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 . 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 ( 2000,).
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 ( 2007). The said vital role in the global economic or financial growth is the reason why more and more countries are focusing on its tourism industry, together with the different individuals and organizations that are striving to take advantage of the current development in the said industry.
On the other hand, due to the different changes and trends in the global and local tourism industry, more and more companies and organizations are focusing on applying the principles of human resource management or HRM in order to ensure their relationship with the different stakeholders, primarily the employees. This is important because of the fact that the people or employees are considered as the most important resource of any company, because they are the one whose converting the raw materials into saleable products or services, at the same time, they are the one whose having a close contact with all the important stakeholders, primarily the customers.
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.
Tourism in Hong Kong
The tourism industry is considered as one of the few key industries in Hong Kong (2003). 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 ( 2008). In 2007, the city recorded a total of 2,120,350 visitors, a 15.9% increase, compare to last year (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 ( 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 ( 2004). The Hong Kong Tourism board reported that in 2006, Mainlanders gained the 58.8% pf the entire tourists in the city.
Human Resource Management
In any organization or business, there are different people who are working with the different field and level of abilities, attitudes, talents, quality, profitability, influence, productivity and culture. People are considered as those that set the strategies and goals as well as those who design the entire working system; produce different products and offer services; monitors quality; as well as those who allocated the different financial resources, and market the products and services ( 2001).
HRM has gained its fast acceptance as the new term in managing employment. Thus, it plays a very important part of the company because it can help to enhance the human capital by the process of investing in education as well as training, together with the application of new technology (1995). As a result, it helps the employees to actualize, at the same time widen their potential and skills regarding the different requirements of the organization. This is an advantage for individuals who are in question, rather than restricting the personnel management to solely administrative tasks (1990).
Selection, appraisal, development and rewards are considered as the key systems that are involved in the HRM. If these systems are properly aligned, it will help to give a high potential to channel different behaviors in order to meet a performance goal ( 1995) (See Appendix A).
In addition, there are three important HRM components. First are the activities of the traditional personnel management such as recruitment, training, remuneration and discipline. Second is the specific managerial and organizational philosophy that sees people as the major organizational asset and regards the workers as an instinctively willing and be able to be developed; and third, the integration of the personnel management function into the strategic management of the organization ( 1997).
Role of Human Resource Management in Successful Tourism or Hospitality Industry
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 ( 2007).
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 ( 1997,) (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 ( 2007).
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 ( 2007).
Hong Kong is considered as one of the most popular region in terms of tourism industry, because of the fact, that it is considered as one of the most visit cities in the world, primarily by Mainlanders. As a result, the city is facing different issues, just like the rest of the players in the global tourism industry. And it focuses mainly on the different businesses that are involved in the hotel industry. Consequently, the application of HRM in the said industries is considered as a must for all of the businesses in the city.
Measurement of Success
Because of the growing success of hotel industry in the city, there have been many businesses that are establishing their infrastructure and services in order to take advantage of the growing population of the city. As a result, different organizations are striving for better and unique idea that they can offer towards their customers in order to ensure their competitive advantage. This can be seen in the different offerings that are available for every hotel, restaurants as well as shopping centers in the city. This is also important because of the fact that the there is an ongoing changes or trends in terms of the preferences or demands of the customers, thus, in order to handle those, it will be important to focus on the abilities and skills of the employees of staffs to communicates or connects to their current and possible customers.
Demographic Issues
Aside from that issue of the growing number of competitors, HRM is also directly related to the different demographic issues that are related to the shrinking pool of potential employees and labor shortages ( 2007, ). This is because of the fact that together with Japan, Taiwan territory and Korea, Hong Kong is also facing the threat of population aging ( 2005). The said changes in the social aspect of the city is important because of the fact that the industry is in great need of young and energetic staffs or employees in order to communicate with the customers. Thus, it can affect the entire performance of tourism industry players. The said situation pushes different businesses to employ staffs from different countries, which help them to retain the feasible number of people. This will affect the entire internal relationship of a company, primarily its organizational behavior and culture, because of the fact that culture is a very important aspect in human resource. It is important to focus different actions and attitudes inside the organization because it is important in the process of problem solving regarding the different conflicts and changes that might affect the organization ( 2002,). It can also help to interpret the relationship between the people and organization in terms of the whole person, the whole group, the whole organization and the whole social system. In the end, it can help to improve the said relationship by completing the human objectives, organizational objectives and social objectives ( 2008).
Above all, HRM is important in the said industry, because of the growing popularity image of tourism industry as an employer ( 2007). It had been mentioned in the first part of the paper, that tourism industry is considered as one of the highest source of jobs.
Employment Characteristics in Hong Kong
The issue regarding the labor cost is an important aspect in the entire HRM; this is because of the fact that it is considered as one of the most important aspect of motivation. 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 (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 ( 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 ( 2005,). 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 ( 2005,).
In the said situation, HRM plays a very important role. This is because of the fact that it can help to focus on the different strategies or policies that can help to lessen the turnover rate. It focuses on the aspect of education, learning and development. 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 ( 2001) Aside from that it can also help to improve the entire performance or productivity of the company that can help to maintain competitive advantage. It is important to take note that without the help of effective training and development program, organization can quickly fall behind in getting the skill sets and other knowledge that are required for the competitive workforce ( 2002,).
Application of Technology
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. Aside from that, it will also be important to focus on application of training and learning process in order to boost the confidence of the employees. This is because of the fact that they can perform at their best, if they are properly informed and skilled.
Appendices
Appendix A: The Human Resource Cycle (1984)
Source: (cited in 1995)
Appendix B: Traditional and Sustainable Human Resource Practices
Source: ( 2007)
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