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Case Study Three: Approaches to HRM in the hotel Sector

As outlined in Box 3.1, HRM in the hotel sector is strongly influenced by the variability of demand,
particularly in those establishments serving the seasonal tourism industry. he hotel sector is
also heavily dependant on the external labour mar!et as staff turnover is typically high and,
therefore, a ready supply of both s!illed and uns!illed labour is often re"uired to meet customer
demand. his high turnover often results in problems of s!ills shortages in !ey operational areas,
such as #aiting or !itchen staff. Ho#ever, #hile the hotel industry context often acts to constrain
managers$ choice in HRM strategy, policies and practices, evidence suggests a variety of
approaches to the staffing and managing the #or!force. he follo#ing case studies contrasts the
employment practices adopted in t#o %similar$ hotels operating in the same &' city.
The Mercury Hotel
The Mercury is a franchise establishment of a large &( hotel chain. )t is *+star rated and mainly
serves the commercial mar!et catering for business clients and hosting conferences and
seminars. )t has almost 3,, guestrooms, is located in the centre of a large &' city and directly
employs over -,, members of staff. #o+thirds of employees are employed full+time on 3.+hour
contracts #ith #or!ing times varying from #ee! to #ee!. Any hours #or!ed beyond this are paid
as overtime. he remaining third of employees are part+time /up to -0 hours per #ee!1. his
structure appears to provide a balance bet#een the need for flexibility in predictably busier
periods throughout the year and as cover for short+term increases in demand. Management also
ma!e extensive use of return staff, mainly students #ho live in the area during term time or
holiday periods, to provide a further element of labour flexibility. (uch employees are seen as a
ready supply of trained labour but #ho have no claim to minimum hours, that can be shed #ith
limited notice and #ho are most #illing to #or! unsociable hours. 2urther shortfalls in labour are
met either by other casual labour /e.g. recruited via temping agencies1 or by increasing
permanent staff hours at short notice. 3ontracted casual employees are %on+call$ so that
managers can demand that employees #or! %as and #hen re"uired$, principally being used for
functions such as #edding receptions. Management see!s to minimise the potentially damaging
effects on service "uality by minimising the use of %temp$ casuals and ensuring that, #hilst
providing a degree of flexibility, most employees are a known quantity and have received at least
some training by the hotel. Moreover, rather than relying solely on numerical forms of flexibility
/altering staffing levels in line #ith demand1, The Mercury attempts to meet the challenge of
variable demand by training members of staff across a range of different areas4 a rudimentary
form of s!ills flexibility. he approach to staffing adopted at The Mercury appears to reflect a
compromise bet#een the need for labour flexibility and employee stability #ith management
attempting not to overly manipulate employee hours simply to meet the direct needs of the
)n terms of employee involvement and communication, formal departmental meetings are held
#ee!ly for staff to discuss operational aspects of the hotel. 5pen staff meetings are held monthly,
for both permanent and casual employees, the purpose of #hich is t#ofold. 2irstly, to pass on
information on the performance of the hotel and secondly, to act as a forum in #hich staff can as!
"uestions directly of the general manager. Most importantly, a consultative committee, !no#n as
the %6mployee 2orum$ meets monthly and is chaired by the hotel general manager or the
personnel manager. his forum is comprised of elected staff representatives from each
department and allo#s staff to raise issues related to their #or!ing environment. )t is also #here
recognition is passed on to staff for good service and employee representatives vote for an
%employee of the month$.
(taff turnover is not considered a significant problem at The Mercury albeit #ithin the context of
the industry. Management reported annual turnover rate of approximately 307 /the company
target is -07and turnover in many hotels can be considerably higher1. Ho#ever, the HR manager
claimed to do a significant amount of #or! to reduce this figure, particularly in the recruitment
process. 2or example, department managers received training in intervie#ing techni"ues and
ensured that candidates are made a#are of the idiosyncrasies and demands of the industry. )n
addition, staff retention is targeted by ensuring staff development is offered to capable
employees and good performance is re#arded and recognised. urnover is mainly attributed to
mista!es made in recruitment and candidates$ misconceptions about the industry generally,
specifically pay levels and #or!ing hours. his is reflected in the fact that departing staff rarely left
to #or! in other hotels, unless at a higher level, but tended to leave the industry. Absenteeism at
The Mercury is considered acceptable. he personnel manager at the hotel suggested that an
environment in #hich %team+#or!ing$ has evolved at the hotel and a degree of peer pressure
discourages unnecessary absence.
Management at The Mercury considered s!ills shortages to be a huge problem in the industry,
compounded by the highly+competitive nature of the local labour mar!et #here it is felt that during
most of the year most employees #ould be able to leave employment at one hotel and gain
employment five minutes down the road in another. he HR manager claims ho#ever that the
inherent local s!ills shortages are not felt as !eenly in this hotel as in others because their image
as a %good employer$ is useful in attracting and retaining staff. he pac!age of benefits available
to staff are described by management as %exceptional$ and are claimed to be central in recruiting
and retaining high+"uality, s!illed employees.
The Luna Hotel
The Luna is located approximately 1 mile from The Mercury and is part of a large &' hotel chain.
)t has -,1 rooms, is also *+star rated and employs 1-8 members of staff. )t serves both the
commercial mar!etplace 9 albeit #ithout conference facilities 9 and the typically short+stay
tourism mar!et. he hotel #as sub:ect to a ta!eover six months ago and is in a period of
transition, not least in the #ay in #hich HRM is conducted. Again, t#o+thirds of the #or!force is
full+time, but the current management are see!ing to significantly reduce this figure and claimed
they are overstaffed #ith permanent employees. hey plan not to replace leavers in certain
departments or replace them by offering #or!ers flexible contracts and express a #illingness to
rely heavily on casuals and agency staff to plug gaps in the #or!force. 6ven permanent
employees are no# employed on significantly less favourable terms than prior to the ta!eover.
Management claimed that this provided %#or!ing+time flexibility$ for both employer and employee.
he number of hours and shift patterns are ad:usted and planned on a #ee!ly basis according to
business levels #ith both parties able to re"uest more or less hours in a given period. ;o attempt
had been made to train employees across a range of tas!s to provide greater s!ills flexibility nor
is there any intention to do so given the stated desire to !ept training costs to a minimum.
6mployee communication at The Luna is predominantly one+#ay. <eneral manager briefings are
held for all staff every "uarter to inform them about organisational and establishment strategy and
managerial decisions. Managerial meetings and communication bet#een heads of department
and employees is limited to one+to+one meetings as and #hen re"uired, instigated by either party,
usually to deal #ith grievance or disciplinary issues. here is no dedicated structure or schedule
to these intra+departmental meetings although some departments imposed some formality by
holding five+minute %chats$ bet#een departmental heads and staff every month. 5ther
departmental managers preferred employees to approach heads of department to raise issues.
hese one+to+one meetings appeared to be the only means of up#ard communication. here is
no other provision for employee consultation, suggestion or participation in decision+ma!ing. )t
appeared that even the general manager$s briefing is merely a communicative device #ith little
provision for employee feedbac!.
he hotel had experienced high levels of labour turnover since the ta!eover, some of #hich is
li!ely to be as a result of the upheaval caused. Regardless, labour turnover is reported to be both
problematic and beneficial at The Luna depending on the staff involved. 5n the one hand,
employee turnover is considered undesirable because of the costs involved in recruiting ne#
members of staff, especially s!illed #or!ers such as chefs and maintenance #or!ers. 5n the
other hand, ho#ever, employee turnover is considered a source of employment flexibility and
%natural #astage$ of staff vie#ed as positive especially #here poor performing staff are
concerned. he general manager claimed that the large labour mar!et in #hich the hotel
operated meant that staff are readily available, albeit often lac!ing re"uired s!ills. Management
coped #ith this apparent s!ills shortage by minimising a reliance on particular s!ills or providing
rudimentary training. he high level of staff turnover often re"uired management to adopt
expedient approaches to filling vacancies, even in important frontline operational /for example,
#aiting and front+of+house1 or s!illed areas of #or!. As the HR and training manager suggested,
When someone leaves ust like that youre in a hole and you have to !et someone in" then
you cant afford to wait a week of so for references to come throu!h" when youve !ot a ob to fill#
$ou take a chance%#
1. )n #hat #ays does the environmental context of the t#o hotels constrain or present
opportunities for strategic choice= Ho# do contextual factors account for the
differences in approach to HRM=
-. 2rom a %best fit$ perspective, #hich of these hotels #ould appear to have best tailored
its HR policies and practices to its competitive strategy=
3. >hat elements of %best practice$ HRM has the Mercury Hotel adopted and #hy might
it have done so=
*. ?ra#ing on the resource+based vie#, #hat elements of people resources could be
exploited to create competitive advantage in the hotel industry=