Human Resource Management in the Hospitality Industry in Thailand - Case Study Example

Human Resource Management in hospitality Industry in Thailand/South Korea Student’s Name: Professor: Course Code: Due Date: Introduction Human resource development and management is critical for any sector of the economy as they form part of competitive advantage. Hospitality sector plays a significant role in the economies of Thailand and South Korea. The two countries have been listed as attractive destinations globally. The human resource practices adopted in the hospitality sector in these countries differs based on macro environment factors, industry strategies and overall culture. The two countries show a significant degree of collectivism. However, Thailand has a higher percentage as compared to South Korea. On the other hand, South Korea exhibits higher levels of advancement in adoption of best human resource practices. This paper examines development of human resources in the two countries and functions of HR within the said industry. The approach that the paper adopts is of analysing divergence and convergence in human resources practices in the two nations. What emerges out of this discussion as the functions of HR include enhancement of performance, industrial relations and diversity management. Part 1: Research Base Human resource Practices in Thailand and South Korea Human resource development is a critical platform of enhancing competitive advantage of a country as a whole. Human resource development can be conceptualised from four sectors. These include government sector, private sector, educational institutions and qualifying systems (Jung Ha and Mi Sook, 2011p.26). Zhu, Warner and Rowley (2007, p.9) opines that human resource management practices have greatly evolved over time in South Korea. They note that the principal factors that have contributed to human resource management changes in Korea include the happenings at macro level, strategic choices of firms and institutional influence. Owing to the Asian crisis of 1997, companies have adopted firm level restructuring by downsizing, initiation of early retirement, performance based incentives and employing contingent workers. The HRM is in Korea is demarcated with application of past practices and continuity & uncertainty in relation to the future (p.10). Thailand constitutes one of the most attractive tourist destinations. Moreover, Williams (2007) ranked the country 10th in terms of contribution to employment globally. However, they are likely to face challenge from other countries. The main concern for this country is how to meet international standards by improving quality (TAT, 2008). Blanke and Chiesa (2011, p.465) observes that majority of housekeeping staffs in Thailand are unwell educated old generation women thus, affecting their image. The same is affirmed by Limyothin and Trichun (2012, p.23) who notes that ‘the problem of the lack of work force, though not a new one, is still the most crucial the hotel business in Thailand has to face with’. Further, 51.1 % have no university qualification (p.26). Lawler and Atmiyanandana (2004) cited in Zhu, Warner and Rowley (2007, p.9) observes that different types of enterprises influence the HRM adopted in Thailand. According to them, these enterprises include family owned businesses, Thai owned enterprises and foreign owned corporations. Cultural Diversity in Thailand and South Korea There are various distinct cultural values that have influenced human resource practices in Thailand. The chief factors in this context are collectivism, intra group harmony, deference to authority, humility and so on (Aycan, 2005, 1084). These have inhibited implementation of western based HRM models like high performance work system in the local firms. However, these models are applied in most foreign owned companies where major share holders are from western countries (p.14). In a nutshell, it is agreed that Thailand leans towards more flexible high performance work system instead of traditional approach with foreign owned corporations taking the lead as compared to Thai owned businesses (Zhu, Warner and Rowley, 2007, p.16). In 2009, there were a total of 1,106,884 foreigners in South Korea who included imported brides, migrant workers and English Teachers. This was approximately 2.75 of the population (National Statistics of Korea, 2006). According to Justice Ministry, over 1.41million foreign nationals were living in the country by the end of September 2012. The foreigners are 3% of the total Korean population. Most of them are migrants from China who make up more than 50% of total immigrants. Thailand has quite a significant number of registered foreigners mainly from Europe, Asia, and North America estimated to be 2million by 2008, an increase from 1.3million from 2000. However, most of the migrants come from Burma, Laos and Cambodia.  Labour law in Thailand Labour laws are crucial for every hospitality business in any country. Labour laws in Thailand are mainly based on the two acts that include Labour Relations Act 1975 and Labour Protection Act 1998. In Thailand, every staff is deducted 5% (upto Baht 750per month) of his/her salary for the reason of social welfare. This is mainly for employees’ basic medical benefits at chosen hospitals. In Thailand, any hospitality organization having more than 6 Thai staff, must provide rules and regulations, contracts of employment, public holidays and put organization structure on a public notice board. In South Korea, they are various Labour laws like Labour Standards Act 1997 (LSA) that automatically applies to all Korean and foreign nationals’ workers. However, several provisions of the LSA apply depending on how many workers are in the workplace. It is vital to note that LSA provisions are mandatory and usually supersede terms and conditions of employment which do not conform to statutory minimums. In Thailand, taxes are charged only on income from domestic sources including business or wages within the country according to Articles 3 and 119, Income Tax Act 1994. In Korea, Income taxes are usually progressive (Article 55, Income Tax Act 1994) beginning at an initial marginal tax rate of 8% based on annual income of KRW10million or less. This moves up to a maximum margin tax rate of KW16.3million in addition of 35% on income beyond KRW80 million. It is vital to note that the salaries of employees are taxed at the source. In Korea, 8% of salary is deducted for the state-administered health insurance under the National Health Insurance Plan. Part 2: Discussion Functions of HR Enhancing performance and use of human resource as a strategic advantage One of the functions that emerge out of the second and third paragraph is the one of enhancing performance. Human resource can be used as a source of strategic advantage (Denning, 2000, p. 2). This is why human resource management in South Korea and Thailand have undergone numerous transformations. The traditional Korean HRM system has greatly transformed mainly from collective orientation like ‘organization first’, ‘community orientation’ and ‘collective equality’ to individualistic and market orientation such ‘market principle adopted’, ‘individual respect’, and ‘individual respect’. Some of the four main areas of HRM under revolution in Korea include: competencies recruitment, competencies reinforcement, competencies retention, and competencies replacement (Cho and Yoon, 2001, pp. 71, 72, 73 & 74). Some of the main factors influencing changes in HRM include strategic choices, institutional influence, and strategic choice (Rowley and Bae, 2002, p. 530, 2004, pp. 59-61). Diversity management As per the fourth and fifth paragraph, the second function that is visible is diversity management. Both Thailand and South Korea are diverse countries in relation to religion, race and beliefs among others. Cultural diversity enriches our societies and work places in various ways. Culture can be defined in numerous ways. However, all the definitions of culture revolve around the patterns of beliefs and behaviour of people of a given cultural background. As such, culture is a learned way of life usually shared by a group. A give cultural group shares common interests, with regard to religious beliefs, gender, race, professionalism and ethnic origin among others factors which generate diversity in work places (Kochan, 2003, p.4). According to Jayne and Dipboye (2004, p.410), the traditional understanding of work place diversity sought to protect employees from job related discrimination and oppression based on their disability, age, ethnicity, gender, race, sexual orientation and religious affiliations among other cultural attributes of individuals. This is evident in Thailand and South Korea where they hire according to qualification and not according to social background. Implementing employment laws and Industrial relations Any given organisational change usually stroke reaction from other bodies like trade union, government through parliament and labour ministry, labour courts and human rights activists (Christensen and Ulrich, 2005, p.36). Thus, this calls for proper human resource management through various theoretical approaches like Unitarianism, pluralism, radicalism, neo liberalism and feminism. However, depending on the level of interest, each relevant organisation will take stand in relation to these theoretical industrial relation approaches according to their best interest (Kelly, 2002, p.69). According to the latter observation, employees and trade union organizations tend to embrace pluralism approach that advances the concept of balance of power between employers and employees or through employers’ federation and trade unions. In the sixth paragraph, what emerges is that these countries lean towards collective bargain. However, there are instances of industrial level bargains. Conclusion The aim of the paper was to examine human resource development in hospitality sector of Thailand and South Korea. The approach given was to explore the convergence and divergence in human resource practices in the two countries. These two countries exhibit distinct characters in relation to application of human resource practices. This is based on the fact that they are diverse countries with diverse cultures. For instance, the paper found out that Thailand has higher level of collectivism and this influences human resource. In addition, the countries have distinct recruitment and appraisal approaches. Secondly, apart from these differences, there are points of convergence which shows that they have semblance in how they apply these approaches. The first is in relation to employment laws which aim at creating harmonious employment relations. The second is diversity management which addresses non discrimination and enhanced working rapport among employees. The last is best practices in enhancing performance. Recommendations There should be a significant changes in HRM aspects at Thailand like moving to performance-based pay at both personal and group levels, progressively by seeing training as an ‘investment’ rather than a ‘cost’, adapting a ‘core-peripheral’ approach to supervision of labour force and realisation of extra strategic task of HR field (2, 2). Thailand should embrace much of industrial level employment relations instead of collective bargain at national level (4, 7). Small firms in South Korea and Thailand should invest in capacity building so that they are able to acquire well trained staffs (3, 3). There should be a paradigm shift from basing recruitment on experience alone to new paradigm that embraces talent (3, 3). References Aycan, Z 2005, ‘The Interplay between Cultural and Institutional/Structural Contingencies in Human Resource Management Practices’, Journal of Human Resource Management, 16(7), p. 1083-119. Blanke, J. and Chiesa, T 2011, The Travel & Tourism Competitiveness Report 2011. Geneva, Switzerland, pp.462-473. Eun-Suk, L 2006, HR System in Korea, Seoul Journal of Business, 12(1), p. 4-12. Jayne, M.E & Dipboye, R 2004, Leveraging Diversity to Improve Business Performance: Research Findings and Recommendations for Organizations, Human Resource Management, 43(4), p. 409-424. Jung Ha, K. and Mi Sook, O 2011, Human resource development in Korean tourism Industry: an analysis. South Asian Journal of Tourism and Heriatage, 4(1), p. 26-35. Kochan, T. et al. 2003, The Effects of Diversity on Business Performance: Report of the Diversity Research Network, Human Resource Management, 42(1), p. 3-21. Limyothin and Trichun, C 2012, The structural equation model of factors influencing the hotel staff in Thailand’s intention to quit, International Journal of Human Resource Studies, 2 (3), p. 22-35. National Statistics of Korea, 2006, Labour Force Survey 2006. Seoul: National Statistical office. Rowley, C., and Bae, J. 2002, “Globalization and Transformation of Human Resource     Management in South Korea,” International Journal of Human Resource Management,     13(3), p. 522-549. Tourism Authority of Thailand (TAT) 2008, Tourism Statistics in Thailand 1998-2007. Willms, J. 2007. The Future Trends in Tourism-Global Perspectives, a club of Amsterdam conference. Zhu, Y et al Feb 2007, Human Resource Management with ‘Asian’ characteristics: a hybrid          people-management system in East Asia, Working Paper Series, University of        Cambridge, available at:               http://www.jbs.cam.ac.uk/research/working_papers/2007/wp0702.pdf Zhu, Y., Warner, M. and Rowley, C. 2007, Human resource management with ‘Asian’ characteristics: a hybrid people-management system in East Asia. Available at: http://www.jbs.cam.ac.uk/research/working_papers/2007/wp0702.pdf. Read More