hospitality and tourism industry
At this time, we are facing a global economic crisis, which also impacts the hospitality and tourism industry in many countries, such as United States, United Kingdom and so forth. Even though the growth of global tourism business is estimated to stay still or even decrease by 2%, the tourism sector can take part to improve the global economy (World Tourism Organization 2009). International tourism becomes an instrument of job creation, poverty alleviation, reduction of gender inequality and protection of the natural and cultural heritage, so this sector can decrease economic unsteadiness and weakness (Benavides & Perez-Ducy 2001).
As a service industry, it is important for the tourism sector to have an excellent HRM functions because this area is highly labour intensive and able to increase the company’s performance especially for multinational companies, which have operation in many countries with different background. For example, if the company has the problem of hiring appropriate employee and high staff turnover, the company’s profit can be dropped because these effects are expensive to the company (International Labour Organization 2001).
In summary, the definition of global HRM is about knowing, examining, engaging and modifying all human resource activities in their internal and external perspectives as they influence the process of organizing human resources in multinational companies to improve the knowledge of multiple stakeholders, including investors, customers, employees, partners, suppliers, environment and society (Briscoe et al. 2004). On the other hand, Morgan (1986, p.44) also create a model (shown in Figure 1) related to International HRM.
FIGURE 1 A Model of IHRM
Source: Adapted from P.V. Morgan, International Human Resource Management: Fact or Fiction. Personnel Administrator, Vol. 31 No. 9 (1986) p. 44
In this case, PCH, which based in Australia, has performed strategy to enlarge the business by acquiring the Rocks Hotel Resort, located on some 200 km from the nearest major town in the central coast of Queensland, and another resort in Thailand in the near future. The management wants to have an ideal strategic global Human Resources Management (HRM) plan, such as recruitment, training and development, employment relations and other relevant difficulties that impact upon a company’s profit, therefore the corporation has performed an inspection in the Rocks Hotel Resort to ensure that corporate human resource standards are executed there and utilized the result as a guidance to prepare a global HRM plan for the new Thailand project (Dessler et al. 2004).
1.2 OBJECTIVE
This report provides evaluation and solution about the effectiveness of HRM functions based on the Rocks Hotel Resort inspection. The result of this inspection will be utilized as a basis to prepare a strategic global HRM plan for the new Thailand project.
1.3 SCOPE
This report focuses on two key factors, which are issues and recommendation about HRM functions. Issues will be found according to the result of the Rocks Hotel Resort inspection, while recommendation will be considered based on the HRM best practice, therefore the correct functions can be applied properly for either both the Rocks Hotel Resort and the new Thailand project.
2.0 ISSUES AND RECOMMENDATION
2.1 HUMAN RESOURCE PLANNING
Assessment
During an interview with human resource manager in the Rock Hotel Resort, the written human resource policy and procedure at the hotel have not yet finished, while employee attendance and workplace injuries are also at above the standard levels.
Risk Implication
A good human resource planning, which has directly linked to the organization strategic objectives can increase the company performance successfully. In addition, human resource planning is the process of directing the company plan, which should include employment, training, development, disengagement, replacement, job rotation, benefit and compensation (Jones 2003). On the other hand, an inadequate human resource planning can make disappointment among staffs because they cannot prepare plans to improve their own career in the company, therefore these skilled and experienced staffs will be resigned shortly from the company to look for other job opportunities, which give them better career development (Kleynhans et al. 2006).
Recommendation
Firstly, a company, which has formulated human resource planning can achieve higher profits, reduce absenteeism and more effective performance management and compensation system. However, all departments should work together in the form of an integrated system to create an effective human resource planning and also should be linked with the company’s strategic objectives (Kleynhans et al. 2006).
In addition, an effective human resource planning turns out to be more critical in the multinational companies (Jones 2003). For instance, the Hilton Group, which has about 500 hotels across the world and hiring over 60,000 personnel in around 50 countries, can operate all its hotels consistently because the global human resource functions in their human resource policy and procedure have been performed properly (Maxwell et al. 2002).
As part of human resource planning, a complete set of human resource policies and procedures should be developed by the company, so all employees can agree and have same view with the employment process (Kleynhans et al. 2006). Furthermore, the company can utilize the existing policies and procedures or create the new one. Meanwhile, the person in-charge for developing human resource policies and procedures is human resource manager or the company may hire a professional consultant (McConnell 2004).
In summary, the new Thailand project should develop and implement its human resource policies and procedures to perform human resource functions effectively, therefore the hotel can have a consistent operation and also its strategic objectives can be achieved successfully. In this case, as part of PCH group, the hotel can utilize and adopt PCH’s human resource manual, but the hotel still needs to modify and evaluate each point in the policies and procedures because possibly some points cannot be implemented at the hotel. Furthermore, human resource manager can become the person in-charge for developing the human resource policies and procedures or if the hotel has enough financial budgets, the management may hire a professional consultant.
2.2 EMPLOYMENT
Assessment
Initially, according to an interview with the food and beverage manager in the Rock Hotel resort, the restaurant personnel are hired with least experience in food and beverage service, while only the attractive waitresses are recruited. On the other hand, the person in-charge in the pool and recreation area also said that no employees with lifesaving, resuscitation or pool-testing qualifications recruited at the hotel.
Risk Implication
Recruiting and then placing employees to the accurate position in the company is important to achieve the company’s goal successfully. Recruitment is explained as finding and acquiring the suitable person to occupy job position in the firm, while selection is the process of placing selected person for the available job position in the company (Dowling et al. 2004). If the company has an ineffective employment process, there are negative impacts, such as increasing human resource cost, wasting manager’s time to develop inadequate staffs, giving multiplier effect to the company’s performance, reducing the overall company’s budget and making upset some failed recruitment candidates (State Government of Victoria 2009).
Recommendation
Initially, the company should plan human resource area carefully, so the number of employees can be predicted correctly to achieve the company’s goal. If there is a shortage in the number of staffs, the company should hire new employees. Before recruiting new staffs, the company must consider the proper cost and the correct person for particular jobs, and also be consistent with the company’s policies and procedures (Kleynhans et al. 2006). On the other hand, the company can use internal sources and methods by getting people within the company or utilize external sources and methods by recruiting people from outside the organization to occupy the available jobs. Secondly, in order to get an excellent performance, the company should recruit and select staffs who work in areas that match with their abilities and expertise because they have skills, experiences and confident (Forte 2009).
Furthermore, the purpose of hiring expatriates in multinational companies is for monitoring the local operation, building expertise, assisting the company in new market and improving international management capability in order to deal with the global challenges (Chew 2004). Before sending the expatriate to HCNs, PCNs must review and consider the candidate resume carefully, such as the foreign language, the global experiences and the individual abilities because expatriate failure will create expensive cost to the company (Avril et al. 2007). On the other hand, there are four approaches to decide expatriate selection by PCNs based on working placement, such as the ethnocentric approach, the polycentric approach, the geocentric approach and the regiocentric approach (Dowling et al. 2004). Most multinational companies usually use the ethnocentric approach that means all main position in HCNs will be occupied by staffs from PCNs.
In conclusion, as a new global branch of PCH, the new project in Thailand should utilize the ethnocentric approach, although the cost will be expensive. In this case, PCH can lend long-term loan to pay compensation and benefit for expatriates in Thailand, while the hotel can return the loan regularly when its operation have performed effectively. Furthermore, it is important that the hotel considers the expatriate’s international background, therefore they can operate the hotel consistently. On the other hand, human resource manager must keep searching local employees who have skills and experiences. Expatriates can share the knowledge and build expertise to local employees, while human resource manager can develop training and development program for them. Lastly, in the future, local employees who have skills and experiences can replace expatriates in the hotel. This strategy is utilized to reduce the cost in hotel operation without threatening hotel operation itself.
2.3 TRAINING AND DEVELOPMENT
Assessment
Firstly, based on an interview with the training and development manager in the Rock Hotel resort, the long-term training has never been performed in the resort because many line managers will not let go their staff for development classes, even if classes are available. Furthermore, human resource manager informed that the resort always performs on-the-job training for new staff because staff turnover is high and more staffs are taken from the local people, but there is no evidence on the training cost. Furthermore, during an observation to the front office area, only one person on duty who recently hired is not allowed to work on the switchboard at the front desk.
Risk Implication
The key of the company’s growth and achievement relates to the skills and knowledge of its employees by performing training and development programs properly. If the companies have poor performance on training and development area, their employees cannot have skills and productivity improvement, good quality of work, loyalty to the company and individual target achievement (United States Department of Labor 2009). Training is defined as a process to increase the existing expertise, while development is a process to develop capabilities, which usually relate to job promotion (Dowling et al. 2004).
On the other hand, the lack of training and development area can also create the company to have high employees turn over and poor performance. According to a recent study commissioned by careerbuilder.com, an online job sites, these effects make thirty-six percent employees are resigned from the company because they are not satisfied with the number of training opportunities available (Watkins 2006).
Recommendation
Firstly, training and development program in many multinational companies has become an important component for human resource functions to develop employee’s skills and careers (Dowling et al. 2004). Furthermore, the company feels that training must be provided to obtain new knowledge and skills for dealing with the difficulty of the work situation, the rapid changes of organization and technology, and the rising number of employment categories, while development is created to improve the existing skills and leadership, so employees can be promoted to the higher level of positions in the company and become good leaders (United States Department of Labor 2009).
Before providing any training, the organization should consider and prepare a training plan and a specific training budget. In addition, a training plan should be created in line with the training budget (Jameson 2000). In a training plan, the company must set up training that can enhance the employee’s existing skills or educate new ones. Some companies may also create leadership or development program for generating new leaders (United States Department of Labor 2009). Lastly, as a multinational company, there will be an effective training program for the selected expatriates. It is an essential training to educate the selected expatriates about the areas of business culture, etiquette, interpersonal communication and conflict resolution (Avril et al. 2007).
In conclusion, the new project in Thailand must build training and development program properly, therefore all their local employees or expatriates can have opportunities to learn new knowledge and skills for performing their jobs effectively. Furthermore, as a long term plan, human resource manager should also plan and run the development program to produce good leaders in the hotel, especially for local employees. On the other hand, new expatriates and their families must have the cross-cultural training to understand HCNs cultures and situation, so they can work conveniently in the new assignment places.
2.4 PERFORMANCE MANAGEMENT
Assessment
During an observation to the room division area in the Rocks Hotel Resort, the executive housekeeper showed that the new staffs have given a day’s on-the-job training in room-attending duties, while the existing staffs have never been evaluated in their performance. In addition, customer comment cards about hotel operation performance for the front office area have also never been evaluated by the front office manager. These cards are kept by sales and marketing division.
Risk Implication
The performance management system is an essential tool that can lead the companies to identify, evaluate and develop the work performance of their employees, so the company’s main goals and objectives are more effectively realized. Furthermore, the effective performance management is created to improve performance, identify performance requirements, provide response relevant to these requirements and assist with career development. The lack of the performance management can emerge negative situation to employees. For example, employees have poor standards of their work performance, they cannot maximize knowledge and skills to perform their job, they cannot have regular responses on their performance and also they cannot develop their career in the company (Office of the Commissioner for Public Employment of the Northern Territory 1998).
On the other hand, the lack of the performance management can also give negative impacts to companies, such as companies cannot achieve their goals and objectives properly, and also they cannot establish promotion scheme to their employees (Central Queensland University [CQU] 2009).
Recommendation
At first, a performance management system for employees is an important component to support the success of the company. The system will become more complex if it is utilized for the multinational company, such as assessing the performance for expatriates to increase their compensation. In this case, sometimes expatriates get inappropriate performance valuation because their performance criteria in home countries are not seem familiar and accurate in the foreign culture, therefore their performance criteria should be included with the accurate selection and judgment of appraisal, host environment and cultural adjustment. Furthermore, the company applies performance management for evaluation and development as its goals (Briscoe et al. 2004).
In order to have an effective performance management, Jay Forte (2009, p.3) said that supervisors should create performance expectation for employees and letting them to tailor their own expectation. In addition, they can also discuss and give performance response frequently for improvement and development purposes. For instance, Carlo Wolff (1997, p.50) has indicated that housekeeping supervisor always hold meeting regularly in the morning with her staffs to discuss and evaluate each staff’s performance and future career. On the other hand, the company, which gives more rewards than punishment can increase housekeepers’ performance in the room division.
In summary, the new Thailand project should produce an effective performance management system to their employees for evaluation and development purposes. Furthermore, employees will be more connected with their jobs and believe that the hotel will give them good career and compensation, especially for local employees. On the other hand, human resource manager must work together with PCH to prepare the evaluation system for expatriates.
2.5 COMPENSATION AND BENEFIT
Assessment
According to an interview with human resource manager, the Rock Hotel Resort has high employee turnover which probably caused by poor compensation and benefit from the hotel.
Risk Implication
The compensation and benefit system is created to attract, keep and encourage staffs, so they can improve their performance to achieve the company’s goal. However, this system should be in the same direction with the company’s strategic plan and effectiveness. If the company pays the compensation level higher than the company’s payment ability, the company’s goal cannot be achieved. On the other hand, the competent employee can also leave the organization to look for better job opportunities, if the compensation level is low (Phillips et al. 2003).
Recommendation
Firstly, many researchers believe that compensation and benefit program is linked with the employee’s dedication to the company. In this case, the compensation and benefit system can motivate and develop work performance, and also improve employee’s loyalty to the company (Storey 1995).
In order to have effective compensation and benefit policies, the multinational company should formulate policies to be in line with the company’s goal, attract and keep employees, assist the movement of international staffs, and consider justice and uncomplicated administration. Furthermore, the key element of compensation and benefit system for employees is base salary, hardship premium, allowances (housing, education, and so forth) and benefits, such as pension plan, medical coverage and so on. On the other hand, expatriates usually want the company’s policies to cover a financial security in the form of benefits, social security and living cost, opportunities to enhance their financial through income, and also expect some allowances, such as housing, children education and so on. (Dowling et al. 2004).
In summary, the new project in Thailand should prepare an ideal compensation and benefit system, which can give benefit for either both employees and the hotel. Initially, local employees can acquire better compensation, so a high employee turnover can be avoid because these employees will be more loyal and connected with the hotel. Secondly, if the hotel wants to hire expatriates, they need to ensure that all compensation structures are paid, such as housing, relocation, and so on because good income and facility will support their work performance at the new place. Lastly, the compensation that paid by the hotel should be consistent with its goal and performance.
3.0 CONCLUSION
At first, the multinational company, which operates in tourism sector as a service business should have an effective global HRM in order to increase its performance. This area has included planning, staffing (recruitment, selection, and placement), performance management, training and development, compensation and benefit and industrial relations.
Most multinational companies have considered employing expatriates for their new global branch. Even though it is costly to hire expatriates, the new branch of the organization will obtain many benefits from them. Before employing expatriates, the hotel should ensure that expatriates have good international background. Initially, the hotel can improve and achieve goal from its operation, and also its operation can be consistent with the head office or other existing branches of operation. Secondly, expatriates can contribute their knowledge and skills to local staffs, so local staffs can replace the expatriate’s position and become an upcoming leader in the hotel.
As it is an expensive cost, the new branch can ask for a long-term loan to head office. The loan can be utilized to pay compensation and benefit for expatriates. After the hotel operation run successfully, the hotel must pay back the loan regularly and replace the expatriate’s position to local employees who have skills and experience. This strategy is to reduce cost in hotel operation without threatening hotel operation itself.
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