Human Resource Management (HRM) in a small business can
be a vital task leading to success. Specifically in the service sector, service
quality depends mostly on the quality of personnel since it is labor intensive
and requires face-to-face interaction with customers. For a firm to be
successful, effective management of the employees is crucial which depends on a
significant extent on human labor
As Baum (2007) supports; in most service industries it is
the human resources that creates the competitive advantage to the organization.
It is imperative to point out that the economic performance of every country's
economy is strongly linked to the SME sector and SMEs rely seriously on their
workforce and on their HRM practices for their success. In the hospitality
industry, the quality of customer services and staff responsiveness has a
direct impact on the image and reputation of the hotel
What drives the true competitive of a hotel is the
performance of its employees. To stay ahead, it is essential to attract, train,
develop, and retain passionate, competent, and accountable employees, and find
ways to keep them engaged and motivated to perform their best
It is a fact that the small and medium enterprises (SMEs)
are playing vital role in the economies around the world in irrespective of the
countries development stage. SMEs are now considered as the leading source of
economic growth. However, as a result of the dynamic environment and
globalization, SMEs are struggling for their smooth survival. Internationally
there are thousands of small-medium sized hotels that are facing challenges
relating to service quality aspects
The hotel industry is a service industry and hence it
strongly relies on human labor; that is, its service quality is directly
connected to its staff quality. It is widely known that internationally the
Hotel and Catering Industry has a number of personnel related problems and poor
employment practices and conditions, especially the smaller hotels. A study in
small hotels of Sweden, by the consultant Mrs. Lorna Young, demonstrated the
informal nature of HRM, the lack of planning and coordination, lack of R&S
policies and the absence of systematic method of T&D. Larger hotels are
advantageous in relation to recruitment and development .The higher level of
remuneration and benefit they can offer makes them a number one choice for
highly competent and skilled staff
Hotels justify the absence or neglect of HRM functions
with the size of the hotel. Smaller hotels with limited financial resources claim
to be restricted in developing and implementing HR systems in comparison to
larger hotels. Undoubtedly, small and large hotels differ in terms of
resources, money, and time. Still, all businesses-whether small or large-must
hire employees to run the daily operations. Despite the size, employees are
vital assets. A well- established and maintained HR department offers a solid
structure which is an organizational advantage that is vital to success
Nevertheless, although small-sized hotels
are faced with unfavorable conditions, they have opportunities to expand
themselves using their strengths as small firms with high levels of
flexibility. Smaller organizations need to change HR practices compared to
larger organizations because of the different workforce requirements.
Specifically, they must focus on improving customer satisfaction and the
quality of service through a procedure of well organized HR management. Human
Resource Management (HRM) is the function within an organization that focuses
on recruitment of, management of, and providing direction for the people who
work in the organization
Sadly, small hotels face many HR-related
problems related to the quality of staff, staff training and development,
unattractive salaries and benefits and the relatively high level of turnover of
younger staff members. It is thought that the implementation of better
practices can improve the attitude and behavior of employees, lower the levels
of absenteeism and turnover, and increase the skill levels of employees which
can lead to "enhanced quality, efficiency and improved productivity"
(Mc Keena & Beech, 2008, p. 36)
The reality is that small independent
hotels cannot be successful without the presence of an efficient HRM system. As
has been observed, hotel owners play the most important role in establishing
such systems and so they should be the starting point of changes. Hence, what
could be done in order to set up a HR system
Sadly, SMEs are not exploiting their
human resource strategically and logically and management ignores
organization's most valued assets, that is, the workforce. One of the major
obstacles faced by small hotels, in implementing human resource practices, is
the scarcity of HR practitioners to maximize their outcomes. Hence several
steps should be taken to improve the sources of organizational efficiencies to
achieve the SME performance
First of all, small hotel owners should
realize that HRM is an investment and that it can lead to business
sustainability and success, since staff members are the most precious resource
that a service sector firm has. Therefore, a Standard Operating Procedure (SOP)
should be shaped for each business that will include working policies and
detailed procedures for staff members in every department in order to define and
maintain quality standards. On this basis a comprehensible plan of internal
work procedures will improve procedures, and when a trouble about service
quality arises, it can effectively assist detecting the cause
Secondly, there is a need of a well organized
HR planning that will involve the analysis of HR needs, the capacity of
existing staff members and the preparation of job descriptions to define staff
duties and qualifications. Appropriate and skilled employees should be
compensated properly, since low salaries and benefits do not attract qualified
staff and of course this may lead to low-quality service terms and, eventually,
a decrease in customers and revenue
Despite the fact that small hotels offer
lower wages they offer a cozier and informal setting. This setting enhances a
closer employee -employer relationship, and greater opportunities to make
decisions that will positively impact the business. Small hotels can embrace
variable pay elements to their pay structures. Pay-hike associated to performance
may be incorporated aside from the regular pay scales. They can also merge
non-financial rewards, such as educational benefits and recreational
facilities
Wisely, pay decisions could have a
linkage with the outcomes of the performance appraisal mechanism in force.
Performance appraisal must be carried out by the persons who observe the
performance of employees. For instance, daily monitoring may suit front office
employees and workers that have immediate and daily customer contact
A small hotel does not need a substantial
HRM system as a large hotel would do but there is a requirement to take care of
staff selection and training to ensure that quality standards are maintained.
In reality, SMEs use recruitment and selection procedures more than any other
HR practice. Despite that, staffing has been identified as SMEs' weakest HRM
practice. In fact, it has been stated that the most frequent staffing method by
SMEs is word of mouth, as it is a low-cost option of attracting candidates
Concerning recruitment small units can
valve human resources through "campus recruitment" as it is a
relatively cheaper source of recruitment than recruiting through advertisement
and private employment exchanges. Furthermore, graduates from educational
institutions may work with enthusiasm and dedication. In the contrary, more
experienced staff may be hired through walk-in interviews. However,
cost-effective staffing for SMEs requires at least a clear job description.
Moreover, attention must be given in the background and reference checking
since time and resources of small hotels are limited
Occasionally, the hotel manager would
benefit from hiring a specific HR manager, in cases in which there are problems
related to high turnover, staff morale or poor service provision. Although
hotel managers/owners have appreciation for the need for HRM, the lack of
professional skills in HR does not allow them to apply systematic HR processes
and comprehend the impact it has on the organization
In addition, absenteeism in the units
seems to be rooted to poor pay and the lack of professional approach on the
part of superiors in dealing with the workers. Hence, small hotels may think of
instituting positive measures like counseling, reward system, improving work
environment, training and so on to deal with the issue of absenteeism
As Wright notes looking from a HRM
perspective, examples of formal training by large firms are generally provided
to employees on a yearly basis and contain personal development opportunities.
On the other hand, in a small hotel, training is often informal, costly and
done on a voluntary basis by other employees within the company or by the
owners. Other training options may include the use of student volunteers from
local colleges/universities that can provide important training and skills to
their employees
Another alternative related to "off
the job training" is to engage academic faculties or trained and skilled
experts in order to improve the skills of the employees. Better still; some
options for training may include low-priced or free training such as advice
from business groups, business communities, travel federations etc. Some of the
most popular tools would be: seminars/webinars, lectures, videos, and
on-the-job training
In reality, hotel owners should in
general improve their knowledge about modern and non complicated management
practices and should expect to fit in applicable management tools and
technology in their own firms. Small hotel owners could create a network with
educational institutions in their area to serve as a source for recruiting
permanent and temporary staff. They could also form a network of small hotel
operators to allow them to share information, compare the results of operations
and build up HR systems. This would assist hotels including those with limited
resources to implement HR systems through outsourced HR services. Small hotels
may not function well without proper human resource management practices. Also,
seeking HR expertise from HR consultants on critical issues could be helpful in
order to make more efficient their functioning
It is a challenge for small hotels to
adopt an always evolving HRM system. The new reality is that small- and
medium-sized hotels should emphasize on creating a softer but formal version of
HRM practices. Small hotel owners or managers should be more willing to involve
further formality in their firms HR practices, since an 'adequate' level of
formality does positively relate with firm performance
However, formalization of HRM practices
requires financial support and training of owner/managers on managerial skills.
Last but not least cooperation and collaboration among the government,
educational institutes and firms are recommended in order to improve HRM
applications. Small and medium size hotels may not function well without proper
human resource management practices. There is a need to use HRM practices that
are cost effective and less time consuming instead of the available
sophisticated practices
The starting point of change must be the
hotel owners who play the most important role in establishing such systems. The
worst thing of having a HRM is not having one. With the cutthroat competition
in the hospitality industry the adoption of a well thought HRM strategy by SMEs
will help boost their customer service levels and, eventually, increase growth
and success