ITT Sheraton Corporation - Case Study Example

Introduction With globalization and internationalization, every industry including the hospitality industry has found newer avenues, newer markets toventure into but these oppurtunities come with a challenge. Hospitality being a service industry, competitive advantage and competitive success relies heavily on the service quality. The delivery of service depends upon various factors and the most important factor is the people or human resources. Assessing the customer expectation and delivery of service is a big challenge in this highly competitive and fast moving industry. Hotels have started cross-border operations and they realize that they do need to adapt their strategies to meet the particular socio-cultural, economic and environmental form at local level (Fu & Liu, 2005). Background ITT Sheraton Corporation is a wholly-owned subsidiary of ITT Corporation, a worldwide hospitality network, which owns, leases, manages and franchises 420 luxury, upscale and mid-scale properties in 62 countries across all continents (Mwaura, Sutton & Roberts, 1998). The group operates in a very competitive market and its success lies in the quality of its service. The group has a global reputation for service excellence and quality and has a loyal customer base. The human resources function at Sheraton is dynamic and strategic across the organization. They conduct world-class training and development programs and have the most competitive pay and benefits program in the industry. The General Manager (GM) at each property is responsible to implement the hotel’s strategy and is responsible for all functions including recruiting, hiring, benefits, and training and employee relations. They hire the best talent through strategic staffing, which are then given comprehensive training (Starwood, 2008). The Human Resources department at Sheraton works to create a safe and productive work environment, as operational business partner, process facilitator and change agent. Nevertheless, when an international position falls vacant, it is communicated to all using a computerized personnel database and anyone can apply through the local unit personnel department. The organization supports individual development needs and they have a rigorous training and development system in place. However, continuing global expansion requires incorporating changes like adaptation to the local business environment, which requires changes in the recruitment strategy as they do face management issues like lack of cultural understanding and awareness. International Human Resource Management As hotels have started expanding overseas and as competition has intensified, organizations accept that international business environment is different from the past which affects the human resource strategy. The most important area in the international human resource management (IHRM) is career pathing (D’Annunzio-Green, 1997). This takes into account how organizations develop international managers, how the employees are able to adapt to new languages and cultures, the effect of training on adaptation and the international aspects of recruitment and selection. The GM and the human resources department at Sheraton have to consider such adaptation in the changed business environment. Managers too must be able to operate in different locations while being sensitive to the local environment. Managers must be able to think globally and view the organization in the international context. Recruitment Recruitment is an area where international organizations cannot stick to an ethnocentric approach (sending expatriates from home country in key positions) and neither can they use only local nationals (polycentric approach). It has been found that it is essential to have a mix of both the approaches (D’Annunzio-Green, 1997). For instance, while the back office operations has no direct communication with end customers, the front office operations depend heavily upon the cultural adaptation of the service. The front office staff represents and reflects the corporate image and culture. It is the main contact point for the guests within the hotel and hence they are expected to be amiable, quick-witted, and aware of the hotel product, be efficient in marketing and be able to understand the guest (Hai-Yan & Baum, 2006). This requires that the staff know the local language, local culture and understand the nuances of the customers. Adler and Ghadar indicated that multinational businesses should link their HRM strategy to business environment (Keating & Thompson, 2004). MNCs operate in a context of worldwide operations including industry characteristics, country-regional characteristics and inter-organisational networks and organisational-specific contingencies. The HRM strategy should assist the MNC in achieving its goals and concerns and these goals and concerns also influence the MNCs approach to HRM. The HR policies are subject to cultural influences which must be taken into account when operating overseas. The cultural differences occur in management styles, employee motivation, leadership style, negotiation style, and cross-cultural training and acculturation issues for expatriates. Significance of culture A study has found significant differences in the usage of the managerial practices by hotel managers in Korea, Japan and Hong Kong (Hope & Mühlemann, 2001). Hospitality, being a service industry, national culture has a significant role to play in determining the practices and operations that should be applied. Culture according to Hofstede is “the collective programming of the mind which distinguishes the members of one group or category of people from another” (Hope & Mühlemann, 2001). The culture in which an individual is immersed since birth is likely to have a much stronger effect on him than the organizational culture. At the same time, managing a multinational business corporation requires a balance of culture, which means a combination of national and corporate culture components (Fu & Liu, 2005). Under the circumstances how to transfer corporate culture to gain competitive advantage is a major challenge. All these factors necessitate that Sheraton should have a geocentric approach where they use a mixture of nationals, expatriates and third country nationals (D’Annunzio-Green, 1997). Merely providing cross-cultural awareness and country-culture familiarization is not sufficient. Culture is a way of civilization and is the “collective programming of the mind”. People acquire the culture of the environment they are in and this culture is transmitted from generation to generation. Culture differentiates one organization from another and provides a sense of identity to the members (Schein, 1992). The three layers of culture are observable artefacts (visible organizational structures and process, which are hard to decipher), espoused values (strategies, goals and philosophies) and basic underlying assumptions (unconscious, taken for granted beliefs, perceptions, thoughts and feelings, which are the ultimate sources of values and action). Employees have to learn these through behavioural, emotional and cognitive process as it would help to solve problems of the external environment. When this is ignored or when an organization does not give importance to any of these factors, they encounter difficulties and success can be achieved only when they change their strategy. International experiences The Ritz Carlton Hotel in the USA received the Malcolm Baldridge award for quality in 1992 but encountered problems in Hong Kong. Culture was identified as the main cause as different cultures imply different mental programming, which governs activities, motivation and values (Hofstede cited by Gilbert & Tsao, 2000). The ‘best practice’ approach of USA was not feasible in Hong Kong as the new setting did not permit them to work too closely or share information with each other, as they believed that ‘knowledge is power’ (Hope & Mühlemann). The Hyatt International Hotel Group has taken into account the problems that can arise due to cultural differences and hence their senior management team represents eight different cultures which helped them to evaluate and incorporate the national culture right from the planning stage (Hope & Mühlemann). The incentive packages too have to be flexible and vary across nations. This is demonstrated by the fact that German managers in the hospitality industry prefer incentive based on thirteen-month salary bonus while in the USA they prefer a non-contributory pension scheme. Again, in the developed nations like Australia, Europe and North America, a high level of immigrant labour can be found in the front line positions in the hospitality industry which is not possible in the Asian countries. Immigrant labour denotes diverse cultures where working autonomously from authority is a new experience. Here the national culture does not remain significant and it becomes very difficult to handle issues like incentives and motivations to get the best out of them (Baum & Nickson, 1998). US companies strongly adhere to the US cultural values of social mobility, economic achievement, closeness to the customer and productivity through people (Mwaura, Sutton & Roberts, 1998). The Great Wall Sheraton Hotel, Beijing has its own distinct US-influenced corporate culture. It was unable to carry out the same policies and procedures as in the US and has had to make alterations. The Chinese culture is a strong determinant of the ways in which organizations in China are managed. Accordingly, influence of the Chinese is present in the environment, the language, the folklore and the practices of government, business and interpersonal relations. Managers have to be trained to adapt to different customer expectations in different locations across the globe (Gilbert & Tsao). For instance, while the Chinese customers are price conscious, the western customers evaluate the quality against the price. To the Chinese customer, the price, the brand name and the prestigious status are more important while a westerner would look for the room size, security, proximity, and location. To understand the customer needs and expectations, the managers need to be trained and oriented accordingly. This emphasizes the importance of ongoing training and development for MNCs. Again, the strategy in managing employees also would differ across nations. In China, a section of employees cannot be concentrated upon. The entire group has to be motivated otherwise it would result in disharmony among the personnel. Such cultural training has to be given to the managers when they are given overseas appointments. Conclusion Thus, ITT Sheraton has to take into account several factors in their overseas appointments in view of the ever-changing business scenario. Merely providing cross-cultural awareness is not sufficient. They cannot impose the US cultural values in all the other countries. It may work well in some western countries like the UK or Australia but the same values may not hold good in the Asian countries. Differences have been found even between the Asian countries. There has to be a geocentric approach to recruitment in international operations. This is essential because apart from understanding the local business environment, it is also important to retain and impart the corporate culture among the staff. Training and development cannot end with initial induction into the job but has to be ongoing as the situation demands. The senior management team should represent different cultures. The pay and benefit scheme also has to match the local requirements and not be imposed according to the US standards. The holidays that are granted to the personnel cannot be defined by the corporate office but must pertain to local festivals. Overall, the staffing strategy should take into account the local differences across nations. References: Baum, T & Nickson, D 1998, Teaching human resource management in hospitality and tourism: a critique, International Journal of Contemporary Hospitality Management. vol. 10, no. 2, pp. 75–79. D’Annunzio-Green, N 1997, Developing international managers in the hospitality industry, International Journal of Contemporary Hospitality Management, vol. 9, no. 5/6, pp. 199–208. Fu, S & Lin, H 2005, Corporate Culture vs. National Culture - The Role of Human Resource in Managing Cultural Differences in International Hotel Companies, School of Business, Economics & Law, viewed 7 Nov. 2008, https://gupea.ub.gu.se/dspace/bitstream/2077/2229/1/Fu_%2b_Liu_THM.pdf Gilbert, D & Tsao, J 2000, Exploring Chinese cultural influences and hospitality marketing relationships, International Journal of Contemporary Hospitality Management. vol. 12, no. 1, pp. 45-53. Hai-Yan, K & Baum, T 2006, Skills and work in the hospitality sector, International Journal of Contemporary Hospitality Management, vol. 18, no. 6, pp. 509-518. Hope, C A & Mühlemann, A O 2001, The impact of culture on best practice production/operations management, International Journal of Management Reviews, vol. 3, no. 3, pp.199-217. Keating, M & Thompson, K 2004, International human resource management: overcoming disciplinary sectarianism, Employee Relations, vol. 26, no. 6, pp. 595-612. Mwaura, G Sutton, J & Roberts, D 1998, Corporate and national culture – an irreconcilable dilemma for the hospitality manager? International Journal of Contemporary Hospitality Management, vol. 10, no. 6, pp. 212–220. Starwood, 2008, Human Resources, viewed 7 Nov. 2008, http://www.starwoodhotels.com/sheraton/careers/paths/description.html?category=200000278 Schein, E 1992, Organizational Culture and Leadership, 2nd edition, viewed 7 Nov. 2008, http://www.onepine.info/mcult.htm Read More