The Role of Human Resource Management in Supporting the Business Effectiveness and Success of International Hotel or Tourism Business in Hong Kong
Introduction
Currently, tourism or hospitality industry is considered as one of the most important and popular industries in the world. It is considered as a complex social, cultural as well as economic phenomenon, and many claim that it is the largest industry in the world (Coles n.d.). Thus, the said industry had contributed to the improvement of the global economy. The World Travel and Tourism Council or WTTC reported that in 1999, the travel and tourism were directly and indirectly responsible for generating about 11% of the global GDP and about 200 million across the global economy (Bardgett 2000, p. 3). In 2008, WTTC reported that the global GDP contribution of the Travel and Tourism will increase from 9.9% or US,890 billion to 10.5% or US,855 billion by 2018. At the same time, the contribution of the entire Travel and Tourism industry to employment will increase from 238,277,000 jobs or 8.4% in 2008 to 296,252,000 jobs or 9.2% by 2018 (World Travel & Tourism Council 2007).
The said aspect is the reason why more and more organizations that are involved in the tourism industry are becoming more and more aware regarding the significance of human resource management in their entire performance. Human resource is considered as one of the most vital aspects of business sector, and it is more so in the case of the service industry such as tourism. This is because of the fact that the tourism industry is characterized by high level of human involvement in the development as well as delivery of service products or even the touristic experiences. There are many ways and approach that can be used or applied in order to deliver the tourism services toward the tourists, however the role of the human as the individual or groups is considered as almost universal. That is the reason why the tourism industry can be defined as the people industry (The Hindustan Times 2007).
This paper will analyze the importance and role of the Human Resource Management or HRM in supporting the effectiveness and success of different hotel and tourism business in Hong Kong.
Human Resource Management in the Tourism Industry in Hong Kong
Baum explained that tourism can be considered and conceptualized as a client that is purchasing different skills, services as well as commitment of different human contributors to the experience that they are about to embark upon that highlights the importance or significance of the human resource management issues, at the same time challenging the said poses for the tourism managers. Thus, according to Baum, there are 8 different managing human resource issues that must be considered by all of the tourism business in order to ensure competitive advantage and success in the entire industry such as: critical awareness of the scope and nature of the labor market; the design of jobs, recruitment, selection, appointment and retention of staff; induction, equal opportunities, training and development or T&D; evaluation of staff performance; salaries and incentives; employment termination, grievances and dispute procedures; industrial relations and employment law; and motivation of staff (Page 2007, p. 315).
According to the survey of Baum (1995) regarding the tourism and human resource strategies in a great many countries, he argues that HRM strategies can help to offer sustainable policies for the commercial development of the tourism and hospitability industry that operators commonly ignore at their peril. He added the differentiation between the old HR practice that can be associate with the hospitality industry’s traditional approach to personnel matter, as well as new, sustainable, human resource paradigm that represents a model of the different best practices for the industry (Goldsmith & Nickson 1997, p. 12) (see Appendix B).
As a result, in line with the management, HRM focuses on the different important processes such as planning, monitoring as well as control of the human resources as a management process. More complex analyses of HRM define the concern that individual human resource system within a given organization will help to realize the different strategic objectives of a given organization such as the delivery of excellent customer service to the different tourism consumer (Page 2007, p. 315).
It is important to consider that for all of the tourism-based system, primarily the hotel industry, human resource issues and factors that primarily affect their performance are commonly connected or related to the staff and workforce, that’s why it is important to recognize the role of the recruitment and ongoing development of the staff resource in order to achieve different strategic goals have become vital (Page 2007, p. 315).
The tourism industry is considered as one of the few key industries in Hong Kong (Zhang 2003, p. 123). It is considered as one of the most successful regions in the world in terms of tourism industry. In 2006, the city has recorded a total of 25.25 million tourists, including those visitors from Mainland, China. Thus, it had helped the country to generate a great amount of HK7.3 billion or US billion income, the said number makes it as the second largest generator of foreign currency (Cochrane 2008, p. 260). In 2007, the city recorded a total of 2,120,350 visitors, a 15.9% increase, compare to last year (Business Monitor International, 2008).
The said growth of the tourism industry in the country is because of the implementation of the Individual Visit Scheme or also known as the IVS, from the government of China. IVS allows the mainland Chinese to visit the city in individual basis. Before the said scheme was implemented, Mainlanders have to travel by group or business visa. As a result, Hong Kong had become the favorite destination of Mainland Chinese tourists (Hong Kong Economic Times, 2006). In 2004, there is 2.6 million of Mainlanders individual document holder that visited the country, since the implementation of IVS. In addition, it had helped to bring HK.6 billion in the city’s revenue (People, 2004). The Hong Kong Tourism board reported that in 2006, Mainlanders gained the 58.8% pf the entire tourists in the city.
Impact of HRM in Hong Kong’s Tourism Industry
Maintenance of the workforce and the process of managing the yield are considered as the primary issue of HRM that is related to tourism industry. Conventionally, in tourism, HRM is perceived as the aspects of authority and directive leadership, but over the years, the role of the frontline staff was redefined, along with that, the relationship marketing strategy had started to play a vital role in the process of exploring the new frontiers in the entire tourism development practice. As a result, HRM plays a vital role in the process of developing quality service via the endorsement of professionalism and skill; attitude and behavior, access and flexibility; dependability and constancy; recovery and status and credibility. In addition, aside from the tourist attractions a region possesses, success of tourism industry basically lies in proper development of human resources involved there in, and in the context f the current competitive tourism market environment, it focuses on the quality products and services, the role of HR, together with its effective management is creating quality product and services is known as one of the most vital elements in the improvement of the competitiveness of an organization. On the other hand, the commonality and the way of functioning of the tourism require appropriate evaluation of vial issues that are connected with HRM for fine-tuning of the said sector (The Hindustan Times 2007).
Political
One of the most important political factors in Hong Kong is that it allows workers from outside the country who possess the skills, knowledge and experience to enter for employment. The Admission for Talents Scheme was implemented in December 1999 in order to improve the competitiveness of the city’s economy (Labor Department 2000). It will help to bring people of different ethnic and cultural background to be together, that can cause different problems such as conflicts and misunderstanding. In that case, HRM can help to develop greater intercultural understanding. As a result, it can help to maintain the current position of the company in the entire market or industry. One of the best examples will be the HRM process of Cathay Pacific. The company is offering equal treatment and opportunity for the local employees and other nationalities. Together with that the company also focuses on open communication inside the organization in order to prevent any misunderstanding or conflict that can affect individual and group performance. The company is offering its Employee Assistance Program, which provides free professional advice as well as information that are related to personal or work concerns (Cathay Pacific n.d.). With the help of the said aspect, the
Economical
In terms of economical, the most important aspect that is related to the tourism industry, primarily in the hotel industry of Hong Kong is the issue regarding the labor cost and turnover rates. Currently, the war for talent is considered as an increasing problem in Asia, particularly in the different territories of China. The competition for talent means that the employee turnover rates are rising, together with wages. From 2001 to 2005, Hong Kong and Taiwan’s turnover rates are higher than Singapore, having a 2.7% rate, considered as lower compare with China that rises from 9% to 14%. In addition, in Hong Kong the salaries had rise from 1.2% to 4.2% in 2007 (Byman 2007).
The employee turnover is considered as one of the important concerns of HRM. The Hong Kong hotel statistics reported that the average annual turnover rate of employees with less than 1 year service was between 44% and 66% during the period of 1985 to 1999 (Lam & Lo 2002). The labor turnover rate is considered as the ratio that shows the relationship of the departing employees to the total number of employees on the staff (Dittmer & Keefe 2005, p. 510). In the case of Hong Kong, one of the most important characteristics of its employment, particularly in the tourism industry is high turnover rate. This is important because turnover is costly. When a specific job become vacant and the management have decided that that position must be filled, the said company will undergo series of processes such as recruitment, interview, selection and hiring replacement. This will mean additional cost for the company (Dittmer & Keefe 2005, p. 510).
Cathay Pacific again is one of the most important examples regarding the said issue. The company is offering flexible benefits to its employees in order to maintain the interests, motivation and loyalty of their employees towards the company. Aside from that the company is also focusing on other important benefits such as discounted airline travel, staff facilities, employee assistant and company transportation (Cathay Pacific n.d.).
Training alone is considered as one of the most complex activities or programs in a specific organization that helps to maintain the effectiveness and efficiency of human resource (Rae 2000, p. vii). It can also help to lessen the rate of turnover. This can be seen in the effort of the Peninsula Hotel in Hong Kong, where in it regards its loyal and experienced staff as its most significant asset. Thus, the company focuses on investing on staff training, career development, and staff well-being and staff communication. In addition, the hotel is also providing cross exposure training to staff from sister hotels and other properties (The Hong Kong and Shanghai Hotels, Limited 2005).
Socio-Cultural
The growth or increasing number of Mainlanders visitors in the city is considered as one of the most important aspect, this is because of the fact that it has a great influence on the skills and abilities that must be acquired by the employees or staffs of different tourism-based business, particularly hotel. Before, staffs from hotels, restaurants and transport sector must focus on using English because the city was under the colonization of British people, thus, most of its visitors comes from different European and American country. However, the aspect is currently vanishing, because of the current implementation of IVS that enables Mainlanders to visit the city alone.
HRM helps hotels and other tourism-based business to focus on selecting and hiring people who can speak English and Chinese fluently in order to communicate properly with different customers from different nationalities. As of now, more and more hotels are giving priorities to those applicants who can speak and understand both English and Chinese. This can be seen in Mandarin Hotel and Cathay Pacific.
Technological
Due to the growing competition, changing demands of employees, together with the changing preferences of the consumer regarding their travel activities, different tourism-based businesses are focusing on applying different technologies in order to communicate and connect to their customers. One of the most important changes is the application of the Internet. Internet has been applied in the tourism industry in order to market or sell their product online, thus making the life of most of consumer easier, because they can book and reserve their travels, hotel accommodation and other related services, without leaving the comfort of their home.
In terms of the employees, more and more companies are pushing their employees to handle different computerized systems in order to speed up and lessen the error because of human intervention. This is very important because, application of new technology is considered as one of the most important changes in an organization that can affect the perspective of the employees towards the company, thus affecting their entire performance. In that case, it will be important to focus on the different programs that can be applied or implement in order to ensure that all of the employees are all properly informed. This can be seen in the effort of Shangri-La in implementing their new complete system that enables quality and personalized service to the guest with a full excess that can help to increase the quality of services that the company is providing. As a result, the company implemented an intensive training towards the end-user of the system; in order to inform them and give them enough knowledge for them to operate the said system with confidence, thus can help to improve their performance. At the same time, helping to lessen the human intervention that can help to lessen errors and improve accuracy (BruNet n.d.).
Conclusion
Based on the facts that have presented in the paper, it shows that HRM has a great impact on ensuring success of any business, in any industry. However, it has a greater impact on the tourism industry, particularly the hotel sector, because of the fact that they are also considered as the people industry, since, the staffs or employees have a great impact of influence on the result of the products or services that they are going to offer to the customers. Aside from that they have the direct relationship with the customers that can directly impact the organizational and brand image.
In Hong Kong, there are four important aspects or issues that can be solved by proper application of HRM inside the company. The political issues pertain on the cultural difference; the economical issues focus on the labor cost and turnover rate in the city; the social issues focus on the growing number of Mainland Chinese visitors in the city; and the technological issues focus on the application of new system. Thus, all of the said events can be helped by focusing on the different aspects of HRM such as training and development, communication, leadership style and management approach to be applied, as well as focusing on the important aspect of motivation.
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