Human Resources Management in Hospitality Industry

Abstract

The important role of Human Resources Management (HRM) in the hospitality industry is explained by the nature of this sector, where human assets represent one of the most significant costs. A lack of proper HRM practices usually results in labor shortages and poor organizational outcomes. The given paper focuses on a comprehensive discussion of ways in which HRM can boost corporate efficiency, improve organizational culture, and retain the organization’s competitive advantages. It has been found that among areas on which HRM may concentrate to achieve each of the items mentioned above are the HR strategies, such as overarching and specific ones. Apart from these strategies, the HR department may consider career planning policies to increase the flexibility of career options. The efficiency of the HRM strategies can be evaluated using an audit or an analytical approach. The competitiveness and sustainability of the hospitality industry organizations can be shaped by the HRM by forming the participatory culture and embedding the mechanism of intrapreneurship. It has been concluded that effective HR management is key to the success of any hospitality enterprise. Strategies aimed at enhancing human capital management have been recommended.

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Introduction

The Human Resources Department (HR) is an essential organizational component that oversees the welfare of the company’s employees. It is responsible for employee hiring, firing, payroll, benefits, and ensuring that a corporation complies with federal and state laws (Nasir, 2017). HR plays a significant role in the success of any hospitality industry organization. Employees are the driving force of corporate operations. The hospitality industry is an actively advancing sector that maintains its attractiveness even in periods of financial turmoil. The business requires constant search and development of innovative aspects of work taking into account the changing market trends. Besides, the sector employs millions of people around the world as the service market involves the reception of many guests (Domínguez-Falcón, Martín-Santana, & De Saá-Pérez, 2016). The nature of services provided in the industry demand efficient human resources management. Majority of the services offered in the hospitality industry depend on the efficiency and competency of staff members (Ruzgar & Ulgen, 2018). Thus, it is possible to state that establishing an efficient HR management system is key to facilitating the functions of businesses in the hospitality sector.

The competition among different firms in the hospitality industry has significantly increased the demand for quality employees. In this regard, numerous firms are often seeking for opportunities in order to attract skilled and talented employees who have a good potential. The HR departments frequently use incentives that are aimed at persuading employees to remain with the company. For instance, there are many firms which offer benefit packages, career advancement opportunities, and safe working environments so as to retain their employees. In general, in terms of meaning, the concept of human resources is closely connected and correlated with such concepts as “human resources,” “labor potential,” and “intellectual potential,” surpassing in volume and organizational effect each of them taken separately. Thus, HR tries to combine all the elements of personnel management in one integral system, with ensuring the presence of synergy effect.

Positive organizational outcomes may result from the efficient utilization of strategies by the HR department, which can focus on either the improvement of corporate efficiency or some specific aspects of a company’s performance, including the establishment of a skilled workforce and the creation of an environment that fosters each employee’s self-development. The HR department can consider elaborating career planning policies to offer workers more flexibility and retain them in an organization. It is important to measure how the HR department uses the labor potential. Among commonly used approaches are an audit method and an analytical method. Overall, HRM department plays a crucial role in the hospitality industry enterprises.

The purpose of the research is to establish the essence of HRM in the hotel management business, the challenges involved, as well as how corporations operating in this sector can overcome them successfully. The methodology which has been used in the given paper is a literature review. Twenty-five academic journal articles that were published within the last six years have been critically reviewed in order to get a comprehensive understanding of the topic. The paper mainly focuses on the hotel sector of the hospitality industry. That is why the limitation of the given research is its rather narrow scope since it does not consider other sectors of the hospitality industry. Upon reviewing the selected journal articles, it has been identified that current literature on the topic has several knowledge gaps. Firstly, little attention has been paid to the methods employed to evaluate an HR function. Secondly, the mechanism of intrapreneurship has been poorly studied in the context of the hotel industry. This research paper attempts to address both of these gaps.

Body

Human Resources Management Strategies

Different organizations have distinct HR strategies. There is no set standard or characteristics since each form in the hospitality sector has its unique needs. However, there are two basic HR strategies. The first one describes the firm’s general intentions about how personnel should be managed and developed (Madera, Dawson, Guchait, & Belarmino, 2017). The objective of an overarching HR policy is to ensure overall corporate efficiency. Contrastingly, specific HR strategies stipulate the intentions of a firm. For instance, a business in the hospitality industry can set out a talent management strategy to manage how the firm intends to establish a workforce of skilled employees. Moreover, HR can set a continuous improvement strategy focused on continuing the innovation sustained within a given period. The company can establish a knowledge management strategy through which the company can create, acquire, share, and use knowledge to enhance performance and learning. A resourcing strategy can also assist an organization in attracting and retaining skilled personnel. Learning and development is also an essential specific HR strategy as it promotes environment in which people are heartened to learn and develop. The organization can use such practices to further the achievement of organizational goals and address the desires of all its stakeholders.

Career Planning Policy and Talent Management in HRM

The increase in working lives has created openings for the emergence of new life stages and careers. Organizations are showing interest in the need to restructure careers with the constant disruption of businesses and jobs. HR needs to re-examine career planning and development policies to integrate increased flexibility and choice for people to customize their career routes (Martin, Farndale, Paauwe, & Stiles, 2016). Since new life stages and careers are emerging, individuals are expected to be flexible to create their unique sequence and stages based on their unique aspirations, needs, and choices. Naturally, all suggested career development prospects must be communicated with staff members (Nieves & Quintana, 2018). Staff members should not only be encouraged to gain additional skills and experiences but also remain with the business that can facilitate their desired professional changes.

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Career planning policies assist businesses in attracting competent personnel and retaining them in the firm. HR uses career planning policies to help staff members develop skills that can help them meet future challenges (Delery, & Roumpi, 2017). Career planning also enhances the utilization of managerial reserves within a corporation, ensures appropriate employee placement, and improves morale and motivation.

One of the directions of providing hospitality sphere companies with qualified staff and ensuring its loyalty and retention is the development and implementation of policies in the field of training and development of their employees, as Oluwaseun (2018) notes. To implement staff training and development policies, many large hospitality companies create corporate universities and introduce a mentoring system that allows them to develop the necessary competencies for employees through the succession of professional skills. These activities demonstrate the highest effectiveness when integrated into the talent management system.

To construct a talent management system, HR managers have to master and apply HR marketing tools. They will create a positive image of the organization and bring in a team of specialists with relevant corporate culture values (Nzonzo & Chipfuva, 2013; Sabuncua & Karacay, 2016). Talent management evidently refers to innovations in the field of human resource management, which are based on the management of human potential. A large group of scientists (Stahl, Björkman, Farndale, Morris, Paauwe, Stiles, Wright) considers talent management as a synonym for human capital management, recognizing the “establishment” of a ‘talent supply’ system as a major problem (Stahl, Björkman, Farndale, Morris, Paauwe, Stiles, Wright as cited in Mohammed, 2019). Immelt generally considers the talent management system to be the most powerful talent implementation tool (Immelt as cited in Lawler, 2017). In practice, talent management represents the implementation of an integrated approach to managing various HR processes, including recruiting, quick adaptation (onboarding), development and training, performance management, leadership and job planning. This, in turn, would have a beneficial effect on company revenue, customer reviews and loyalty, increased productivity and market capitalization.

Evaluating the Efficiency of Human Resource Management Strategies

An audit approach can be applied to measure the efficiency of the HR function. The audit function must be independent of the organization to ensure impartiality. The evaluation process must be based on evidence and not gut feeling. Before the audit process can commence, it is vital to have clearly defined objectives to guide the procedure. The HR audit may be total or partial, depending on the objectives set at the beginning (Deery & Jago, 2015). Auditors have a range of methods that they can apply for evaluation, including a comparative approach, compliance method, statistical technique, outside authority approach, and management by objectives. Regardless of the method used in the auditing process, the evaluation data is provided by HR research.

HR management strategies can also be assessed using an analytical approach. The team relies on cost-benefit analysis and utility assessment. These concepts seek to express the assessment in economic terms, and which are more viable for decision-makers. However, the process is challenging since it is only applicable to specific situations. The efficiency of HR managers can also be assessed using quantitative and qualitative indices (Deery & Jago, 2015). The use of a balanced scorecard is also an effective measure of the efficiency with the HR department. Managers need to identify key performance indicators within these four areas and how to track them. A balanced scorecard can assist in establishing a well-adjusted picture of the current HR management performance and trigger future performance.

It should be noted that social effectiveness is becoming increasingly important in the strategic management of the organization, and the most important component of the organization’s social performance is employee satisfaction with work (Ćulibrk et al., 2018). There is a direct proportional relationship between categories such as job satisfaction and the effectiveness of an employee’s organizational behavior: the lower the degree of job satisfaction, the less effective his behavior in the organization. Accordingly, it seems appropriate to include an integrative indicator of job satisfaction in the key performance indicators (KPI).

To assess the totality of the heterogeneous characteristics of the labor potential, it is necessary to develop a synthetic indicator that would allow comparing the magnitude of the potential at a given point in time and identifying the influence of individual factors on its total value. This, in turn, would allow a more justified choice of personnel policy and would enhance the company’s competitiveness. In our opinion, for a quantitative (cost) assessment of the qualitative characteristics of the labor potential, it is advisable to use the concept of “goodwill of the labor potential of personnel.”

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Goodwill is most often defined as the business reputation of an enterprise, which affects its value, and, therefore, its competitiveness (Leliuc Cocmulese, Grosu, & Hlaciuc, 2017). The carriers of the business reputation of any company operating in the field of hospitality are, primarily, employees. Consequently, the quantity of the company’s goodwill will depend on the quantitative and qualitative characteristics of the labor potential of the personnel. Intangible assets and labor potential of an enterprise are closely interconnected and depend on carriers of abilities for intellectual, creative work, i.e., from specific workers (Ratiu & Tudor, 2013). When active, creative workers leave, the enterprise loses its reputation associated with the ability to produce competitive products/services, and loses the ability to create intangible assets. In this regard, the most interesting is the valuation of goodwill of the personnel’ labor potential as the creator of the company’s business reputation.

In the literature, it is proposed to determine the estimated value of an employee using a goodwill of the employee’s human capital, which is defined as the sum of indices that take into account the company’s profit, total personnel costs, and professional level of employees. To obtain a more accurate result, it is proposed, in addition, to conduct a qualitative assessment using expert methods according to the following criteria (Vermeeren et al., 2014):

  • Professional competence;
  • Intellectual and creative capital; ability to perceive innovations and be a participant in innovations,
  • Adaptability to rapidly changing production conditions;
  • Knowledge of several specialties;
  • Professional mobility;
  • Responsibility;
  • Personal characteristics;
  • Results of work and achievements;
  • Job satisfaction.

Goodwill of labor potential, in our opinion, can evaluate such an important characteristic of personnel as their competitiveness, which can serve as an indicator of a qualitative assessment of labor potential. In general, for an enterprise, characterization of the level of competitiveness of employees is necessary to assess the prospects for successful activity, determine the level and direction of investment in labor resources, attract, select, distribute and redistribute workers and, ultimately, to increase the competitiveness of the enterprise itself.

The Impact of the HR Management System on the Competitiveness and Sustainability of Hospitality Industry Enterprises

Any enterprise in the hospitality industry seeks to maximize the use of the “competitive advantages” of its employees. In this regard, HR management is becoming one of the most important areas of life and production activities of the organization, capable of repeatedly increasing its effectiveness. Moreover, according to Mohammed (2019), the very concept of “HR management” is considered in a rather wide range: from economic and statistical to philosophical and psychological. At the same time, often the leaders of hospitality industry enterprises, starting the implementation of the change program, use outdated methods based on common sense and intuition, which represents the main problem of modern management. Unfortunately, in our time, this is already becoming insufficient for success. The implementation of organizational changes is “aerobatic performance” in the work of managers, which requires knowledge of the psychology of the process of change, its philosophy and technology, as well as the study of successful and unsuccessful experiences of other companies (Nivethitha, Dyaram, & Kamalanabhan, 2014). The focus of modern views on the general concept of HR management of an enterprise in the hospitality industry is the ever-increasing role of the employee’s personality.

The creation of a culture of involvement in the hospitality industry has a number of both objective and subjective obstacles. Many hotel workers are the so-called “marginal workers”: students, women working part-time, and labor migrants. If, at the level of a qualified minority, HR policy can be built on more or less standard grounds, then the approach to an unskilled minority requires a completely different, “flow” approach (Baum et al., 2016). This complicates the process of accumulation and transfer of experience and knowledge between employees, which negatively affects the stability of the service.

One of the most modern methods of combating staff turnover and increasing the competitiveness of hospitality company is HR management based on a competency model. A competency-based approach defines the standards of behavior expected from employees and quality requirements for work. A systematic approach to the use of the competency-based approach in HR management involves the coordinated participation of HR departments, managers and employees in the implementation of various aspects of HR development. In turn, the competency-based approach attaches primary importance to the accumulated knowledge and experience of the enterprise, which is a source of benefits under the conditions of knowledge management existence.

People represent the competitive wealth of the enterprise, which must be developed together with other resources in order to achieve strategic goals. Today, worldwide, the competitiveness of an enterprise, is determined, along with technologies and methods of organizing production, by the availability of skilled labor, the degree of motivation of personnel, organizational structures and forms of work that allow achieving a high level of competitiveness of employees and more efficient use of their labor potential (Uysal, 2016). Thus, only at the intersection of three components – competitive technologies, competitive methods of organizing production and labor, competitive personnel – it is possible to achieve the competitiveness and sustainability of the company as a whole, which, in turn, is the key to its effective work.

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In the framework of talent management, the implementation of hotels’ innovative activity is possible using the mechanism of intrapreneurship, when for this purpose a group of initiative workers is organized within the enterprise, taking on specific functions related to the implementation of innovations. In this case, the introduction of innovations receives comprehensive support from all services of the company (Neessen, Caniëls, Vos, & de Jong, 2019). The economic essence of intrapreneurship consists, first of all, in the search and implementation of new combinations of factors of production (updating of products, technologies, organizational approaches) in order to satisfy obvious or potential demand (Nivethitha, Dyaram, & Kamalanabhan, 2014).The advantages of intrapreneurship in the hospitality industry can be summarized like this: the involvement of all staff in the implementation of innovations, material incentives for innovation, dependent on the results; the spread of a creative approach to the professional duties of all members of the team and, above all, the management apparatus. The introduction of intrapreneurship in the hospitality business can significantly increase the efficiency of its activities, expand consumer opportunities, and increase the level of competitiveness.

By analogy with the fact that entrepreneurship cannot do without competent marketing, intrapreneurship, in turn, is closely connected with the so-called internal marketing. Internal marketing consists in the fact that employee-company relations are built on the same principles as company-customer relations. The administration of the company offers the employee a product that consists of a position, duties, and wages, and the employee purchases this product, paying for it with his labor. Thus, the employee becomes an internal consumer. At the same time, the attitude to him should be no worse than to an external client. Thanks to this approach, staff turnover ceases, employees better master the standards and principles of the company, and better implement activities related to customers (Nwokah & Briggs, 2017). Thus, it is possible to make each employee a brand advocate, create a customer-oriented approach in each employee, and establish fast and high-quality feedback. It also allows improving quality indicators, reducing resistance to changes, and accelerating the process of finding and adapting new employees (Varun & Indu, 2015).

An effective internal marketing program requires close collaboration between the marketing department and HRM service, the key areas of which are recruitment and training; in addition, employees must be able to work as a team. For example, in restaurants using internal marketing, employees can completely replace each other to improve the service culture. Employees who see that the client needs something will serve him, even if it is not their direct responsibility (Gjurašić & Marković, 2017). A competent internal marketing program should focus on educating employees who need to be able to take responsibility in extraordinary situations (Ahmed & Rafiq, 2016). One of the benefits of an internal marketing program is providing employees with the right attitude, knowledge, communication skills, and authority to work in unusual situations. Internal marketing should provide two types of benefits: a satisfied customer and a satisfied employee.

Conclusion

HR is a significant organizational element that manages the welfare of its personnel. It is responsible for employee hiring, firing, payroll, benefits, and ensuring that a corporation complies with federal and state laws. The hospitality industry employs millions of people around the world as the service market involves the reception of many guests. The nature of services provided in the industry demand efficient human resources management. Establishing an efficient HR management system is key to facilitating the functions of businesses in the hospitality sector.

Meanwhile, insufficient use of opportunities to improve the efficiency of human resource management, in our opinion, is largely due to the lack of methodological tools for assessing the effectiveness of HR strategies, in particular, their impact on organizational performance and goodwill. The basis of the concept of HR management is the development of principles, directions, and management methods, accounting for work with personnel at all levels of the strategic planning of the enterprise, HR-analytics, assessing the degree of employees’ involvement, the effectiveness of internal marketing strategies, etc.

The results of the activities of many leading hospitality enterprises and the accumulated experience of working with staff show that the formation of a high quality of labor potential is a decisive factor in production efficiency and product competitiveness. Thus, namely labor potential should be recognized as a key factor in competitiveness, and therefore, business success. It is necessary to invest in personnel, along with fixed and working capital. To do this, it is needed to develop a personnel strategy that contributes to the achievement of business goals, which affects management decision-making and change management to ultimately improve the financial performance of the enterprise.

Challenges which are associated with employing and retaining the workforce are the most critical in the hospitality sector. In fact, quality employees are assumed to give a company a great competitive advantage over other firms, which explains why numerous corporations are in constant search for opportunities to attract skilled employees. It has been shown that HR plays a crucial role in the hotel business by hiring, training, and maintaining employees, as well as helping them adapt to their roles. Recruitment of staff is considered the most important task of the HR since skilled workers can help the business realize its objectives.

There is a number of methods which the HR department may utilize to ensure overall corporate efficiency and reach specific organizational goals, including overarching strategy, continuous improvement strategy, resourcing strategy, as well as learning and development strategy. HR specialists may elaborate career planning policies not only to attract skilled employees but also to help them develop competencies which will be useful for a company in future. Besides, it is worth mentioning that career planning may assist the HR department in managing reserves and reducing the levels of employee turnover. For example, the personnel training and development policies may help ensure that workers have all the required competencies to perform their duties and tasks successfully and permanently replenish their knowledge to do their jobs better. Also, staff training and development policies may increase employee loyalty. Talent management is a strategy that can be utilized by the HR department to enhance such process as recruitment, onboarding, performance evaluation, leadership and job planning, learning and development, as well as planning of compensation. This holistic approach may have a positive effect on the company’s image, generated profits, and customer loyalty.

HR management strategies can be evaluated using either analytical or audit methods, both of which are popular nowadays. These methods may involve the use of various techniques for performance measurement. For example, quantitative techniques provide for the cost assessment of the predetermined indicators. The most commonly used indicator is the company’s goodwill. Some organizations also measure the goodwill of their individual workers based on their professional competencies and total personnel costs. The HR management system can impact the sustainability and competitiveness of hospitality industry organizations in a number of ways. Under a competency-based approach, the HR department may develop standards of employee behavior. Building a culture of involvement helps make employees more proactive, loyal, and productive. HR may benefit from introducing intrapreneurship to find new organizational approaches and increase the efficiency of activities.

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