International Hospitality Industry - Essay Example

Running Head: SHRM AND INTERNATIONAL HOSPITALITY INDUSTRY SHRM and International Hospitality Industry of Institution] SHRM And International Hospitality Industry In order to critically evaluate the notion that the literature on strategic human resource management is of little value in understanding the international hospitality industry one has to study the literature available on the topic in details. Literature distinguishing between personnel management and strategic human resource management (SHRM) has been advanced. Normative models have suggested that by being more strategic about human resources (aligning internally consistent bundles of HR practices with business strategy), organizational performance will improve. Recent results have more strongly suggested that there may be a universally superior (i.e. a high-commitment) approach to HRM, regardless of the business strategy followed (Bamberger and Meshoulam, 2000). There has also been a call for more focused empirical research looking at the link between HRM and a number of potentially inter-related business outcomes (e.g. employee commitment, service quality, profitability) (Worsfold, 1999). Support has also been voiced for SHRM. For example, drawing on his empowerment research, Lashley (1997, p. 184) has suggested that "there might be four ideal types of HRM strategy matched to different combinations of service features." His typology is based on two dimensions, external versus internal control, and standardized versus customized service offers. Lashley's work is significant as it challenges the very essence of universality and reinforces the legitimacy of the command and control approach that dominates much of the industry today. This paper seeks to contribute to these debates and in particular argues that the universalistic approach may hold promise for the hospitality industry. It does this by briefly summarizing the normative and empirical HRM literature and extending the work of Storey (1992), who provided a useful framework for understanding four distinct conceptions of HRM. It also presents a case study of the HR approach used by Intrawest in its mountain resort operations in Whistler, B.C., Canada. This case was selected due to similarities between the company's approach and universal HRM principles. The data were collected through in-depth, semi-structured interviews and a review of archival data (Web sites, employee handbooks, newsletters, departmental forms) during 1998, 1999, and 2001. Key contacts included Gord Ahrens, former Director Employee Experience (1998, 1999) and his successor, Kirby Brown (2001). Understanding Human Resource Management: A Framework Within this section four distinct conceptions of HRM are presented: traditional HRM; integrative HRM; strategic HRM; and universal HRM. While empirical support for each of these perspectives exists, due in large measure to their degree of inter-relatedness, emerging research provides compelling support for the universal perspective. Storey (1992) explains that the concept of human resource management has attracted enormous attention and stimulated significant debate among academics and practitioners. (McGunnigle P., Jameson S., 2000, pp.403-421) Traditional HRM Traditional HRM (THRM) has its roots in personnel management. Its focus is on worker productivity through discrete HR practices such as selection, job design, and incentive pay practices (Bamberger and Meshoulam, 2000). Empirical THRM research has tended to focus on the link between these practices and various human behaviour and productivity variables (e.g. turnover, job satisfaction, labour costs). Support for this perspective has been found (see for example, Hackman and Oldham, 1980; Guzzo et al., 1985; McEvoy and Cascio, 1985; Weitzman and Kruse, 1990; Cutcher-Gershenfeld, 1991). It is also not always clear what effect first level outcomes (i.e. reduced labour costs) have on second level outcomes (e.g. product quality, sales, profits). Integrative HRM Integrative human resource management (IHRM) is also interested in the impact of various human resource practices, but focuses on their "congruency" (Beer et al., 1985), "bundling" (MacDuffie, 1995) or "degree of internal fit" (Bamberger and Meshoulam, 2000). Empirical support for this approach has also been found. For example, Wright et al. (1998) studied the impact of a number of high-commitment or high-performance HR practices in petrochemical refineries and found that: What is not clear from Wright et al.'s (1998) research is whether there is any empirical support for an integrated HR approach that is consistent with a low-commitment HR approach (e.g. little involvement, little training, external recruitment, etc.). Strategic HRM Strategic human resource management (SHRM) is also referred to as a "contingency," "best-fit," or "external fit" approach. From the SHRM perspective, the closer the external fit between an organization's HRM policies and practices, and its overall competitive strategy or position, the more effective the organization will be. SHRM builds on the pioneering work of Chandler (1962) who coined the phrase "structure follows strategy." Chandler's work also led to the development of organizational life cycle models which suggests that HRM practices should change over time depending on whether the organization is in a stage of formation, growth, maturity, or decline (Schuler and Jackson, 1987a; Robbins, 1990). For example, when organizations are forming or growing the major recruitment source is the external labour market which should be tapped by offering an entrepreneurial environment, high levels of employee participation, being a pay or benefits leader, and/or tying wages to profitability or employee skills. For example, Schuler and Jackson (1987b) and Schuler (1989) matched three generic organizational strategies (i.e. cost reduction, innovation, and quality enhancement) with three generic HRM philosophies (i.e. utilization, facilitation, and accumulation). They suggested that organizations following a cost reduction/utilization strategy seek to minimize labour costs and place little emphasis on upward mobility or training. Organizations following this approach recruit from the external job market, design narrow jobs, focus on individual and immediate performance issues, and provide little job security (Huang, 2001). In contrast, organizations pursuing an innovation/facilitation strategy emphasize creativity and collaboration. They seek employees who are creative, cooperative, flexible, committed to the goals of the organization, and can cope with uncertainty and ambiguity. They provide broad job descriptions, extensive employee interaction, promote from within, emphasize training and development, use performance evaluations that stress team work and a long-term orientation, and provide excellent job security (Huang, 2001). Finally, a quality/accumulation strategy emphasizes "careful selection of good candidates based on personality rather than technical fit" (Bin Othman, 1996, p. 42). Within this framework employees are "expected to be adaptable to changing skill requirements" and the organization should place considerable emphasis on "training, egalitarianism and lifetime employment" (Bin Othman, 1996, p. 42). There are many similarities within this model with Lashley's (1997) typology. For example, command and control (e.g. simple routine tasks, low discretion, control culture) is similar to cost-reduction/utilization; involvement (e.g. complex tasks, high discretion, trust culture) is similar to innovation/facilitation; and professional and participative (e.g. moderate to high predictability, moderate control and trust) share elements with quality/accumulation. Many empirical studies have tested SHRM models and theoretical propositions (Bamberger and Meshoulam, 2000). While Bamberger and Meshoulam (2000) advise caution in generalizing these results (i.e. the settings are primarily US manufacturing, and the inherent difficulty in operationalizing various organizational dimensions), these studies do provide tentative support for the notion that independent of organizational strategy, human resource practices impact organizational performance. This view is consistent with the next and final type of HRM to be reviewed - universal HRM. Universal HRM Universal HRM focuses on achieving competitive advantage through the development of a highly committed, competent, and motivated workforce, through the creation of a high-trust culture and high-involvement practices (Appleby and Mavin, 2000). According to (Bamberger and Meshoulam, 2000, p. 175), "Researchers adopting a universalistic perspective [claim that] all organizations, regardless of size, industry, or business strategy, should adopt these so-called 'best practices."' They also describe the three-pronged mechanism by which universal HR policies and practices impact organizational performance: "Human capital base" or the collection of human resources (skills, knowledge, potential), which the organization has to work with. The organization's recruitment, selection, training, and development processes directly affect the quality of this base; "motivation," which is affected by a variety of HR processes including recognition, reward, and work systems; and "opportunity to contribute," which is affected by job design, involvement/empowerment strategies, etc. Providing a non-western and cross-industry perspective, Huang (2001) recently empirically tested UHRM in a cross-section of businesses in Taiwan. Modeled after the work of Schuler and Jackson (1987b), Huang found that innovation type firms outperformed the cost-leadership types, regardless of the HR strategy used. He also found that different types of HRM strategies lead to statistically significant differences in performance outcomes, regardless of organizational strategy. "The facilitation type of HRM strategy achieves optimum results with regard to indicators of organization morale and overall performance, followed by the accumulation strategy and the utilization strategy" (Huang, 2001, p. 142). Offering a direct challenge to IHRM and SHRM, as well as to the standard practice of many organizations in the hospitality industry, he also found that linking cost-leadership with a utilization strategy resulted in a "sharp decline" in organizational performance (Huang, 2001, p. 145). Huang concluded that the optimal choice of an HRM strategy exists independently of strategic orientation and that organizations should (Huang, 2001, p. 146): make available multiple avenues of promotion and encourage regular job rotation; emphasize worker training and education; promote employee development; pay attention to internal and external pay equity; and provide workers with long-term job security. These results seemingly challenge the typology suggested by Lashley (1997) who suggested that firms should select their HR strategy on the basis of strategic position. Of note, they respectively found considerable commonality in HR practice amongst hotels regardless of market segment (i.e. deluxe, upscale, midscale, economy, budget, extended stay, and casino) as well as an association with these practices with positive organization outcomes (e.g. improved employee satisfaction and morale; reduction in turnover; and increased productivity). These practices included: Culture. Valuing employees (i.e. viewing employees as "internal customers," measuring employee satisfaction as part of a "balanced scorecard" approach) (Ulrich, 1997; Haynes and Fryer, 2000). Leadership. Assessment strategies and the provision of development opportunities to support promotion from within. Selection. Hiring for attitude (e.g. service orientation/values) and motivation. Training. Intensive orientations, training programs, and cross-training opportunities. Communication and coordinating mechanisms. Managers as coaches, regular meetings, newsletters. Employee involvement/empowerment programs. Focus on customer service, broadly defined jobs, and self-managing teams. Contingent reward systems (paying for innovative ideas, profit sharing, employee recognition programs) The case: Whistler and Blackcomb mountains Whistler and Blackcomb (W/B) mountains are owned by Intrawest, a "leading developer and operator of village-centre destination resorts across North America" and since 1991 has been repeatedly recognized as the "#1 ski resort in North America" (Intrawest, 2001-2002). The work of W/B's employees ranges from being highly standardized, high volume, and simple (e.g. line cook, F&B cashier) to highly customized, low volume, and complex (e.g. private ski lessons). Mission, service-profit chain, and values This mission is explicitly linked to financial performance through the service-profit chain. It believes that to be successful, it must first create a strong service philosophy and culture, which through effective human resource policies and practices is translated into "internal service capability," and employee effectiveness and teamwork. This in turn leads to employee satisfaction and retention, as well as a high and consistent level of service quality. As a result, guests perceive value in their experience, are satisfied, and repeat business increases. Lastly, revenue growth and profitability are achieved, which can be used to further support the service philosophy and culture. W/B's service philosophy and culture are reinforced through its stated values which include: providing a positive employee experience; guest loyalty; striving to be the best; team work; responsibility to the community and environment; uncompromising safety; and honest and integrity (Intrawest, 2001-2002, p. 3). Each of these values is elaborated in detail in the employee handbook. They are also reinforced through specific human resource goals and practices, which are presented using Bamberger and Meshoulam's (2000) framework. Human Capital Base W/B uses several strategies to build a strong human capital base. Of the approximately 5,000 employees needed by W/B for the winter season, only about 400 are permanent, full-time positions. However, due to effective HR practices, a large percentage comprises returning hourly employees and volunteers (i.e. "long-term seasonal") and in-season turnover is remarkably low for the industry (about 14 per cent). This leaves the need to hire only about 1,400 new employees each year. W/B's high return and retention rates can be attributed in large measure to the recognition that "employees are the ultimate source of our company's strength" (Intrawest, 2000-2001). One overarching goal for the employee experience (i.e. HR) department is for the company to be recognized as an "employer of choice" by 2003. Company documents also reflect the belief that treating their current employees well will assure them of a "plentiful supply of potential employees" (Intrawest, 1998-1999). W/B's recruitment activities include sending a fall newsletter with the caption "We want you back" to all previous employees and volunteers. Previously successful employees also receive a letter encouraging them to arrange their re-employment over the phone. Employee reunions are also held on a periodic basis. The selection process for new employees occurs over a six-week period each fall and involves a multi-staged selection and interview process. W/B's focus is on "hiring for attitude and training for skill" (Intrawest, 2001-2002, p. 3). W/B's orientation program takes place in groups of 70 to 100 over a six-hour period. The employees play games and perform skits that illustrate the company's values and various sections of the employee handbook. Job specific training can vary from one day to two weeks, depending upon the position, and typically involves both classroom and on the job training (with designated trainers). Throughout their employment, employees are also encouraged to participate in a variety of training and development activities (e.g. conflict resolution, public speaking, communication skills). We invest in the skills and knowledge that assist staff in being successful in their daily tasks and supporting future personal growth" (Intrawest, 2001-2002, p. 3). Motivation W/B also focuses on employee motivation. Social events include an annual summer family BBQ, a casino night, and trips to Vancouver for sports events. The primary recognition program is called Inspiring Continued Excellence (ICE). Other recognition programs include: Planned Spontaneous Recognition (PSR), which reinforces team culture by providing an on the spot donation to the employee's department's party fund; Above and Beyond, which results in a letter attesting to the employee's superior performance being given to the employee, shared with senior management for comment, and placed in his or her file; and which gives employees a "scratch card", redeemable for merchandise such as camping gear and electronics. It also has a length of service recognition program for long-term seasonal and year-round employees for every five years of service. In terms of compensation, W/B focuses on providing superior perks and benefits. Perks include: skiing and golfing privileges; an equipment allowance (up to $1,200 per year); discounts on food, beverage and merchandise; free ski and snowboard lessons; discounted child care and kids ski lessons, etc. Benefits (e.g. medical, dental, and life insurance, vision, pension, etc.) vary based on the length of employment. Other human resource practices that support employee motivation include: an annual employee survey, which tracks employee satisfaction and commitment; a variety of communications devices (e.g. weekly newsletter, suggestion program, communications boards, staff profiles in the local paper); an annual performance appraisal; and a focus on promotion from within (i.e. internal job postings). W/B reinforces employee contribution through its focus on quality service: "We never say 'no' and we always do 'whatever it takes' to make our guest happy. We encourage employees to use their instincts and good judgment on the job. Think service before adherence to rules" (Intrawest, 2001-2002, p. 4). This philosophy is reinforced through its hiring practices; "we always select people who are capable of accepting responsibility, willing to take risks and aren't afraid to express their individuality" (Intrawest, 2001-2002, p. 3). Employees are also oriented to W/B's empowerment philosophy, "service power" (Intrawest, 2001-2002, p. 5). Employees are told to provide exceptional service by: anticipating guest needs ("read and understand your guests' needs"); be animated ("choose to be happy"); be on the move ("provide fast and efficient service that exceeds expectations"); be accountable ("find a solution add your personal touch"); stay connected ("continue to engage them while serving them"); and play safe ("safety should never be compromised"). When problems do occur, its stated "service recovery strategy" includes being proactive, listening to guest needs, empathizing, and taking responsibility. Employees are told, "if the guest comes to you with a problem, you own it" (Intrawest, 2001-2002, p. 7). Employees are also provided with vouchers that they can use for compensating guest problems. Current Issues While this case illustrates many of the principles of UHRM, Kirby Brown, the current Director of W/B's employee experience department has identified areas for improvement and change. While he was pleased with the overall results of the most recent employee survey, the score for "employee commitment" was not as high as he would have liked it to be. In order to build a stronger labour pool in the immediate area he also plans to: strengthen relations with the local high school and native community; direct more of the annual social fund towards employees with families; enrich the benefits package; and extend efforts to profile employees with interesting lives in the local paper. Conclusion This paper has reviewed four key HR perspectives including traditional HRM, integrative HRM, strategic HRM, and universal HRM, and has suggested that emerging empirical research shows support for the UHRM perspective. The implications of this are profound, particularly given the number of hospitality operations that use a "command and control" or "cost reduction/utilization" HR strategy. The case study provided an example of one organization's universal approach to human resource management, which may prove useful to practitioners wishing to implement such an approach. Many "best practices" were illustrated, which focused on establishing a service-oriented culture, building a strong capital base, motivating employees, and providing employees with the opportunity to contribute. Where the results did challenge UHRM theory was related to the concepts of employee commitment and organizational life cycle. While not directly challenging the principle of UHRM, the director felt the need to improve employee commitment, more closely control costs, place more emphasis on a particular group of employees (i.e. returning employees), and more clearly demonstrate impact. This pressure may ultimately create a certain degree of differentiation with respect to the implementation of various HR practices, providing support for Lashley's (1997) argument that the "devil is in the detail" and for Bamberger and Meshoulam (2000), who suggested that UHRM may represent more a set of guiding principles than specific HR practices. Future HRM research should further explore the applicability of UHRM to the hospitality industry. If the concept of universality is supported (whether at the level of guiding principle and/or HR practice), it will then be important to better understand what the barriers are for adopting such an approach. 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