It is has been a cliché that the people are the most important resource in business. Effective use of people makes seems to be one of the primary assets of a business aside from its financial, technological and physical resources therefore it has to be managed effectively and strategically. Defining Human Resource Management, HRM, it is a range of management activities which aim to achieve organizational objectives through effective use of employees (Ozbilgin, 2006).
Human resource was first coined by Peter Drucker with his book The Practice of Management. After that, theoretical development of HRM emerged, accompanied by the development of different HRM models in several schools of management in the USA and the UK. These models are currently applied to different companies and businesses especially in multinational enterprises, MNEs, which needed effective HRM.
The focus of this paper is on the significance of HRM Models in the formulation of HRM strategies in MNEs in the hospitality industry. The paper analyses the different HRM approaches of organizations within the hospitality industry as well as the influence of local national environments on the effectiveness of human resource policies in hospitality MNEs.
HRM Models
There are two famous HRM models that exist today. One of these is the Michigan School Model which was developed by Fombrun, Tichy and Devanna (1984). This is also referred to as the hard HRM which emphasizes on treating employees as a means to achieving the organization’s strategy. Organizations that practice this model monitor investment in employee training and development to ensure to ensure it fits with the firm’s business strategy. The management’s principal reason for improving the effectiveness of HRM in this model is increasing productivity. The Michigan model also assumes that HRM will respond to the external and internal environment appropriately and a contingency approach to HRM. The Michigan model is hard HRM because it is based on strategic control, organizational structure and systems for managing people. Although it acknowledges the importance of motivating and rewarding people, it concentrates most on managing human assets to achieve strategic goals (Pinnington & Edwards, 2000).
Another HRM model was developed by a group of academics from the Harvard Business School thus it was called the Harvard Model. The Harvard Model (Beer et al, 1984) proposes that people can be dealt with within four human resource categories. The first category is the employee-influence which refers to the amount of authority, responsibility and power voluntarily delegated by and is compatible with the purpose and interests of the management. The second is the element of human resource flow, which refers to decisions on recruitment, selection promotion, exit, job security, career development, advancement and fair treatment. The reward systems is concerned with intrinsic and extrinsic rewards such as the work itself, sense of purpose, achievement and challenge, pay, bonuses, insurances and flexible working hours. The reward system should always be aligned with the overall business strategy and management philosophy. The last category is that of work systems which deals with the arrangement of people, information activities and technology (Kidombo, 2006). This is a highly prescriptive model of HRM which emphasizes a number of presumed long-term benefits of acting on stakeholder interests and situational factors, assuming that there is a set of predetermined and superior human resource policy choices (Sisson, 1994). Organizations adopting this model would ensure that employees were involved in work, have opportunities
The Michigan School Model emphasizes the strategic resource aspect of human resources and is considered to be the ‘hard’ variant of HRM (Ozbilgin, 2006) which considers employees as one of the key resources of organizations, arguing that human resource should be used effectively in order to achieve organizational goals. On the other hand, the Harvard model stresses the human element in the human resources formulation (Ozbilgin, 2006) and is considered as the ‘soft’ variant in HRM. The soft version of HRM is linked to the human relations school while the hard HRM version is seen as emerging from the strategic and business policy thoughts (Guest, 1989).
These two models are the most commonly use HRM models in businesses today aside from other models that has been theorized and formulated by some academics. Based on the definitions and explanation of each model, it can be concluded that the soft model is more advisable to be practiced by industries within the service sector while the manufacturing sector would be better to use the Michigan Model of HRM for increased production.
HRM Approach in Hospitality MNEs
While the manufacturing industry uses human for increased production and innovation in products, the labor-intensive hospitality and tourism industry especially the international companies or the multinational enterprises, MNEs, due to the fact that the industry relies on the kind of services they provide, needed an appropriate HRM model that will help the industry formulate HRM strategies that are aligned with the objectives of the company. Schuler (1992) proposes that strategic HRM is about integrating people issues with the strategic needs of the business. Therefore, business strategies provide the foundation for HRM strategies, policies and processes to be linked and a good HRM model will serve as a guideline in formulating HRM strategies.
Also, MNEs should be able to adapt to the changes in the environment that may influence the present and future survival of an organization. MNEs should have the ability to exist in different countries adopting its culture, economy, politics and the market. HRM in international context is important in the operations of MNEs (Schuler, Dowling and De Cieri, 1993). Management of human resources and HRM practices may differ from country to country. For example, organizational structures in Japan may be decentralized while in the US and UK firms may be more centralized and bureaucratic. Employees in Japan may not be very productive and efficient when the bureaucratic approach of management is implemented to them.
Emmott & Hutchinson (1998) cite the most common factors driving organizations to adopt flexible working practices as increased competitiveness both nationally and globally; new technology; changes in labour markets and employee demographics and government policies. Human resource policy of a hospitality firm in the US might differ from the HR policy in UK or in China because policy is influenced by first, the employees. Employees in the US might have different attitudes compared to employees in China. Also, corporate and HR policy is influenced by the culture especially in the hospitality industry where diversification of culture is important. Since China is a communist country, it is expected that they have different legal and political structures compared to the US. The legal structure and culture are usually the basis of HR policy of an MNE in a particular country. The parent company will incorporate its HR policy with its firm in a host country and make some necessary changes in order to adapt with the environment, making the firm more competitive within that country.
The hospitality and tourism industry’s primary asset is the services it provides. No matter how good the service a hotel, for example provides its customers, it will still rely on the manner the staff or the personnel deliver the services to the customers. Thus, as with the HRM definition above as an effective used of employees, the hospitality MNEs should formulate strategies that will enhance customer service and at the same time give emphasis on the value of the employees, providing them opportunities and making them highly committed with the organization. HRM strategies should not only be focused on the organization’s objectives and goals and competitive advantage but also with the training and education of employees making them highly competitive in the global market of MNEs.
HRM models play key roles in formulating HRM strategies; it serves as guidelines to companies on to what approach they will use with their employees. Whether a multinational company opts to have a hard or soft HRM approach, or the consolidation of both approach, the effectiveness of HRM strategies depends on the implementation of the HRM model chosen and the environment of the firm. Some countries may be best implemented with hard HRM approach while some will create effective employees with the implementation of soft HRM approach.
References:
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