baum, T., Devine, F. and Hearns, N. (2007). The implications of contemporary cultural diversity for the hospitality curriculum, Education and Training, 49(5), pp.350-363. Bhatia, S.K. and Chaudary, P. (2003). Managing cultural diversity in globalisation – key to business success of global managers: insights and strategies. New Delhi: Deep and Deep Publications. Cox, T.H. (1993). 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