Abstract
Many hospitality companies highlight the importance of their employees, and this features strongly in their consumer marketing. However, the capacity of organizations to deliver “people first” practices is seemingly subject to increasing pressure within the international hospitality sector, both internally and from the external environment. Nowhere is this clearer than in the roles that are played with respect to the human resource management (HRM) function, both by those specifically designated in that post and by nonspecialist managers taking HRM responsibilities. This conceptual article has two principal aims: first, to illuminate the growing trend of formalized HRM practices being downgraded, eliminated altogether, or decentralized; and second, to highlight the need for a greater understanding and consideration of the external factors affecting hospitality HRM practice. The article reviews the nature and scope of the HRM function in hospitality, presents an overview of the trends toward internal reorganization through decentralization of HRM functions and, finally, assesses the impact of external pressures of the delivery of effective HRM. We then propose a dynamic framework designed to help facilitate greater understanding of the implications of internal and external pressures by HRM professionals and researchers, and conclude with reflections and recommendations followed by proposals for future research.
Introduction
Implicit in the marketing claims of many companies is a commitment to the importance of their employees. Examples include Fedex’s People-Service Profit corporate philosophy, Southwest Airlines’ employee branding (where people are proclaimed as the single greatest strength and most enduring influence on long-term competitive advantage) and Marriott’s “Marriott Way” (“take care of the associates, and they’ll take good care of the guests, and the guests will come back”). Indeed, many major hotel companies have an explicit statement or motto which proudly displays the importance the company places on its workers. This is even illustrated at a national destination marketing level, where for example, an Irish slogan exhorted visitors to come for the scenery but to come back for the people (Baum, Hearns, & Devine, 2008).
Such “people first” practices are subject to increasing pressure within the international hospitality sector, both within organizations (ever-increasing pressure on financial performance) and from the external environment (e.g., demographic changes in the workforce). Nowhere is this clearer than in the increasingly prominent roles that non–human resource (non-HR) managers play in the execution of the HR function. In attempting to understand these dual pressure points and the implications these mounting pressures have on the realization of hospitality companies’ “our employees are everything” corporate straplines, this article has two principal aims. First, we illuminate the growing trend of formalized HRM practices being downgraded, eliminated altogether, or decentralized (“outsourced” to line-level, operational positions) within the multiunit chain organization. We then further consider the consequences that this can have on an industry so reliant on people. Second, we argue the need for an improved understanding and consideration of the external factors influencing hospitality human resourse management (HRM) practice.
Our concern here is with responsibilities within the HRM function, with specific reference to the international hospitality industry, itself a further and rapidly evolving contextual determinant in shaping how this role pans out in practice. Since the introduction of “personnel” departments in the early 1900s, the function, scope, and role of HR professionals has continued to evolve. The hospitality industry is service oriented, and one which relies heavily on people to deliver. Nonetheless, we find it surprising that the role and function of the HR manager (or those tasked with HRM functions) continues to be a neglected area in the hospitality academic literature. This article provides an appraisal of the key environmental influences on the role of this cadre of professionals as well as the wider practice of HRM within the sector. As far as we can ascertain, this is the first such assessment within the hospitality literature.
To achieve our principal aims in the most effective manner—illuminating the growing trend of HRM functions being moved away from HR professionals and toward line supervisors and the impact of “outside” or environmental factors affecting HRM—this article adopts a conceptual approach (Glasser & Strauss, 1967). We argue for the appropriateness of this approach as our general aims are to generate understanding of existing concepts and relationships in order to “produce an integrating framework” for improved understanding of a blend of existing research, concepts, or ideas (Skilton, 2011, p. 23). Astley (1985) argues that greater understanding of theoretical language and context, rather than verification of theory through testing, is the most important product of research in the social sciences. It is therefore our aim to uphold the key tenet in his article which seeks “generation without verification” (Skilton, 2011, p. 23), so that the collection of ideas presented will stimulate subsequent attempts at verification.
Adopting a conceptual approach, this article is structured in the following way: First, we provide a brief review of the HRM function and its context in a broad sense, reflecting on how this translates specifically to the hospitality industry. This is followed by a review of trends toward internal reorganization through decentralized HRM functions (the “devolution evolution”). We then illustrate how external pressures can influence the HRM function in hospitality by focusing on selected pressure sources. On the basis of this review, we discuss the implications of the fast-paced economic, political, social, cultural, demographic, and technological change environment within which today’s hospitality businesses are “glocally” located and consider the future of the role of the hospitality HR manager. We then leverage this discussion to highlight a series of unknowns that provide a basis for the hospitality HRM academic to respond with appropriate research in order to further understanding and improve practice. In concluding, we return to the juxtaposition of idealistic corporate blandishments and the reality of mounting pressures on hospitality HRM and propose a more believable strapline.
Literature Review
Understanding HRM in the Hospitality Industry
As demand for travel, tourism, leisure, and hospitality continues to grow, notwithstanding short-term recessionary pressures (U.N. World Tourism Organization, 2011), a cloud of concern hovers in relation to a range of HR-related issues (e.g., Barron, 2008; Watson, 2008). These concerns were recently illustrated in a worldwide survey of general managers across hotels in 60 countries that found that human resources and related matters were by far the greatest issue of concern, regardless of country or region (others included issues related to the economy, environment, understanding customers, rising costs, strategy, and competition; Enz, 2009a, 2009b). The human issue was so dominant that “all other issues combined paled by comparison” (Enz, 2009a, p. 8). Further analysis of the factors underlying the human problem rated these specific issues as the most pressing (in order): attracting quality candidates, employee retention, training and development, morale, perceived career opportunities, skills and labor shortages, and increasing labor costs (Enz, 2009b). In the context of the developed world, these factors can be interpreted in terms of both internal pressures on business (e.g., adapting to competitive, financial and investment pressures, technological change) and a range of external considerations (such as demography, changing expectations of work, market demands). We note here that this article does not enter the discussion about the difference between the terms human capital (often used in the context of the resource-based view of a firm), and human resources. Both terms have been used somewhat interchangeably in the literature, although human capital tends to be more connected to “its potential to contribute to the competitive advantage or core competence of the firm” (Lepak & Snell, 1999, p. 35), whereas human resources is a broader term aimed at employees more generally (see, e.g., Hitt, Biermant, Shimizu, & Kochhar, 2001; Lepak & Snell, 1999; Schultz, 1961). Regardless, the hospitality HR professional is hemmed in at every angle by such internal and external pressures, as depicted in Figure 1. However, none of these, in and of itself, wholly explains the challenges faced by those executing the contemporary HRM function within as diverse and fragmented an industry as international hospitality.
360 Degrees of Internal and External Pressures on the Hospitality Human Resource Function
HRM is a term that is most often used to represent those parts of an organization’s activities concerned with the sourcing, maintaining, management, and development of its employees (Wall & Wood, 2005), and is often viewed as a “bundle” of activities, designed to be of maximum value to enhance organizational performance (Barney, 2002). In trying to identify the right components of this amorphous “bundle,” researchers have used the terms black box and holy grail—suggesting a void in terms of understanding the correct array of processes and mechanisms which lead from HR practices to optimum organizational performance (Harney & Jordan, 2008; Purcell, Kinnie, Hutchinson, Rayton, & Swart, 2003). In particular, evaluating the effectiveness and impact of HRM practices presents challenges which can result in conclusions in its favor that are based more on faith than hard evidence. Guest (2011, p. 3), for example, wraps up an extensive review by concluding that “we are still unable to answer core questions about the relationship between human resource management and performance.”
The field of HRM is itself undergoing significant change. Influence from concepts such as strategic human resource management, which espouse the importance of firms viewing the HRM function in strategic terms (Wright & McMahan, 1992); and the resource-based view (RBV) of a firm, which suggests that the basis for competitive advantage of a firm lies primarily in the strategic utilization of the whole bundle of valuable resources at the firm’s disposal (Wernerfelt, 1995), provide compelling cases that a business can achieve at least some competitive advantage by the way it philosophically and practically performs the function of HRM. Extending from both these perspectives is the more recent notion that principles of sustainability can be applied in the context of HRM (Ehnert, 2009), recognizing the value of applying longer term considerations to response and practice in areas such as labor and skills shortages, investment in HR development, and remuneration. Researchers have also advocated the need for a greater understanding of regional and government policy implications for HRM (Baum, 2008; Baum & Szivas, 2008), and for strategic restructuring of HR departments aligned with corresponding organizational structures (in order to hold the HRM function more accountable to business strategic aims; Ulrich, Younger, & Brockbank, 2008).
While the vast majority of research calls for more attention and greater understanding of HR practices, there have also been expressions of concern about the future of HR. Warnings that HR faces “transformation or demise” (Schuler, 1990, p. 49), and Woods’s (1999) proposition that HRM in the hospitality industry will have to find its way or risk being replaced by outsourcing and technology indicate that HRM in hospitality has yet to find an unchallenged role and a permanent organizational location wherein to reside. Ulrich (1998) argues that managing people has never been more necessary, and that the question is not “if HR,” but rather more “how to do HR” (Ulrich, 1998, 2005). Perhaps a middle point to the “to HRM or not to HRM” is the growing trend today toward a compromised position where the dedicated HRM role is retained for some purposes but many HR functions are integrated into frontline management responsibilities (Kulik & Perry, 2008). We return to this theme later in this article.
HRM responsibilities can be seen to fit somewhere on a continuum from strategic to operational and administrative (as depicted in Figure 2). In practice, those with HR “manager” in their title tend to be tasked with broader strategic issues associated with an organization’s employees including planning for long-term staffing requirements linked to company growth forecasts, developing information systems to improve efficiencies across the organization, benchmarking practices against competitors, industrial bargaining, talent identification and management, succession planning, and communicating with senior management to ensure that important decisions always take proper account of HR considerations. The principles that can be drawn from a conceptualization of HR at this level also translate into the language of sustainable HRM, focusing on principles, practices, and change actions that enable the organization to “deploy HR in a way that the employee’s long-term development and performance is . . . improved” (Zaugg, 2002, p. 14). In contrast, the more operational, line-level tasks of the HR function include activities such as hiring, terminations, performance reviews, payroll and related, and the like. In many organizations, line managers have found themselves playing the role of “accidental” (operational) HR managers, as more and more of the core HR activities are being decentralized and handed down (Kulik, 2004).
Human Resource Activities, From Strategic to Operational
The HRM function is widely recognized as critical in the hospitality industry, yet it is often seen as quite isolated and disconnected from the frontline function (Raub, Alvarez, & Khanna, 2006). This has been attributed to a number of reasons, including the perception that many organizations still do not consider HR managers or even the HR function to be central to strategic decision making, and that HR managers are too often caught up in administrative processes and routines (Tracey & Nathan, 2002).
We support a widely accepted claim that, in today’s global hospitality industry dominated by constant change and other intangibles such as brand strength, customer and employee engagement and effective management of the workforce aligned with a firm’s strategy requires the HR function in today’s organizations to go well beyond the bounds of traditional personnel administration. Ahmad, Solnet, and Scott (2010) and Lepak and Snell (1999) go further, suggesting a strategy of differentiation (HR systems differentiation). This is a process where different HR practices, aligned with a firm’s strategy, are applied to groups of employees based on their skills and value to an organization. This process, a managed HR architecture, includes the HR function but connects the HR function in terms of the implementation of strategies and actions by line managers.
In recent years, there have been a number of influential reviews of the state of HRM in the hospitality industry, each seeking to highlight the importance of the topic in the context of hospitality (e.g., Davidson, McPhail, & Barry, 2011; Enz, 2009b; Kusluvan, 2003; Singh, Hu, & Roehl, 2007). These reviews have provided comprehensive assessments of a number of current HR issues, however, none has focused on HR professionals and assessed the implications of trends toward devolution of their responsibilities to line-level managers or given significant attention to the external pressures on the HRM role. In response to this lack of scholarly work that seeks to encompass the full 360 degrees of pressure faced by hospitality HR managers, we first sought to investigate the internal response to mounting pressures within the HR environment, that of devolution and delegation. We then broadened our sphere of interest to address these pressures from an external perspective, in other words, what is the influence of these environmental change factors on the role of HRM and the functions performed by managers in hospitality tasked with responsibility for HR outcomes?
Devolving the HR Function
Most supervisory and managerial employees in hospitality businesses today can be said to be truly on the “front line” of HR management (Baum, 2008; Watson, Maxwell, & Farquharson, 2007). It is not unusual in small and even larger hospitality organizations for supervisors and line managers to play a major role in recruitment and selection decisions, the conduct of performance reviews, bonus allocation discussions, promotion decision making, and handling terminations. In other words, there has been a movement of some key HRM responsibilities to line management level within operations, a result of both managerial delayering (Littler, Wiesner, & Dunford, 2003) and practical necessity. However, some organizations are going further, through engagement in deliberately “devolving” HR activities to line managers that previously were the exclusive domain of HR specialists. Beyond hospitality, the devolution of HR responsibilities from bespoke HR departments and managers to the level of line responsibility is both a growing and global trend (Larsen & Brewster, 2003). Renwick (2003) attributes devolution to the changing status of the people management function within organizations when he argues, “although line managers have always been involved in managing human resources (HR), it is within human resource management (HRM) that their involvement has been placed centre-stage as a core element of an HR approach” (p. 262).
There is clearly a trend of organizational flattening or delayering which is taking place at all levels within the corporate hierarchy. Rajan and Wulf’s (2006) findings report that the layers of intervening management in organizations are being eliminated and the CEO is coming into direct contact with more managers in the organization, even while managerial responsibility is being extended downward. Devolution has wide-ranging implications for the role of line managers, the role of personnel professionals, and for an organization’s capacity to establish and administer people management policies across the entire business (L. Hall & Torrington, 1998). Organizations that adopt a devolution strategy may be taking a poorly understood risk in that they are placing responsibility for the “care and feeding” of their most important assets (their employees) in the hands of managers who may have received little or no formal training in HR (Kulik, 2004). These day-to-day HR practices are critical in contributing to the organization’s bottomline performance (Becker & Huselid, 1998; Huselid, 1995).
Although it might seem organizationally appropriate and practical to devolve some HR practices to line managers, this is not always a welcome change to job responsibilities; nor does such transition always proceed without difficulty. In a study of hotel line managers, a number of barriers and divergent views were found, particularly regarding workloads and short-term job pressures, from the various levels of managers who were tasked with HR responsibilities (Watson et al., 2007). Similarly, other researchers found that, although line managers often had responsibility for the implementation of a variety of HR practices, there were significant variations in terms of the quality of the practices undertaken (McGovern, Gratton, Hope-Hailey, Stiles, & Truss, 1997; Perry & Kulik, 2008). These researchers identified additional constraints to devolution, including the lack of incentive for line managers to give necessary effort to HR functions, the likelihood that line managers would prioritize their prime responsibilities rather than those related to HRM, and that the changes inherent in devolved HRM activities create additional strain on all employees which would be exacerbated without professionally administered HRM practices. Finally, it is worth referring to the potential for what McConville (2006) calls role dissonance as a consequence of the devolution of HRM functions to middle managers, as it can be seen as an imposition onto what is already a heavy operational workload.
We acknowledge other views about devolution, that there are in fact devolution “optimists,” who suggest that many HR roles should be removed from HR specialists so that these specialists can be liberated to concentrate on strategic activities (Cunningham & Hyman, 1999). Furthermore, greater levels of commitment and engagement with HRM more broadly are gained through sharing the responsibilities across the organization (Perry & Kulik, 2008).
There is little doubt that the HR function in businesses generally, and particularly within hospitality, has and continues to change according to fashion and context. Guest (2011) identifies as many as six phases in the evolution of the academic assessment of the HRM function over a 20-year period, highlighting the uncertainty which has beset observers of what is essentially a “Pimpernel” domain. However, the polarization of HR within large organizations, between a strategic, politicized, and global-reach role at corporate level (Farndale, Scullion, & Sparrow, 2010; Novicevic & Harvey, 2001) and functional application of HR at the devolved, “coal-face” level, with little in between, appears to be a trend that is becoming increasingly embedded.
HR Under External Pressure
In the context of our review so far, we have focused on a HR function that has both matured and gravitated downward within organizations in recent years. These change processes, in themselves, imply stress for those charged with responsibility for the execution of the HR function. This stress is due to role ambiguity and change together with the demands placed on line managers with limited professional training in HR to carry out what can be both procedurally and legally complex functions, with little more than the corporate HR “help-line” to support them. We now turn to the impact of external change pressures on the HR role in hospitality, how Bolman and Deal’s (2008) HR frame relates to wider environmental influences on the organization. We seek to assess the extent to which the industry and its line professionals are in a realistic position to respond to these influences. At the same time, we do recognize that internal changes beyond devolution also exert pressures on the role of frontline management but it is beyond the scope of this discussion to address these here.
We start this part of our discussion with affirmation that the role of HR in the hospitality organization (whether represented at a departmental, functional level or devolved to operational line management) is becoming more complex and subject to a range of challenges. We acknowledge that such changes have not come about suddenly. More than 20 years ago, Schuler (1990) called for a repositioning of the HR function of organizations, suggesting the possible demise of the HR department if it could not change with the times linked to what he called “dramatic environmental changes” (p. 50).
Schuler (1990) argues that the business environment is causing an increasing shift in the importance of the HR function based on a number of factors, including the rapid rate of business change; rising costs; increasing competitive pressures on margins; rapid technological change; increasing demands for new skills through sourcing, education, and retraining; greater complexity in organizations, customers, and marketing; changing demographics; and limited labor availabilities. Organizational change, he argues, places even greater importance on HR issues because of the growing uncertainty associated with change and the importance of people to organizational success in most businesses.
Along with others (e.g., Davidson, McPhail, & Barry, 2011; Enz, 2009b; Kusluvan, Kusluvan, Ilhan, & Buyruk, 2010; Ulrich et al., 2008), we argue that, although the predictions of change proposed by Schuler (1990) have been accurate, the effect on HRM has been significantly exacerbated in today’s more complex and fast-evolving external change environment. Therefore, those charged with the execution of professional HR functions are faced with a combination of pressure points over which they have little direct control and which include the eminently predictable, the reasonably likely, and the totally left-field. HR managers in hospitality, therefore, need to be equipped to respond appropriately to all these changes. For the purposes of this evaluation, we have been selective in our use of “illustrative pressure points” to highlight how external environmental change influences the role of HR management at the centralized and devolved level in hotels. In their entirety, these sources of pressure are multiple and interdependent but we will focus on three by way of illustration here.
Changing workforce characteristics
The hospitality workforce in most countries, particularly in the developed world, is becoming increasingly diversified and heterogeneous in terms of its characteristics. The somewhat naïve and rarely challenged assumption that hospitality is a young person’s industry, albeit reluctantly according to Wood (1992), is under threat in its traditional manifestation. This is largely because of demographic change in many developed countries which, at the one end of the spectrum sees fewer young people entering the workforce and, at the other, witnesses more older workers having to work beyond traditional retirement ages. At the same time, global migration is at record levels, a trend set to continue into the foreseeable future. Organisation for Economic Co-operation and Development’s annual assessment of international migration for 2011 points clearly to the impact of the current global economic downturn on migration, highlighting 2009 declines in permanent and labor-induced migration over 2008. However, it also notes that figures for 2009 still represent higher levels of migration than any year prior to 2007. Most relevant to our review, tourism and its dominant subsector, hotels, are one of the economic sectors in the global economy (alongside agriculture, construction, and mining) which are preeminent in the opportunities offered to migrant workers worldwide (Baum, 2012). This is substantially because they are place-specific sectors, which, unlike manufacturing, cannot be mobile in response to low labor costs elsewhere. Janta, Ladkin, Brown, and Lugosi (2011) argue that there is little dispute that tourism employment is an important component and driver of human mobility.
Baum (2010) argues that an aging population, however, is likely to have the most significant impact on the hospitality labor market (and the function of HR management within it) of both developed and developing countries. In the case of the latter, the impact will be through the pull of migration to developed economies as a means of sustaining standards of living and providing the care necessary for aging communities. As a result, key workers in developing countries will continue to leave and affect the quality and competitiveness of the local hospitality sector. In the case of developed countries, considerations such as pension deficits, provision of suitable housing, and social security are likely to keep older workers in employment for longer, potentially benefiting flexible work environments such as those in hospitality. However, sustaining workers in employment for longer or recruiting an older generation as first-time hospitality workers will have implications for both HR development/training in the workplace and for the design and management of the workplace and organizational environment.
Demography and migration, then, are changing the complexion of the workforce available to the hospitality industry, both in terms of its age profile and its ethnic mix. These challenges to the role of HRM are further compounded by the changing characteristics and workplace expectations of those younger employees who do enter the industry, perhaps best encapsulated in the notion of “Gen-Y” workers.
This new generation of workers is often cited as being “radically” different in their attitudes and approaches to employment (Solnet & Hood, 2008). For the hospitality industry, with its traditional reliance on younger workers to fill its customer-facing positions, this generation has presented a significant challenge to management, in terms of attracting, motivating, engaging, training, and communicating with them effectively (King, Funk, & Wilkins, 2011). Although there is a robust debate about the empirical evidence to support the contention that measurable and enduring differences exist in the work-related attitudes of successive generations of employees (see, e.g., Deal, Altman, & Rogelberg, 2010), the problems inherent in successfully managing “Gen-Y” employees are among the most cited current HR challenges by many hospitality owners, managers, and HR professionals (King et al., 2011; Solnet & Hood, 2008). Regardless of the lack of available research evidence, HRM professionals in the hospitality industry are searching for new and innovative ways to appease the perceived high demands and expectations of the Gen-Y employees while still operating within the short-term cost restraints imposed by owners and executive management.
Change of this order, then, implies significant alterations to the roles and responsibilities of those charged with the management of people in hospitality organizations, both in functional terms and in a qualitative and emotional sense. Functionally, for example, the parameters and technology of recruitment and selection change as a consequence of the amalgam of these social and demographic changes. There may also be very different legal obligations imposed on organizations and their managers as a further consequence. Qualitatively and emotionally, the demands of supporting a diverse workforce in terms of its age profile and ethnicity requires different and, arguably, wider scope skills than may have been the case in the past (Baum, 2010). Older workers perform and learn at a different pace from the industry’s traditional sources of labor and will require different, perhaps less “needy,” attention than their younger, Gen-Y colleagues (Gursoy, Maier, & Chi, 2008). We propose that demographic change, therefore, asserts new and uncharted pressures on line managers in terms of their HR functions while requiring global-reach strategic responses from HR professionals at the corporate level.
The ebbs and flows of political impact
One of the most challenging dimensions of the work of the HR professional is the necessity to remain current within an ever-changing labor/industrial relations environment (Baum & Szivas, 2008). In terms of the devolved HR function and the “part-time” HR manager in many hospitality businesses, the responsibility to keep abreast of change becomes even more onerous. Long-term change, in relation to employment law, can be said to reflect social change and the collective aspirations and value of the community—for example, the progressive reduction and elimination of child labor in most countries or enhanced benefit entitlements relating to maternity and paternity leave which have been put in place. These types of provisions, once in place, are rarely retracted and, from the perspective of the manager with an HR brief, their adoption in practice is probably not too challenging.
However, the labor/industrial relations context in some countries can also be highly politicized and subject to ebb and flow in response to the ideological bent of those currently holding political sway, resulting in change of a rather more unstable and short-term nature, subject to subsequent modification or revocation. Major political upheaval at a national level can portend dramatic changes to the industrial relations and HRM environment with a consequent impact on the role of HR professionals at an organizational level. Brewster (1992) and Koubek and Brewster (1995) report on this role change in the context of the Czech Republic in the early 1990s. Classically, in Western democracies, this is portrayed in terms of a left–right pendulum or, in the context of the United States, the swing between liberal and conservative policies. In such cases, the “battleground,” in simplified terms, has been about the perceived rights of the individual and the collective (trade unions) in the workplace as opposed to the needs of business, big or small. Both Australia and the United Kingdom provide case examples of environments where political change at national level, on a cyclical basis, has resulted in significant tinkering with labor law in a manner which has direct and practical impact on the roles and responsibilities of those charged with HR responsibilities. In the Australian context, R. Hall (2008) highlights the dominant role which industrial relations issues played in the 2007 Federal elections, providing voters with a clear choice in terms of workplace practice options.
Such political impact may also be reflected in terms of a specific single issue or in ideological or religious dimensions within the context of employment in particular nations. The rise of Islamist political parties in some states in Malaysia, for example, opened debate with respect to the role of women in the workforce (Amin & Alam, 2008). The enhanced rights of minority communities in the workplace, through affirmative action policies, are likewise subject to modification or removal in some countries in response to political change. In the United States, for example, these changes have seen the application of specific, statutory measures moderate into the wider, organizationally driven application of diversity management practices (Kalev, Dobbin, & Kelly, 2006; Kelly & Dobbin, 1998). Political flux brings, in its wake, a raft of changes to employment legislation and necessitates that those engaged with the HR function are on top of such changes and are able to implement their consequences in a manner that is also in line with the organization’s strategic and operational imperatives.
Boom/bust economic cycles
The hospitality industry, in most countries, operates in sensitive response to the pressures of variable demand, notably but not exclusively driven by seasonality. The impact of variable demand on the operational and marketing environment of tourism and hospitality businesses is well documented (see, e.g., Getz, 2004). Less interest has been taken by researchers in the impact of seasonality on the HR environment although Jolliffe and Farnsworth (2003) consider the impact of seasonality on a range of HR dimensions within the hospitality industry of Atlantic Canada and use this as the basis for a series of strategic responses. At a micro level, Baum (2006) discusses the impacts of variable demand on HRM practices within the daily operating cycle of hospitality businesses.
The industry, therefore, should be well inured to the impact and consequences for HRM of both expected and unexpected variations in consumer demand (Dickson, 2005). Therefore, economic boom and bust cycles should be readily accommodated within the capabilities of both strategic and operational people managers in the industry. However, there is evidence that businesses remain doggedly reactive rather than strategic in their HR responses to both boom (see, e.g., Moore & Gardner, 2004, in relation to the booming mining sector in Western Australia) and downturn (in the United Kingdom, e.g., Chartered Institute of Personnel and Development, 2010 report that a majority of businesses have reduced their HR spend in response to downturn) with little evidence of forward thinking, planning, or engagement. Kamoche (2000) tracks HRM practice in Thailand through cycles of boom and bust and shows clearly how reactivity dominates within both phases of the economic cycle. We would question whether this is a direct consequence of devolving HR responsibilities to levels where managers are forced to operate to short-term targets and their performance is primarily measured on a “here and now” basis.
Hospitality is an industry that remains highly labor intensive, notwithstanding technological innovation and change, where payroll costs are frequently the single largest item on the balance sheet (Brien & Smallman, 2011). Labor intensity goes hand in hand with the flexible characteristics of a weak labor market in hospitality which permits redeployment of labor across roles and levels together with short-term and outsourced solutions to labor demand needs (Kleinknecht, Oostendorp, Pradhan, & Naastepad, 2006). Consequently, economic upturns and subsequent downturns have direct and immediate consequences on those employed, both numerically (how many people are employed) and functionally (the skills they bring into or acquire in the workplace).
Irrespective of economic cycles, most hospitality businesses gear their HR deployment practices to the reality of volatile demand cycles which are somewhat predictable but, nonetheless, present significant operational and staffing challenges (Crotts, Dickson, & Ford, 2005). Such cycles are predicated on seasonality and other factors which militate against stable or sustainable employment practices. HR practices at times when major economic change is evident, either boom or bust, tend to be assessed and accommodated in a similar manner, focusing on short-term, operational needs rather than giving consideration to longer term strategic considerations. The HR role of the departmental manager can increasingly be likened to that involved in the just-in-time purchase of consumable supplies, usually considered a hallmark of “lean” manufacturing businesses, by tailoring the quantity of staff employed at any particular time to the short-term, predicted levels of consumer demand (Lai & Baum, 2005).
Outsourcing labor solutions have become an increasingly common response to variable demand for staff caused by both general cyclical and less predictable economic reasons. Outsourcing commonly involves the use of agencies as the source of labor but may also involve contracting individuals on a self-employed basis to undertake roles normally ascribed to full- or part-time staff on the payroll—anecdotally, a practice increasingly common in countries such as Italy and Malta. Although outsourcing is often perceived to be a measure that decreases organizational control and affects organizational culture, there is a prevailing view that many firms will continue this practice as HR outsourcing firms become more viable, as the cost–benefit swings in favor of outsourcing, and for the more administratively intensive HR tasks such as payroll and benefits (Ulrich et al., 2008).
At a macro level, the impact of economic upturn and downturn on employment in the hospitality sector can be clearly tracked both nationally and regionally. The impact, however, is not solely numerical as businesses are forced to review notional hiring standards during boom times in response to tightening labor markets (Baum & Odgers, 2001). In periods of downturn, the consequences of retrenchment can not only be, notionally, to give access to a higher skilled workforce but may also lead to the underemployment of overqualified entrants, seeking work at a level which previously they may not have considered. Both these scenarios, paradoxically, can challenge managers charged with devolved HR responsibilities in terms of the range and quality of services they are able to deliver to customers, as well as in terms of the attitudes their employees hold toward their work.
Implications for the Future
This article represents a diagnostic journey through the rapidly changing world of HRM in the hospitality sector. We have identified the complexity of this role within a sector challenged by diversity in terms of structure, size, location, consumers, and demand. We have also highlighted how aspects of a polarizing, professional HR role have spiraled downward within organizational structures in search of equilibrium at the lowest point within the management hierarchy of many hospitality businesses. We have noted and illustrated how mounting external environmental pressures affect the HR role at both ends of the pole, strategic and operational, and have used three from a wide range of potential pressures to illustrate possible consequences. In drawing these themes together, therefore, we seek to make sense of the current status and role of HR management within the hospitality industry, speculate how this may evolve in the future in light of the ever-increasing pace of change, and highlight crucial areas for academic research that will further our understanding of the interplay between theory and practice in hospitality HRM.
Our assessment of the current status and role of the HR manager in the hospitality industry is depicted in Figure 3, representing a coalescence of internal change in the allocation of HRM responsibilities within hospitality organizations and the increasingly complex external environment which predicates the context within which operationally focused line managers are expected to execute their HR roles. The coalescence we identify here is based on two paradoxical developments within the execution of the HR function. On one hand, organizations have encouraged the devolution of real-time HR activities to the lowest possible level within the management hierarchy across a much wider spectrum of responsibility than was the case in the past. Thus, the operational manager, trained to cope with dimensions of internally focused individual and team management within a broadly organizational behavior brief (motivation, interteam relationships, role allocation, and responsibility) has been catapulted into a role that is externally facing and has clear strategic implications in its execution (mediating the impact of external labor market changes, labor cost budgeting, recruitment, and development). Impinging on both dimensions of this devolved role are the increasingly complex consequences of a fast changing social, demographic, political, and economic context which those with professional HR responsibilities at an operational level must recognize and accommodate. Success in this role would therefore demand sophisticated and analytically attuned external antennae.
External and Internal Pressures Forcing the Polarization of Human Resource Management (HRM)
Our evaluation of the 360 degrees of internal and external pressure on the role of those tasked with HR responsibilities in hospitality has raised more questions than it has answered. These “unknowns” provide a solid basis for future academic research in this area. We now present the implications that have emerged from our exploration, and propose that these, taken together or as individual research questions, form a fruitful and prolonged agenda for future research.
First and foremost, it would be useful to know what the HR manager actually “looks like” across the spectrum of hospitality businesses. By this we mean, what HR roles, functions, and responsibilities exist in different types and sizes of companies in the various sectors of hospitality, and who is it that is actually performing these HR-related roles? From this point, is it then possible to investigate the extent and nature of devolution across the range of businesses? How prevalent is the practice of devolving HR functions to the operational line managers, and specifically which HR functions are line managers asked to perform? Is devolution more commonplace in larger multinational companies (assuming that smaller hospitality businesses have always had to rely on multitasking line managers)? In the case of organizations that have designated and specialized professional HR managers, what is it that these managers are primarily tasked with accomplishing? To what extent do sustainability principles inform HRM thinking at a strategic level in organizations?
Another pertinent question relates to the rationale for devolving HR responsibilities down the line. We wonder whether devolution has been a proactive strategic initiative in the hospitality industry, or rather, whether it has been a consequence of cost cutting, short-term profit goals and, perhaps, implicit cynicism about the value of professional HRM. We are drawn to an assessment that role changes and devolution of HR responsibilities have evolved without clear consideration or understanding by organizations of either the workload or competence consequences for those at the “coalface” of hospitality businesses. Although a seemingly intuitive and logical conclusion based on the extant literature and ample anecdotal evidence, our assessment needs verification through empirical research. The HRM function is often cited as critical to the success of hospitality businesses, although nonetheless it has been depicted as a somewhat stand-alone activity disconnected from the day-to-day operations performed by frontline employees (Raub et al., 2006). The administrative burden placed on many HR managers is attributed as an explanation to why the HR function in hospitality is often not viewed as central to strategic decision making (Tracey & Nathan, 2002). As a result, we wonder if those tasked with the HR function are more likely to just perform the next urgent activity (hire, fire, pay) without regard for planning, long-term thinking, or current best or sustainable HRM practice. Indeed, do certain HR tasks and functions get “lost” in a devolved structure, and if so, which ones? An investigation into corporate planning as it relates to the HR function in individual hospitality business units is warranted here.
We acknowledge the argument that devolution of HR responsibilities in hospitality has some potentially beneficial outcomes. Hospitality, of course, by virtue of its dispersed structure, provides an ideal context within which devolution can be fostered. Indeed, it is arguable that devolution in practice, if not in name, has been commonplace in the industry for many years. Kay and Russette (2000), in a wide ranging review of hospitality management competencies, track a number of studies which highlight human relations or HRM skills as central to the operational management role in the industry. Their study highlighted the central role of HR functions such as training, mentoring, and coaching; developing positive employee relations; and handling grievances and managing employee problems, among others. Therefore, the expectation that managers will execute a range of HR functions in the sector appears to have been long in place. There are those that argue that closer involvement with the HR function through devolution is an opportunity to place HRM at the “center-stage” of a people-focused organizational strategy that is embraced by all participants (Perry & Kulik, 2008; Renwick, 2003). It would be valuable to evaluate the extent to which line managers in hospitality see performing HR functions as central to their role and whether this aligns with their perceptions of their own organization’s strategy. It is logical to argue that where there is alignment between line managers seeing themselves as primary executors of the HR function and line managers believing that their organization is focused on employee well-being, there is greater potential for improved HR outcomes (and therefore by extension, according to the resource-based view of firms, improved business outcomes). However, it remains in question whether junior and middle managers in practice have the appropriate skills to execute these functions.
Our contemplation of the devolved HR responsibilities in hospitality has drawn us to the troubling conclusion that these lower level line managers are ill prepared for their role in terms of initial education and subsequent development. Furthermore, we would contend that the core job responsibilities of such managers give them little or no time to engage with the complex external context on which their people management roles increasingly depend. The implications of such a conclusion have far-reaching consequences in terms of employee retention, job satisfaction, and motivation as well as in terms of customer satisfaction, retention, and profitability. Research centered on the extent, nature, and timing of HR-specific training for frontline managers would be welcomed here. Also, it may be found that particular hospitality companies are quite successful in maintaining a devolved HR structure—in which case we would ask, what are the features of “best practice” in this area, which “bundles” of practices enable such success, and in which contexts?
So far we have only considered the research implications of the internal aspects of the 360 degrees of pressure on the hospitality HR function—we now turn our attention to the external pressures. We asked ourselves how likely is it that those who serve in the HRM function are looking outside their businesses to the swarm of looming challenges they will very likely confront in coming years. Some external pressures obviously cannot be controlled by the line manager alone, take for instance demographic change. Even in the case where an individual line manager recognizes the impending risks posed by an unbending commitment to hiring young employees (Magd, 2003) and maintaining the autocratic management style so commonplace in hospitality (Haynes & Fryer, 2000), said manager’s ability to address such issues can only be effectively realized through corporate support for cultural change through strategic organization-wide responses. If best practice or sustainable HRM is purported to be central to an organization’s strategy, then what systems for feedback, evaluation, and improvement exist between the executors at the “coalface” and the strategists at corporate headquarters? In other words, to what extent is the actual experience of the line as a result of external pressures used as an input into strategic planning?
Our final questions relate to the practical implications of devolved HR management under external pressure. What is the impact of an increased portfolio of responsibilities (i.e., the extra HR roles in addition to the accepted operational duties) on business outcomes? Are companies more or less successful in achieving their stated goals (e.g., customer satisfaction and repeat business, employee engagement and turnover, revenue and profits) when line managers take on board those tasks that were traditionally the domain of professional HR managers? Is there then an empirically defensible case for (or against) “devolution optimism”? Is devolving HR functions amid a backdrop of mounting external pressures a sustainable long-term corporate strategy for hospitality businesses?
Concluding Remarks
We see a future imperative for hospitality organizations to provide far more strategic and sophisticated support to their operational management in executing their complex HR functions. Devolution is all very well but it must be undertaken without compromising the high words and good intentions implicit in people-focused organizational marketing and strategic blandishments. Recommendations to manage the 360 degrees of pressure currently exerted on the devolved HR function could include extra time and role space for line managers to engage effectively with their additional HR responsibilities, targeted training and development for all facets of HR roles and functions, as well as associated external pressures, and a real-time, user-friendly communication channel between the “coalface” and the “HQ.” Failure to recognize the importance of such actions is likely to lead to functional neglect and failure in terms of devolved HR within an increasingly complex and challenging workplace environment.
The future of the professional HRM function within the hospitality industry cannot be predicted with any level of clarity. We have not considered HRM in context of the small hospitality business or, indeed, the local/regional chain where multifunctioning in all areas of management has had a long tradition. In the future, large, particularly multinational, hospitality organizations will need to strike a strategic balance in their HRM between the globally all-encompassing and the locally sensitive. There is a need to align a global HR vision with wider organizational goals while simultaneously allowing local managers to engage with the specifics of their national and regional environment in a strategic but place-sensitive way.
Our introductory statements referred to the mottos and statements that many companies make about the centrality of their employees. Despite almost ubiquitous blandishments to the contrary, it is difficult to avoid the conclusion that a more accurate corporate strapline might be “We care about people, and they are vital to our firm’s success–but we do not invest in them because it costs too much in the short run.” Given the complexities of likely change into the future, operating within the multiple layers of this spider’s web presents a challenge with which hospitality leaders must engage if functional HRM is to move beyond tacit support for such a mind-set.