Human Resources In The Hospitality And Restaurant Industry

2122 words - 9 pages

Human Resources in the Restaurant and Hospitality Industry


In the restaurant and hospitality industry, the manner in which human resources (HR) management is handled is largely dependent on the size of the company. This can present problems for smaller organizations that may not place a large emphasis on HR management until it’s too late. Many companies are corporate-owned and HR management processes are established at higher levels than just the specific locations where a majority of employees work. In smaller organizations, however, these policies are typically not established beyond the most basic, simplistic measures. These problems can largely be mitigated by placing a ...view middle of the document...

Nowhere are these ideas more apparent than in the hospitality industry. HR remains one of the key challenges decision makers face. Industry leaders in both the hotel and restaurant industries report human capital challenges as the problems that "keep them awake at night" (Enz, 2001,2004). Hospitality leaders are concerned because in service firms, the success of products depends on their delivery by employees. Thus, service organizations rely on their employees to create memorable experiences that develop a loyal customer base and ultimately carry out the firm's strategic initiatives (Liao & Chuang, 2004; Skaggs & Youndt, 2004). Yet, most hospitality organizations operate with extremely tight margins. Many of these companies face incredibly turnover and find it challenging to attract, retain, and develop a talented labor pool capable of creating relationships with customers that result in repeat business. At the same time, most organizations also are required to offer immediate, oftentimes significant returns to their investors. When salaries and wages represent the number one expense item on the profit and loss (P and L) statement, decision makers find it difficult to justify increased investments in HR, as any additional pay or training budget cuts into immediate profits.
The challenge decision makers face is twofold: How can organizations recognize the value associated with their human capital, and how can they make better decisions to manage the associated investments? While employee behaviors are difficult to predict, observe, and measure, investments in employees still need to be managed. While a great deal of research in professional service firms, such as law and medical practices, focuses on the value employees bring to their organizations as assets (i.e., Hitt, Bierman, Shimizu, & Kochhar, 2001; Kannan & Akhilesh, 2002), very little research has considered the value of employees performing low-skilled service work, such as those hired for hotels, restaurants, and other hospitality service organizations. With annual turnover often climbing over 100%, the common practice has been to minimize investments in employees, as they will likely soon leave the business. What is known from research is that employees as a form of human capital have knowledge, skills, and abilities that can be applied to their work to generate tangible value for the organization (Crossan & Hullard, 2002). When they are performing their jobs well, employees are able to work in an unspoken manner, meaning they are able to complete a task at a level that is almost instinctive and does not require a great deal of planning or thought. When a group of employees act this way, they create an organizational system or routine that is so efficient it becomes a source of advantage for the business that other companies cannot replicate (Argote & Ingram, 2000). At the highest level, this application of human capital has been termed "knowledge value...

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