Managing Resources within a Changing Economic Climate - Case Study Example

Introduction One sector that has received plenty of attention in the recent past and that more research is also being carried out in order to ascertain the needs of this lucrative industry is the hospitality industry. Most businesses in this industry have fetched a lot of revenue and foreign exchange because of the needs of humankind at the moment that centre mostly on leisure, food and accommodation. As more people move around the world in search of education, to set up their companies through globalization, to study, for tourism purposes etc. the need to tap the money used for such requirements through the hospitality industry is palpable. Modern businesses are faced with many challenges in their current business undertakings and there is a need for them to fight for their survival that results from global events and competition which affects them either positively or negatively. Business environment keeps on changing as businesses strive to maintain their market share and at the same time provide quality services to their customers. Kotler (1988) clearly states that, for a company to survive and flourish in this competitive business world, it has to engage in strategic management which clearly defines its objectives and examines both the inner and outer situations to formulate a strategy, implement that strategy, evaluate its progress, and make any adjustments where necessary to stay on the track. This business report presents an analytical analysis of Hilton Hotels Corporation’ business in terms of business management process, evaluation of the impact of the economic and business management process, the management process including any structural adjustments, the human resources management strategies undertaken by Hilton in the face globalization which may hinder the business development process in the company. The report will then give a conclusion on the basis of the findings. Company profile Hilton Corporation is one of the leading hotel brands globally; the hotel is recognized internationally as a most excellent brand in the hospitality industry. The corporation boosts of 2,700 hotels located in over 70 countries globally. Hilton hotels aims at bringing positive benefits to societies within which the hotel operates by offering quality services, environmental protection, economic development community participation and community employment. Hilton’s major business segments comprises hotels which it owns and manages, this segment provides the biggest percentage of income which amounts to about 87% of the total amount as at 2006. (Hilton hotel, 2006) Normally, there are some set of human resource practices that are essential for any company and that if they are not implemented well and in a proper manner, will lead to misunderstandings, conflicts and general failure of the company. Recent research has suggested that HRM practices play important roles in the development of any business. This hotel has embraced this reality and it has come up with strategies for employee recruitment, planning, selection, evaluation and dismissing by the management. This is because the management has realized that there exists a distinctive link between the human resource management practices and systems employed by the hotel and its overall productivity. Hilton hotel has a good human resource department that gathers for the needs of its employees. It however has some improvements to make in terms of formulating corporate strategies that incorporate systematic scrutiny and elucidation of the hotel’s management avowal. Hilton hotel’s human resource department should also offer strategic plans to the rest of the administration when considering how the hotel services should develop and in what ways should the hotel propel for its success with regard to future developments. Despite all setbacks, Hilton hotel is certainly proud of an overall improvement in management of the hotel that has been able to foster an environment of growth and development for the last few years hence all credit should be given unto it. This hotel is also recognized with superior corporate forecast which has improved in general the assimilation of development schemes within the hotel such as the improvement of human resource practices which incorporates both tactical and strategic development plan. A clear assessment of the company’s financial performance within the context of prevailing economic climate With the increased level of competitiveness in the business world and high tempo of change at present, a company need to put in place strategies which will ensure that it achieves its financial objectives and goals. A company needs to understand which customers segment and/or products are really profitable and which ones are not? This apparently straightforward question becomes a lot more intricate in a prevailing changing economic environment (Kotler, 1988). The competitive advantage of Hilton comes from the fact that, Hilton positions its products based upon quality and its image. Hilton Corporation created the hotel revolution in London and the whole world. Hilton hotel chain is the leading specialty hotel industry, with many locations around the globe. Hilton Corporation positions its products on a comparatively simple strategy. They sole centre on quality and experience, instead of price. (Fortune.com, 2002) The corporation brand image is one of the main elements to its current success. Hilton has recognized that clients don’t just come for to take room service alone they come for the ambience. People come to socialize, relax or just to enjoy the food and drinks. Understanding this, Hilton try to make its hotels and rooms unique in one way or another which will generate an appealing ambience. This has ensured that the company financial performance has increase over the years and the hotel chain has been able to open or acquire more hotels. (Fortune.com, 2002) Table1; financial performance of Hilton London; source, www.hilton.co.uk particulars 2006 2007 Bal/carried forward 990,655 received during the year 4,750,000 6,000,000 Carried forward to next year (990,655) (294,642) Income for the year 3,759,335 6,696,023 Hilton Corporation has been able to almost double its profitability even in the advent of competitive market. Hilton recognized that it is significant to increase product differentiation and create good customer relationship to increase profitability. It is crucial that Hilton continue positioning their brand for what it stands for: “an innovative industry leader that produces high quality products”. Brand image, as it has been already revealed, is an objective upon which each one the future useful strategies will work to achieve. (Fortune.com, 2002) How company’s financial performance has affected human resource management, particularly, recruitment, selection and training Recruitment and retention Human resource management (HRM) practices of Hilton Corporation are among the best as attested by being rated as on of the best companies to work for by Fortune magazine. (Fortune.com, 2002) The management knows that the most important asset for any organization is its human resource, which requires extensive investment, commitment, financial benefits among others to be highly motivated and also committed to the company, ensuring that the new strategies being formulated are implemented successfully (Fortune.com, 2002). At present the company has made a lot of profits over the years and its financial base has tremendously improved, thus the company has been able to use its vast resource in sourcing for well qualified staff, which can drive the company to new heights. Kotler (1988) states that; employee recruitment is very important in an organization. It consists of administration, performance and staffing. All these are interrelated activities that are carried out in an organization. Management and staffing activities help in ensuring that employees with right or desired skills are recruited. Hilton Corporation has undertaken this issue correctly by carrying out professional recruitment selection of employees. The employees recruited are in the right numbers desired by the organization. Employee recruitment at Hilton aims at ensuring that employees are at the right place at the right time. Human resource manager of the Hilton is concerned with ensuring that employees perform their best. Best recruitment processes have ensured that the organizations get the best staff that can improve and add value to the company. The corporation provides better employment terms to retain employees who are experienced in the organization. (Kotler, 1988) Training Each employee requires more learning in order to improve his /her skills, no matter how best a candidate is, he/she can not be 100% percent qualified. Thus, the human resource management should implement learning management system (Armstrong, 2006) Hilton Corporation has understood this aspect and that is why it recognizes that its employees are one of their highly valuable resources. The management recognizes that the Hilton employees play a foremost function in the expansion of the company. (Fortune.com, 2002) Hilton Corporation training can be termed as systematic enhancement of knowledge, skills and attitudes of the needed by an employee in order to perform a given task. Development is the growth of an employee in terms of capability, understanding and awareness. In Hilton Corporation training and development has helped the company to; 1. Develop a workforce that can perform higher-grade assignments 2. Increase efficiency, effectiveness and standards of performance by the employee 3. Keep the employees informed 4. Provide the usual training of new recruited workforce (Armstrong, 2006) Suggestion of how the company can improve its human resource management in order to help improve its financial performance. Recommendations Faced with the need to add value to the organisation, human resource need to come up with a more coherent and focused approach in sourcing practices. According to Armstrong (2006) to develop such strategy, two issues have to be addressed. 1. What type of workforce does the organisation need in order to manage and also run the organisation so has to meet the organisation strategic business goals? 2. Which type of workforce programs and schemes must be planned and implemented so as to attract, develop and retain a workforce that can compete effectively? For these questions to be answered the Hilton human resource has to align four key areas of an organisation these are; The sourcing culture of the organisation; norms, beliefs and the management way of the organisation has to be structured in manner that it encourages sourcing or recruitment based on merit alone and on any other factors Human resource has also to address the organisation structure; this will define proper job descriptions, reporting lines in the organisation and job descriptions. The workforce; the human resource has to address the issue of level of skills, management abilities of individual employees and staff potential The human resources will have also to address its systems; the human resource should have a workforce focused mechanism that will deliver a plan of workforce selection, training, communication, career development and rewards. If these steps are undertaken the company will be able to achieve and even surpass its financial goals. Conclusion Overall, Hilton appears to be a well-built and well-rounded company, as a leader in the industry, Hilton have built a very strong brand name which has assist Hilton to gain a substantial greater share of the total market in contrast to its competitors. This has made it also achieve its financial targets. Financially, Hilton Corporation is stable in spite of its rapid economic changing environment and increased competition. Human resources strategies and practices of Hilton are sound though a few improvements can be undertaken in areas which have been noted. Appendix The table below shows the performance of Hilton in a number of aspects in three stated years; source; http://www.wikinvest.com/stock/Hilton_Hotels_(HLT) Historical Performance 2003 2004 2005 Number of Hotels 2,173 2,259 2,800 Number of Rooms (Thousands) 348 358 475 Geographical Presence (Countries) N.A. N.A. 80 Occupancy Rate (Percent) 68.2 71.3 73.8 RevPAR (USD) 85.51 93.16 104.1 Reference: Armstrong. M. 2006. The Handbook of Human Resource Management Practices, tenth edn Kogan Pages, London, Aviad, A. (2007): Crisis Management practices in the restaurant industry; international Journal of Hospitality Management, Vol 27; retrieved from http://www.sciencedirect.com/science accessed on 24th April, 2008 Davidoff, M. (1994): Customer service in the hospitality and tourism industry, Englewood Cliffs: Prentice Hall Fortune.com (2002); Best Companies to Work For; Retrieved 10 Feb., 2008 on the World Wide Web: http://www.fortune.com/lists/bestcompanies. Hilton hotel (2006): Hilton Hotels UK and Ireland; retrieved from; www.hilton.co.uk accessed on 24th April, 2008 Kotler, P. 1988. Marketing Management- Analysis Planning and Control, Prentice-Hall Publishers Powers, T. (1995): Introduction to management in the Hospitality Industry, New York Wiley Scarnati, J. 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