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 organisation. )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. 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. 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

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# $ou take a chance%# Questions 1. )n #hat #ays does the environmental context of the t#o hotels constrain or present opportunities for strategic choice= Ho# do contextual factors account for the differences in approach to HRM= -. 2rom a %best fit$ 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=