Professional Documents
Culture Documents
INTRODUCTION
The labor shortage has been recognized nationally as a major force driving
change for decades and is predicted to continue into the future with the
shortage having greater impact on the hospitality industry (Terry, 2005).
This shortage is even more amplified for resorts that are typically located
in remote areas with a high cost of living, low unemployment rates, and a
seasonal need for employees (Angelo & Vladimir, 2004). These three factors
have led to increased turnover and higher overall costs for resorts. In the
past 3 years, there have been many media reports on the seriousness of the
Address correspondence to Marcia Taylor, PhD, Department of Hospitality Management at East Carolina University, RW 312 Rivers, Greenville, NC 278584353. E-mail:
taylormar@ecu.edu
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Strategic Management in HR
Historically, the role of HR in a hospitality management company has been
administrative in nature. Fulford and Enz (1995) documented this administrative definition, which they called personnel administration, in the HR
department of a multi-unit restaurant chain. A national trend in HR is to
move from the administrative role to the incorporation of HR in strategic
planning. This movement was aided by the development of the concept
of human capital or human assets in an organization. Human capital is defined as including skills, judgment, and intelligence of the firms employees
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(Barney & Wright, 1998, p. 32). In a Norwegian hotel chain, Engstrom, Westnes, and Westnes (2003) identified human capital as one of three components of intellectual capital; the other components were customer capital
and structural capital. These authors identified measures for human capital
as competence, improvement systems, intellectual agility, performance, and
attitude and motivation.
One study that investigated human capital in U.S. hotels identified a Hospitality Human Capital Process Model (Young, McManus, & Canale, 2005).
The three components of the model are (1) service-oriented employees, (2)
empowered employees, and (3) committed employees. Developing serviceoriented employees requires training on guest expectations, an appropriate
hiring process, and a service-oriented culture. Developing empowered employees requires training on problem solving; shared values, norms, and
goals; in addition to an appropriate hiring process and service oriented culture. Managerial activities that develop committed employees include nurturing psychological bonds, treating employees fairly, meeting employee
expectations, in addition to a hiring process that selects best fit employees.
This model delineates a comprehensive program for maximizing hospitality
HR.
Building on the view of HR as human capital, strategic human resources management (SHRM) includes approaches for matching people
to business strategies (Miles & Snow, 1984). A model of development of
the HR function in organizations includes five levels divided into two categories according to Kearns (2004). The two categories are where employees are seen as a cost/resource and where employees are seen as a
competitive advantage. When employees are seen as a competitive advantage, HR becomes a strategic partner responsible for getting the maximum
value from the company employees. Strategic HR managers see the workforce as a source of strategic advantage, not a cost to minimize (Pfeffer,
2005).
An increase in the strategic approach to human resources management
in the U.K. hotel industry was reported by Hoque (1999) and was recommended for multi-unit restaurants by Fulford and Enz (1995). It was proposed
by Guest (1987) that the integration of HR into strategic plans supported
by policies, a culture that stresses the importance of HR, and employee
commitment will lead to the successful implementation of those strategic
plans.
The results of a project to investigate the impact of technical (the administrative role) HR and SHRM on firm performance indicated that SHRM
has more positive impact on firm performance than technical HR (Huselid,
Jackson, & Schuler, 1997). These researchers also linked SHRM to competitive advantage and, in turn, to business performance. Olsen, West, and Tse
(2007) use the co-alignment model to demonstrate the significance of this
link.
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Co-Alignment Model
As early as 1983, strategic management has been recognized as important for managers in the hospitality industry (Reichel, 1983). More recently Kim and Oh (2004) recommended the use of a comprehensive,
integrated strategic-management method to give hotels a competitive advantage. The co-alignment principle is a strategic-management theory that
implies that companies can gain a sustainable competitive advantage if
management adopts the principles of the theory in their everyday operations (Olsen et al., 2007). In support of this theory, Olsen et al. (2007)
developed a model that consists of four constructs necessary in achieving co-alignment within business. According to the co-alignment principle model, if management can (1) identify opportunities that exist in the
forces driving change in the environment, (2) invest in competitive methods (strategy choices) that take advantage of these opportunities, and (3)
allocate resources to those methods that create the greatest value, then they
can (4) achieve sustainable competitive advantage (Olsen et al., 2007; see
Figure 1).
A firms success depends on the managements awareness of the environment and ability to identify and adapt to changes. According to Olsen
et al. (2007), the co-alignment model is similar to other strategic management concepts, but it is future oriented. The application of the co-alignment
model to the hospitality industry has been reported by Olsen et al. (2007)
and in many unpublished dissertations. Typically, the hotel industry is considered a copycat industry. Hoteliers are quick to copy innovations by
others. Adopting the co-alignment model can give a resort manager a competitive advantage in the marketplace. Due to the competition for luxury
travelers and the short lifespan of luxury services, application of this model
is appropriate for managers in luxury resorts.
PURPOSE OF STUDY
The purpose of this study was to answer two research questions: (1) Are
luxury resorts investing in competitive methods to take advantage of the
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opportunities that exist in the forces driving change in the environment? (2)
Are luxury resorts allocating resources to those competitive methods that
create the greatest value? Specifically, the study sought to find out if luxury
resort HR managers recognize the forces driving change in the environment,
the competitive methods they are utilizing to solve the labor shortage, how
they are allocating resources to these competitive methods, and the performance indicators as a result of implementation.
METHODOLOGY
To answer the research questions, the case study method with multiple
cases as described by Yin (1993) was used. The case study method has been
demonstrated as appropriate in testing the co-alignment model because researchers must enter into the domain of the firm and study it in depth in
order to understand the complexities of the situation (Taylor & Olsen, 2006).
The use of face-to-face interviews has proved effective in testing the coalignment model because the subjects may not be familiar with the concepts
included in the co-alignment model, and interviewing allows researchers to
probe and use questions to get a valid response. Other researchers (mostly
unpublished dissertations) have used the case study method in investigating the co-alignment model. In addition, Aung (2000) used the case study
method to identify the core competencies of the Accor hotel chain.
The focus for this study was 4-star resorts in North Carolina. Seven
resorts were identified in the Official 2005 North Carolina Travel Guide
(2005). After contacting the HR directors at these resorts, five of the seven
HR directors agreed to participate in the study. Yin (1993) suggested the
use of multiple cases be viewed as multiple experiments and not multiple
respondents to a survey. The consensus for numbers of cases falls between
two and four as the minimum and ten and fifteen as the maximum (Perry,
1998). Therefore, the five cases were considered to be adequate for this case
study.
A structured questionnaire consisting of twenty-seven open-ended questions was developed to serve as the basis of the face-to-face interviews with
each director on location at the resort. Six of the questions were descriptive
of the resort. Five questions sought to identify the forces in the environment
identified by the HR director as driving change in the hotel industry. These
forces also have the potential of affecting the resort in the future and are
contributing to problems in HR at the resort. Four questions addressed the
strategy choices or competitive methods utilized by the resorts. Specifically,
the HR directors were asked to identify the resorts competitive methods and
what was included in each method. They were also asked how competitive methods were chosen and which methods were perceived as adding
the most value to the resort. The next five questions sought to identify how
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Strategy Choices/
Competitive Methods
Economic IssuesLabor
Unemployment rates
Benefits increasing in
cost and changing in
nature
Leadership development
and increased training
Developing a company
culture
Building loyalty among
employees
Incentive programs
Redefining full-time
employment
Extending seasons
Redefining full-time
employment
Firm Structure
Increased HR
budgets
Changing
management
structure to
compliment capital
investment
HR as strategic
partner
Culture committee
Flextime
Child care
Job sharing
Immigration and
diversity of the work
force
Energy costs for
employees
Generational mix
Economic IssuesGuests
Growth in family
travel due to
increasing energy
costs or value of time
New competition
Other Issues
Technology
Environmental
Renovated facilities
Added amenities
Increased service quality
Package pricing
Renovated facilities
Added amenities
Increased service quality
Package pricing
Leadership development
and increased training
Cobranding
Focused marketing
Focused marketing
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For example, in one resort, for every dollar invested in their employees
an increase of three dollars in profit was generated. At another resort, any
increase in revenue was interpreted as meaning that they were doing the
right thing.
Competitive strategies that impacted employees directly included redefining full-time work, offering competitive wages and benefits, creating
loyalty in employees, and a variety of changes to encourage a more-stable
workforce. In one resort, the minimum number of hours required for an employee to receive full-time benefits was decreased from 40 hours per week
to 30 hours per week. This change allowed employees to stay on the payroll
and receive benefits during slower seasons. A variety of wellness programs
and incentive programs were described as methods for increasing the health
and well-being of employees and to reward employees for contributing to
the bottom line of the resort.
The HR director at one resort reported treating employees like family as a method used to create loyalty in the workforce. Examples of how
a family environment type of work culture was created included fundraisers, company support for employees with need, supporting the community
with funds, and paid time for employees to assist community organizations.
Changes made to encourage a more stable workforce included extending
the seasons by offering themed weekend events, promoting job sharing,
and offering flextime. It is interesting to note that none of the resorts used
outsourcing to solve labor problems and the implementation of all of these
changes decreased the need to use guest workers.
Competitive HR strategies that were implemented in response to the
changes in guest needs included more training and leadership development,
and developing a full-time, year-round workforce. The increase in training
allowed the resorts to capitalize on the strengths of their current employees.
By decreasing the need for part-time or seasonal workers, the resorts could
offer consistent quality service as demanded by guests at a luxury resort.
Firm Structure
The third component of the co-alignment model is the firm structure required to implement the strategy choices/competitive methods that have
been selected. Results in Table 1 indicate increased HR budgets, change of
management structure to compliment capital investment, involving HR as
a strategic partner, and establishing a culture committee as needed to address the unemployment rate issue. Focused marketing was implemented to
address both of the guest issues.
Structural changes that were identified by the HR directors were not
as comprehensive as the strategy choices. In addition, they were not tied
directly to a strategy choice as the co-alignment model would indicate. The
comprehensiveness of the responses received from the HR directors ranged
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from all of the structural changes included in Table 1 to listing only one
increased HR budgets.
Firm Performance
The final component of the co-alignment model is the firm performance
measures that are used to determine the impact of the changes. Traditional
measures of performance in the lodging industry (average daily rate [ADR],
revenue per available Room [RevPar], turnover, etc.) were identified by all
but two of the HR directors. These results are similar to those reported
by Mandelbaum (2006). It was interesting to note that almost all of the
respondents did not have access to the operating data on a regular basis
and in no case could alignment be determined. The annual ADR ranged
from $185 to $300, annual occupancy rates ranged from 59% to 96%, and
annual RevPar ranged from $125 to $559. Only one HR director reported
seasonal data. Employee data included payroll percentages ranging from
32% to 38.5%, employees to rooms ranging from 1.1 to 1.9, and turnover
percentages ranging from 16.5% to 65%.
The wide range in RevPar, occupancy rates and turnover were due to
data from one seasonal resort. Turnover rates were also impacted by the
use of temporary guest workers. The HR directors reported that turnover
rates were not increasing. This trend is different from a study by the Society
for Human Resource Management where 38% of the members reported increasing turnover rates (Feeney, 2007). While it is difficult to link these data
as outcomes for a strategy choice and change in firm structure, there was
a trend for lower turnover rates in the resorts with a more comprehensive
People Strategy.
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When applying the co-alignment model in this case study, there is very
little evidence that co-alignment is being used as a basis for planning. The
forces driving change in the environment and competitive methods were
identified by all HR directors. The allocation of resources to these methods
was not clearly delineated. In addition, the outcome measures and the effectiveness of each method were not identified by the directors. Use of the
co-alignment model could give these resorts a competitive advantage due to
their constant need for outstanding service as expected in a luxury resort.
Although limited to resorts in only one southeastern U.S. state, the findings indicate the need to duplicate this research project with data gathered
from more resorts across the country. Through additional case studies, the
use of SHRM and the co-alignment model could be documented as providing
a competitive advantage in resorts. Further research needs to be conducted
using the general manager as the source for information. The results of such a
study would be strengthened by their knowledge of performance measures.
Despite the limited number of cases in this study, the information gathered should help HR directors in the hotel industry as they identify and react
to the forces driving change in the environment.
REFERENCES
Angelo, R., & Vladimir, A. (2004). Hospitality today: An introduction. Lansing, MI:
Educational Institute of the American Hotel and Lodging Association.
Aung, M. (2000). The Accor multinational hotel chain in an emerging market:
Through the lens of the core competency concept. Service Industries Journal,
20(3), 4360.
Barney, J. B., & Wright, P. M. (1998). On becoming a strategic partner: The role of
human resources in gaining competitive advantage. Human Resource Management, 37(1), 3146.
Berta, D. (2002). Special reportopportunity through tears: Immigration. Nations
Restaurant News, 36, 9, 122123.
Berta, D. (2004). U.S. to foreign workers: Stay home for the summer. Nations Restaurant News, 38, 13, 15.
Cooper, K. (2005). The missing link in people strategies. Customer Inter@ction Solutions, 24, 5, 4850.
Engstrom, T. E. J., Westnes, P., & Westnes, S. F. (2003). Evaluating intellectual capital
in the hotel industry. Journal of Intellectual Capital, 4(3): 287303.
Ettedgui, E. (2006, September 18). Striving to offer quality in a flawless manner.
Financial Times, 5.
Feeney, P. (2007). Hotel recruitment: Is a talent shortage looming? Hotelexecutive.com. Retrieved January 4, 2007 from, http//www.hotelexecutive.com/
bus rev/pub/002/744.asp
Fisher, K., Gross, S. E., & Friedman, H. M. (2003). Marriott makes the business case
for an innovative total rewards strategy. Journal of Organizational Excellence,
22(2), 19.
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