Hospitality Workforce Best Practices EXPERTISE WITH COMPLEX, SEASONAL HR NEEDS. eguide

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1 eguide Hospitality Workforce Best Practices EXPERTISE WITH COMPLEX, SEASONAL HR NEEDS HIRING FOR VALUES A different perspective on better customer service TYPES OF TRAINING Support your organizational goals EMPOWER EMPLOYEES Increase employee retention and customer experience REWARDS AND RECOGNITION Cost effective and proven to work IFC2 BEST WORKFORCE PRACTICES IN HOSPITALITY

2 Table of Contents ABOUT THE STUDY... 3 EXECUTIVE SUMMARY... 3 THE HOSPITALITY WORKFORCE... 4 RECRUITING TO YOUR VALUES... 4 INVEST IN TRAINING... 5 EMPOWER YOUR EMPLOYEES TO EFFECT CHANGE... 5 RECOGNIZE THEIR VALUE... 6 CONCLUSION... 7 REFERENCES... 7 Disclaimer: The contents of this white paper have been prepared for educational and information purposes only. The content does not provide legal advice or legal opinions on any specific matters. Transmission of this information is not intended to create, and receipt does not constitute, a lawyer-client relationship between TriNet, the author(s), or the publishers and you. You should not act or refrain from acting on any legal matter based on the content without seeking professional counsel.

3 About the Study This study focuses on the unique characteristics of the workforce in the hospitality industry and the specific human resource management (HRM) challenges that affect it. Using models and best practice cases, it highlights the innovative ways companies have addressed these issues and suggests ways in which a small to midsize company can use these strategies. Executive Summary When compared with other industries, hospitality stands out due to the unique characteristics of its workforce. A disproportionate number of workers are part time, students, young mothers and young people with lower academic or skill qualifications. Due to the transient nature of this workforce, there are inherent challenges in creating a long-term HRM strategy. The specific challenges that do not align with a hospitality company s goals and trajectory are: reliance on an informal recruiting process, higher-than-average employee turnover rates, low motivation and company loyalty among employees, and weaker or less obvious career development avenues. Informal recruiting process High employee turnover rates VALUES- BASED RECRUITING INVEST IN TRAINING RECOGNIZING AND REWARDING VALUE EMPOWER EMPLOYEES TO AFFECT CHANGE Weak career progression opportunities Low motivation and company loyalty Employers should recruit to the values that align with their organization s goals and mission rather than for a particular skill set, which employees could acquire through training. Investing in initial training significantly improves employee retention and performance. Not only will this create a better-trained workforce, it will also allow a company to build a training cadence and structure that mirrors their primary goals for customer satisfaction. BEST WORKFORCE PRACTICES IN HOSPITALITY 3

4 Alongside training, employees need to receive the tools, autonomy and experience to act in unsupervised settings. As customer interactions occur for the most part outside of a tightly supervised environment, building an employee s ability to be a company ambassador helps improve performance and build company loyalty. Finally, rewarding and recognizing employee efforts, with a thoughtfully constructed program of monetary and non-monetary recognition, allows a company to acknowledge, incentivize and retain top people as they work toward better individual and team performance. The hospitality workforce There is a disjuncture in the perspective of employers and employees with respect to the main causes of hospitality labor turnover. While employers blame the transient nature of their workforce (students, young people and young mothers) on their inability to retain staff, employees themselves cite low pay as a reason they switch employers, although the International Labour Organization found career development and lack of benefits to be of even greater importance. 1 These circumstances have contributed to a pattern of personnel problems in hospitality, including low wages, work hours and shift patterns that are not family-friendly, poor or non-existent career development, an over-reliance on informal recruitment, and use of seasonal employment. 2 Short-term imperatives lead to short-term managerial responses to recruitment, selection and basic training, and adversely affect the development of existing employees. These issues are exacerbated by the nature of the sector, where managerial decisions are driven by short-term imperatives. This leads to short-term responses to recruitment, selection and basic training, and adversely affects the development and career paths of existing employees. HRM is extremely useful when trying to align an organization s practices to support its service model. Recruiting to your values HRM is extremely useful when trying to align an organization s practices to support its service model. This is especially true for recruitment practices and the expected yield of the workforce. Recruiting in the hospitality sector involves looking for people with an aptitude that serves the company s end goal. 3 Here, a high service, quality hotel would need employees that have an aptitude for customer care. A real example of such recruitment in action is the Taj group of hotels. Ranked in the top 20 hotels by Condé Nast Traveler magazine, the Taj is known for its quality, highly trained employees and going the extra mile for customers. A large part of the Taj s extreme customer centricity can be attributed to the values-driven recruitment strategy that the group uses to identify recruits. The group prefers to identify recruits that hold traditional Indian values, which would translate well into high quality customer service. To accomplish this, the group recruits in the hinterlands (rather than the main cities), where values such as respect for elders, humility, consideration of others, discipline and honesty still hold sway. Its recruitment team starts in small towns and identifies schools with good teaching standards, then relies on the school s staff to help them identify prospective candidates. The recruiters primarily look for three characteristics: respect for elders, cheerfulness in the face of adversity, and ambition. Once the recruiters are satisfied that they have found candidates to fulfill these criteria, they are willing to train the staff in whatever they lack regardless of academic aptitude, qualification or readiness. 4 The way they recruit enables them to train a resilient class of committed staff who are loyal to the company and willing to work hard to achieve their goals. 1 International Labour Organization, Human Resource Development, Employment and Globalization In the Hotel Catering and Tourism Sector.(Geneva: ILO,2001). 2 Dennis Nickson, Human Resource Management for the Hospitality and Tourism Industries (New York: Routledge, 2013). 3 Kim Hoque, Human Resource Management in the Hotel Industry (New York: Routledge, 2000). 4 Deshpande, Rohit and Anjali Raina, Ordinary Heroes of the Taj (Boston: Harvard Business Review, 2011), 11(89), BEST WORKFORCE PRACTICES IN HOSPITALITY

5 Organizations can create appropriate HRM practices by aligning them to defined market segments. Invest in training A successful company s values and competitive strategy are aligned to their HRM practices, especially with respect to training. Understanding the end goal of the corporation, and the interaction model it would like to establish with clients, is essential to building the correct workforce through recruitment and training. Lashley and Taylor suggest that organizations can create a fit between functional areas and HRM practices by aligning them to strategically defined market segments. Two firms illustrate this difference clearly. The Marriot hotel chain offers a mass service model that requires a high degree of labor contact with customers, but a limited amount of customization, which allows it to provide a standardized, expected service across locations. Therefore, their recruitment efforts should align with applicants who are comfortable providing high service quality to customers. This level of service becomes Marriott s point of difference against competitors. The company should focus its training efforts on high service quality in all locations. The performance quality and skill set the company prioritizes should be the value that affects customer retention and brand equity. McDonald s, on the other hand, subscribes to an HRM model that allows very little discretion or autonomy to employees and even trains them with scripted interactions. As the focus of McDonald s offering is on the tangible product and speed of delivery to the customer, the organization uses its HRM style to cultivate the strategic drivers, such as service delivery, in order to achieve their corporate goals. 5 These examples illustrate the manner in which using HRM practices that align with a company s strategy can enhance the training experience and help companies achieve their primary goals. Empower your employees to effect change In hospitality, customer engagement and satisfaction are paramount concerns. The concern for any company is not only employee training that creates the right customer environment, but also to enable them to engage and increase customer satisfaction to help build a robust, loyal client base. Research shows that employees make 70 to 80% of their contact with guests while unsupervised. 6 Given this data, it is practical Employees make 70 to 80% of their contact with guests while unsupervised. to train employees to be able to be proactive regardless of the situation they are in. Creating training and HRM practices that tie employee behaviors to the core values of the business would allow them to go that extra mile without prodding or instruction. British Airways successfully created such a campaign when it sought to increase the customer responsiveness of its front-line staff. 7 Putting People First and Winning for Customers were some of the initiatives that encouraged teamwork, enhancing quality procedures and equipping staff with multi-lateral skills. 5 Lashley, Conrad and Stephen Taylor, Hospitality Retail Operations Types and Styles in the Management of Human Resources, Journal of Retailing and Consumer Services (New York: Elsevier, 1998), 5(3), Deshpande and Raina, Ordinary Heroes of the Taj, Grugulis, Irena and Adrian Wilkinson, Managing Culture at British Airways: Hype, Hope and Reality, Long Range Planning (New York: Elsevier Science, 2002), 35(2), BEST WORKFORCE PRACTICES IN HOSPITALITY 5

6 Recognize their value Rewarding employees is an essential method of achieving the institutional goals of attraction and retention, improving or maintaining performance and complying with employment legislation. 8 The type of employee reward can speak to key strategy objectives and play a pivotal role in employee relations. SUPPLEMENTAL BENEFITS Works well as an employee perk, but can have adverse effects when management uses it as a buffer against external factors. MONETARY REWARDS Can work as an extrinsic motivator to increase and maintain employee performance or desired strategic outcomes. RECOGNITION AND PRAISE Builds company loyalty for employees, boosts morale and fosters a sense of intrinsic motivation in employees. One way of creating financial rewards is to provide supplemental employee benefits, which might be hard for them to acquire themselves. Starbucks, for example, provides employees who have at least 240 hours of service over three months with exemplary benefits such as free tuition, Starbucks stock and free coffee. By providing employees with the opportunity to earn one of more than 40 online degrees from Arizona State University, Starbucks is making a considerable investment in its workers. 9 The drawback in this method is that due to short-term goals, management is quick to use these benefits as a buffer against external factors. Not only does this have an adverse effect on their employee relations, but can result in employees seeking legal protection for these benefits. Another type of reward links performance reviews to pay increases. Quick service food chain Pret a Manger links any pay over the fixed pay rates to variable performance and retention top-ups. 10 As a result, the rewards are seen as high performance motivators. Rewarding employees can speak to key strategy objectives and play a pivotal role in employee relations. Employees crave non-monetary rewards from work as well. Recognition, especially from direct supervisors, can be a powerful motivator in the workplace. The Taj group insists on timely recognition of service and that the recognition comes from direct supervisor of the employees. 11 As employees consider their direct supervisor s appraisal to be the most critical, they are likely to be even more motivated by the recognition and rewards tied to such positive feedback Nickson, Human Resource Management, Victor Luckerson, These Are all the Awesome Benefits Starbucks Baristas Get, Time, June 16, Michael Armstrong and Duncan Brown, Strategic Reward: Making it Happen (Philadephia: Kogan Page, 2006), Deshpande and Raina, Ordinary Heroes of the Taj. 12 Nickson, Human Resource Management. 6 BEST WORKFORCE PRACTICES IN HOSPITALITY

7 Conclusion Given the nature of the hospitality industry and the unique characteristics of its workforce, companies should be cognizant of the short-term imperatives that drive their managerial decisions and find solutions to create robust HRM strategies with respect to recruiting, training, retaining and rewarding their employees. Using best practices established by well-known brands, companies should employ four key principles at the forefront of their HRM strategy to overcome these challenges effectively. They should match recruits values to company values and mission, and invest in early training of employees to ensure quality as well as to build employee loyalty. Following these principles, the company should empower their employees to function in the interests of the company even in unsupervised situations, and finally, should employ a hybrid reward system that integrates monetary and non-monetary recognition and rewards to ensure an engaged and motivated workforce. References Armstrong, Michael and Duncan Brown. Strategic Reward: Making it Happen. Philadephia: Kogan Page Deshpande, Rohit and Anjali Raina. Ordinary Heroes of the Taj. Boston: Harvard Business Review Grugulis, Irena and Adrian Wilkinson. Managing Culture at British Airways: Hype, Hope and Reality. Long Range Planning. New York: Elsevier Science Hoque, Kim. Human Resource Management in the Hotel Industry. New York: Routledge International Labour Organization. Human Resource Development, Employment and Globalization in the Hotel Catering and Tourism Sector. Geneva: ILO Lashley, Conrad and Stephen Taylor. Hospitality Retail Operations Types and Styles in the Management of Human Resources. Journal of Retailing and Consumer Services. New York: Elsevier Luckerson, Victor. These Are all the Awesome Benefits Starbucks Baristas Get. Time. June 16, Nickson, Dennis. Human Resource Management for the Hospitality and Tourism Industries. New York: Routledge BEST WORKFORCE PRACTICES IN HOSPITALITY 7

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