hrm practices performance and strategy in the italian hotel industry-libre

8/11/2019 HRM Practices Performance and Strategy in the Italian Hotel Industry-libre

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World Review of Entrepreneurship, Management and Sust. Development, Vol. 8, No. 4, 2012 405

Copyright 2012 Inderscience Enterprises Ltd.

Human resource management practices,performance and strategy in the Italian hotel industry

Stefano Bresciani

Researcher of Innovation Management,

Faculty of Economics,

University of Torino,

Corso Unione Sovietica, 218 bis, 10134 Torino, Italy

Fax: +39 (0)11-6706052

E-mail: [email protected]

Alkis Thrassou and Demetris Vrontis*

School of Business, University of Nicosia,

46 Makedonitissas Ave.,

P.O. Box 24005, 1700 Nicosia, Cyprus

Fax: 00357-22-353-722



*Corresponding author

Abstract: The aim of this paper is to study the relationship between humanresource management (HRM) and organisational performance in the Italian

hospitality sector. In particular, it investigates the extent of adoption of HRMpractices, the existence of formal HR strategies, and the degree of developmentof the HR function, in the Italian hotel industry. The findings aim to verifywhether the effectiveness of HRM is contingent upon the approach to adoptedbusiness strategies and whether the hotels, which strategically formally applyHRM practices, outperform those with HRM practices outside a formalorganisational strategy. The research finally expands on the underlying factorsand managerial implications of the findings to conceptually interpretphenomena and prescribe actions.

Keywords: human resource management; HRM; strategy; marketing;hospitality industry; hotels; organisational performance; Italy.

Referenceto this paper should be made as follows: Bresciani, S., Thrassou, A.and Vrontis, D. (2012) Human resource management practices, performance

and strategy in the Italian hotel industry, World Review of Entrepreneurship,Management and Sustainable Development, Vol. 8, No. 4, pp.405423.

Biographical notes: Stefano Bresciani received his PhD in BusinessAdministration in 2003. He has been working as research scholar in theESCP-EAP London in 2006. He is currently a Researcher in BusinessManagement at the Faculty of Economics, University of Torino, where heteaches business management and innovation management. He is performingresearch integrated with the Department of Business Administration of theFaculty of Economics of the University of Torino. His main areas of researchinclude business management, innovation management and strategicmanagement.


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406 S. Bresciani et al.

Alkis Thrassou is an Associate Professor at the School of Business, University

of Nicosia, Cyprus. He obtained his PhD in Strategic Marketing Managementfrom the University of Leeds (UK). From 1996 until 2002, he has worked as aBusiness and Project Manager for an engineering management firm in Cyprus,leading teams of professionals through many projects of varying size andnature. In 2002, he joined the Marketing Department of the University ofNicosia, involving himself in various scholarly activities, lecturing onmarketing-related subjects to both undergraduate and postgraduate students,and undertaking extensive research in the fields of strategic marketing, servicesand consumer behaviour. His work has been published in many scientificjournals and books, and he retains strong ties with the industry, acting also as aconsultant.

Demetris Vrontis is a Professor of Marketing and the Dean of the School ofBusiness at the University of Nicosia in Cyprus. He is also a Visiting Scholarfor Henley School of Management in the UK, a Visiting Professor for

Vorarlberg University in Austria, a Visiting Research Fellow at ManchesterMetropolitan University in the UK and a Visiting Fellow at Leeds MetropolitanUniversity in the UK. His prime research interests are on internationalmarketing, marketing planning, branding and marketing communications, areasthat he has widely published in over 50 refereed journal articles, contributedchapters and cases in books and presented papers to conferences on a globalbasis. He is also the author of ten books in the areas of international marketingand marketing planning, is the Editor of the EuroMed Journal of Business(EMJB) and the President of the EuroMed Research Business Institute(EMRBI).

This paper is a revised and expanded version of a paper entitled Humanresource management practices, performance and strategy in the Italian hotelindustry presented at 3rd Annuale EuroMed Conference of the EuroMedAcademy of Business, Nicosia, Cyprus, 45 November 2010.

1 Introduction

In order to compete in an increasingly competitive business world, corporations have

modified their internal structure and processes to become more lean and flexible. This

enables them to react quickly to the incessantly changing competitive conditions and to

adapt their businesses accordingly. This is also reflected in the way corporations seek to

achieve competitive advantage, moving their attention from hard elements, such as

privileged access to resources (e.g., capital), to softer elements, such as the management

of human resources, innovation, etc. (Foss and Laursen, 2000; Laursen and Mahnke,

2000; Leoni et al., 2000; Wilkinson, 2000; Valdani, 2000; Ham and Kleimer, 2002;

Bresciani, 2009, 2010; Tardivo et al., 2011).

The relationship between human resources and performance has been widely

researched over the last twenty years, especially in the USA (Arthur, 1994; Osterman,

1994; Huselid, 1995; Macduffie, 1995; Koch and Mcgrath, 1996; Lazear, 1996;

Ichniowski and Shaw, 1999) and in Great Britain (Guest and Hoque, 1994; McNabb and

Whitfield, 1997; Guest, 1999; Hiltrop, 1999), where a number of research studies have

lead us to understand this relationship. The main outcome of these studies has been the

recognition that human resource management (HRM) has considerable impact on an


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Human resource management 407

organisations capacity to be competitive and can be considered a source of sustainable,

long-term competitive advantage (Delery and Doty, 1996; Guest, 1997; Boselie et al.,2001; Golinelli et al., 2005).

Moreover, authors describe the impact of high-commitment management (Wood

and Albanese, 1995; Wood and De Menezes, 1998) and high-performance work

practices (Huselid, 1995) on organisations. Most researchers, however, focus their

attention on the manufacturing industry (Arthur, 1994; MacDuffie, 1995), though more

recently it is possible to find studies related to services, and even particularly referring to

the hospitality sector (Boselie et al., 2003; Lockyer and Scholarios, 2004; Maxwell et al.,

2004; Tsaur and Chun Lin, 2004; Boella et al., 2005; Alleyne et al., 2006; Chand and

Katou, 2007; Cho et al., 2006; Knox and Walsh, 2006; Namasivayam et al., 2006;

Connolly and McGing, 2007; Nickson, 2007; Urbano and Yordanova, 2007; Watson

et al., 2007).

Given the heterogeneity difficulties characterising the service sector, it is very hardfor researchers to generalise data from different types of service organisations like

financial enterprises, retailing operations, transport operations and the hospitality sector.

Moreover, the service sector is probably undergoing the greatest changes in terms of

product, process and customer behaviour (Thrassou and Vrontis, 2008), and the role of

HRM cannot be generalised even within the sector itself. This paper, therefore, presents

an industry-specific research, rather than an analysis of the services sector as a whole,

investigating the relationship between HRM and performance, within the Italian hotel

industry.

The paper includes a literature review on the subject, with special focus on the

analysis of two frameworks: that of internal and that of external fit. In particular, the

paper uses an adapted version of the Hoques (1999) model in order to compare the

Italian hotel industry with Hoques (1999) sample of hotels in the UK; and Alleyne et al.

(2006) survey of the Barbados hotels. The research was executed in two phases,

which included firstly a selection process of a sample of 350 hotels, and secondly a

questionnaire survey based on this sample.

2 Theoretical background

2.1 Generic research on HRM and organisational performance

The study of HRM is concerned with the selections that organisations make, from among

the myriad of policies, practices and structures for managing employees (Sisson, 1990;

Boxall and Purcell, 2003; Boselie et al., 2005). The combination of chosen practices is

geared towards improving organisational effectiveness and hence better performanceoutcomes, in order to enable the organisation to achieve its business goals (Wright and

McMahan, 1992; Delery and Doty, 1996).

A number of trends have emerged in the field of HRM over the past few years. A

mainstream one relates to the nature of the interaction between HRM and performance

(Arthur, 1994; Guest and Peccei, 1994; Kalleberg and Moody, 1994; Huselid, 1995;

MacDuffie, 1995; Snell and Youndt, 1995; Delery and Doty, 1996; Boselie et al., 2001;

Guthrie, 2001), showing a statistically significant linkage between HRM practices and

some measures of organisational performance. In the same context, Harney and Dundon

(2006) study HRM practices in small and medium size enterprises, finding that HRM was


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not the coherent set of practices typically identified in the literature, but rather was often

informal and emergent. In the latter context, Thrassou and Vrontis (2006) present theneed for HRM to be incorporated in the wider strategic functions of HRM, also retaining

nonetheless a much needed flexibility and adaptability.

Another major research trend was the endeavour to understand the mechanisms

through which this relationship takes place. Authors such as Dyer and Reeves (1995),

Guest (1997), Wright and Gardner (2003) and Dowling et al. (2008) researched some of

the mediating relationships that exist between the HRM practices and organisational

performance. Other authors, such as Ferris et al. (1999), Guest (1997), Rogers and Wright

(1998), Wood (1999), Gerhart (1999), Gerhart et al. (2000a, 2000b) and Wright et al.

(2001), studied the problem from a theoretical point of view reaching various and

frequently conceptual conclusions.

A final main trend is the more recent interest in taking a multi-level and

multi-dimensional approach. Wright and Gardner (2003) reviewed the HRM literatureand found that past researches on the subject can be differentiated along two dimensions:

firstly, whether the focus was on single or multiple practices; and secondly, regarding the

unit of analysis, specifically the individual versus the group or organisation. Ostroff and

Bowen (2000) and more recently Bowen and Ostroff (2004) have developed the most

extensive multi-level model of HRM, arguing that HR practices serve as communication

mechanisms signalling employees to engage in certain behaviours.

Reviewing all these works, their common thread lies in the recognition that HRM has

an important impact on an organisations capacity to be competitive, that it can be a

competitive advantage in itself and that it is in essence, not just a process, but an

investment.

The methodological deficiency of referring to past research, in this papers context

though, is the fact that one cannot blindly assume that these generic findings are

necessarily transferable to the hospitality industry. This research therefore, has expanded

its theoretical review to the existing, albeit much fewer, industry-specific works.

2.2 HRM and the hospitality sector

The hotel industry has been historically renowned for its poor pay, inferior employment

conditions and deficient adoption of HR practices. The industry has largely relied on a

low cost, numerically flexible and disposable workforce. Increasingly, however, there

have been debates concerning the extent to which managers in the hotel industry are

embracing high commitment HRM and functionally flexible work practices. Interest in

HRM within the hospitality sector has been increasing since the 1990s, with the first

studies, showing a lack of interest among managers in HRM practices (Hales, 1987;

Guerrier and Lockwood, 1989; Lockwood and Guerrier, 1989; Price, 1994; Lucas, 1995,1996). Later research though, showed that the interest among hotel industry managers on

HRM practices, which could help organisations in improving effectiveness and hence

better performance outcomes, was visibly increasing (Harrington and Akehurst, 1996;

Watson and DAnnunzio-Green, 1996; Gilbert and Guerrier, 1997; Hoque, 1999).

However, it was only during the 2000s that it was possible to find specific evidence of

the systematic use of HRM practices within the hospitality sector.

Boselie et al. (2003) gathered empirical data on the effectiveness of HRM in the

Netherlands, including the tourism industry, finding a lower effect of HRM than in other

sectors. In the same context, Lockyer and Scholarios (2004) consider the nature of best


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practice recruitment and selection in the Scottish hotel sector showing a reliance on

informal methods in smaller hotels and structured procedures, including references,application forms and panel interviews in larger and chain hotels.

Knox and Walsh (2006), focusing on Australian hotels, find evidence that while hotel

workplaces in general continue to be associated with high levels of numerical and

temporal flexibility and greater informality of HR policies, larger luxury hotels were

adopting more systematic employee management techniques and strengthening their

internal labour markets through functional flexibility initiatives. Urbano and Yordanova

(2007) studied the determinants of the adoption of HRM in tourism SMEs. They find that

the adoption of HRM practices is positively associated with the presence of an HRM

department. Also, SMEs in which the person responsible for HRM has previous

experience in similar positions, are greater adopters of HRM practices. Finally, they find

that SMEs, which cooperate with other organisations, are more likely to implement HRM

practices.Tsaur and Chun Lin (2004) empirically explore the relationship among HRM

practices, service behaviour and service quality among tourist hotels; discovering that

HRM practices partially have a direct effect on customer perceptions of service quality

and an indirect effect through employees service behaviour. Additionally, Maxwell et al.

(2004) investigate the nature of, and relationship between, a quality service initiative and

the concept of strategic human resource development, and find that the quality initiative

is acting as a catalyst for a strategic approach to human resource development to emerge.

Namasivayam et al. (2006) examined the relationships between compensation (direct and

indirect) practices in hotel organisations and their performance. The results show that in

the case of management employees, direct compensation fully mediated the relationship

between indirect compensation and hotel performance.

Cho et al. (2006) focused the attention on the impact of HRM practices on hospitality

firms performance. They investigate the relationship between twelve different HRM

practices and organisational performance is measured by turnover rates for managerial

and non-managerial employees, labour productivity, and return on assets. The results

indicated that companies implementing HRM practices are more likely to experience

lower turnover rates for non-managerial employees. In the same direction, Watson et al.

(2007) explore different levels of line manager perspectives, namely strategic and

first-line, and their role in HRM and human resource development; and identify enablers

of and barriers to devolving HR to line managers. They find a number of points of

divergence in opinions, implying that there is potential for organisations to secure greater

engagement of their first-line managers in HR roles. Focusing on Irish hotels, Connolly

and McGing (2007) show that Dublin-based hotels display some of the human resource

practices associated with high performing work practices. There are, however, very low

levels of employee participation, which many authors argue are the cornerstone of highperformance practices.

Finally, Chand and Katou (2007) focus their research on two interlinked aspects of

the hotel industry in India: whether specific characteristics of hotels exist that affect

organisational performance; and whether some HRM systems affect organisational

performance. They find that hotel performance is positively associated with hotel

category and type of hotel (chain or individual). Furthermore, hotel performance is

positively related to the HRM systems of recruitment and selection, manpower planning,

job design, training and development, quality circle, and pay systems.


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3 Research aims, value and limitations

The aim of this research is to investigate the relationship between HRM and performance

in the Italian hospitality sector, as well as its practical implications.

Towards this aim, four objectives have been set:

1 to undertake a literature review that will provide the theoretical context, both with

regards to generic and specific to the hotel industry HRM knowledge

2 to measure the extent of the adoption of HRM, the existence of a formal HR strategy,

and the degree and nature of the development of the HR function in the Italian hotel

industry

3 to compare it with Hoques (1999) sample of hotels in the UK and Alleynes et al.

(2006) survey in the Barbados hotels

4 to combine and interrelate the findings of the theoretical and empirical research and

analyses to conceptually identify underlying factors, managerial implications and

practical applications.

This research is a valuable contribution to knowledge on the subject for three main

reasons: it is the first study of its kind regarding the Italian hospitality industry; it makes

use of past studies (Hoque, 1999; Alleyne et al., 2006) to make additional comparisons of

international value; and finally, it interrelates and extrapolates on the findings to offer

practical prescriptive findings to both individual enterprises and collective stakeholders.

The limitations of the research relate to the difficulty in distinguishing between cause

and effect in the correlation between performance and HRM practices. Additionally, it

must be noted that the focus of the research was on larger hotels, whose adoption of

HRM practices is considerably greater than for smaller hotels. The results therefore, areclearly not representative of the hotel industry as a whole.

Towards verifying whether the effectiveness of HRM is contingent upon the approach

to business strategy that has been adopted, this paper has additionally posed one research

question: Is external fit important within the hospitality sector? Furthermore, this paper

tests whether the hotels that introduce HRM as a formally supported package of strategic

practices outperform the hotels which do introduce HRM, but not as a part of the

organisational strategy. Consequently, a second research question has been generated: Is

internal fit important within the hospitality sector?

4 Methodology

4.1 Data sources

The data used are taken from Rapporto sul sistema alberghiero in Italia edited by

Federalberghi in 2007. The research was conducted in two separate phases. In the first

phase a sample of 350 hotels was selected, including only those with a minimum of

65 bedrooms1, which are representative of the region and which have a star rating of 3 or

more (on a rising scale of one to five). In the second phase, a structured questionnaire

was sent to the 350 hotels of the sample. One hundred four hotels responded with

acceptably completed questionnaires (a successful response rate of 29.71%).


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Table 1 HRM practices used within the analysis

HRM practice

Terms and conditions

Harmonised terms and conditions between management and non-management staff

Single status for all staff

Internal promotion the norm for appointments above the basic levels

No compulsory redundancy

Recruitment and selection

Trainability as a major selection criteria

Use of psychological tests as the norm for the selection of all staff

Deliberate use of realistic job previews during recruitment and selection

A formal system for communicating the values and systems in the company to new staff

Training

Deliberate development of a learning organisation

An explicit policy requiring all staff to spend a specified minimum period annually in formaltraining

Job design

Flexible job descriptions that are not linked to one specific task

Deliberate design of jobs to make full use of workers skills and abilities (i.e., use of jobenrichment and/or autonomous work groups)

Work organised around team-working for the majority of staff

Staff involvement in setting performance targets

Quality issues

Production/service staff responsible for their own quality

A majority of workers currently involved in quality circles or quality improvement teams

Communication and consultation

Regular use of attitude surveys to obtain the views of staff

A system of regular, planned team briefing or cascade of information from seniormanagement to the lower grades/shop-floor during which work stops

All staff are informed about the market position, competitive pressures and establishmentand company performance as a matter of course

Pay systems

A merit element in the pay of staff at all levels

Formal appraisal of all staff on a regular basis at least annually

Source: Hoque (1999)

4.2 Method of analysis

This research applies the same model of analysis used by Hoque (1999) and Alleyne et al.

(2006). The model is consequently synthesised as follows:

4.2.1 Dependent variables

To define HRM practices, the questionnaire asked for the rating of specific HR outcomes:

the commitment to the organisation of lower-grade staff, the level of job satisfaction of


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lower-grade staff, the flexibility of staff, the ability of staff to move between jobs as the

work demands, the quality of work of lower-grades staff, and the quality of staff currentlyemployed; on a scale of one (very low) to five (very high).

Then, to define the performance, the questionnaire asked for the rating of specific

performance outcomes: how well does labour productivity compare with the hotel

industry average?, how does quality of service compare with the hotel industry average?,

how is the financial performance compared with the hotel industry average?; on a scale of

one (very low) to five (very high).

4.2.2 Independent variables

Table 1 presents the specific measures of HRM used to test the relationship between

HRM and performance.

4.3 Towards answering the research questions

Question 1: Is external fit important within the hospitality sector?

According to Schuler and Jackson (1987) and Hoque (1999), HRM should prove

effective only within hotels which emphasise a quality-enhancing or innovative approach

to business strategy, and should prove ineffective where the hotels business strategy is

focused on cost-cutting or price competition. Consequently, in Hoques (1999) model,

respondents are asked to chose the two features that best describe their approach to

business strategy. The choices were price, quality, cost control, responsiveness to

customer needs, advertising/marketing and providing a distinctive service.

On the base of the answers, it was possible to split the sample into three categories:

a hotels that focus their business strategy on cost minimisation or price competition

b hotels that focus their business strategy on quality enhancement

c hotels that do not have a clear approach to their business strategy.

The measure of HRM used in this analysis is cumulative, in order to allow the ranking of

the hotels from the most HRM practices adopter to the least HRM practices adopter

on a rank from 0 to 21 (see Table 1; 0 = no HRM practices; 21 = all HRM practices

adopted). By splitting the sample in the three categories described above, and then

regressing this aggregate HRM variable on each of the dependent outcome variables, it is

possible to verify the effectiveness of HRM in each of the categories.

Question 2: Is internal fit important within the hospitality sector?

Of the hotels adopting HRM practices, those introducing HRM practices as a strategic

part of their own business strategy [Hoque (1999), says as a synergistic package of

mutually supporting practicesas a coherent, institutionally supported synergistic

package] should outperform hotels which introduced HRM practice in a more casual and

independent operating manner.

According to Hoque (1999), it is possible to split the sample into three categories:


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1 strategic HRM hotels, which are those with above-average (14 or more) HRM

practices, strategically integrated with each other

2 non-strategic HRM hotels, which are those with above-average (14 or more) HRM

practices, but not strategically integrated

3 low-HRM hotels, which are those with below-average (fewer than 14) adoption of

HRM practices.

If internal fit is important, the strategic HRM hotels should outperform the others.

5 Results and analysis

5.1 External fit

Table 2 shows the presence of a link between HRM and all of the HR outcome measures.

In-depth analysis of the sub-samples, makes it possible to find more differences. For

others, the link is perfectly replicated; for quality-enhancer the link is replicated, with

the only exception being quality of staff; otherwise, for cost-reducers it is possible to

find a link only for the HR outcomes of organisational commitment, job satisfaction and

staff flexibility. So, HRM would seem to be more effective among the quality-enhancer

hotels.

Table 2 The relationship between HR outcomes and HRM in Italian hotel industry

All hotels Cost-reducers Quality-enhancer Others

Organisational commitment

HRM 0.016 (0.011) 0.028 (0.030) 0.123 (0.021) 0.105 (0.010)

n 104 24 51 29

Job satisfaction

HRM 0.101 (0.033) 0.018 (0.021) 0.014 (0.034) 0.021 (0.042)

n 104 24 51 29

Staff flexibility

HRM 0.04 (0.015) 0.021 (0.046) 0.110 (0.032) 0.135 (0.047)

n 104 24 51 29

Ability to move staff between jobs as required

HRM 0.081(0.012) 0.078 (0.134) 0.089 (0.022) 0.064 (0.043)

n 104 24 51 29

Quality of work

HRM 0.066 (0.018) 0.095 (0.124) 0.043 (0.043) 0.110 (0.032)n 104 24 51 29

Quality of staff

HRM 0.044 (0.021) 0.044 (0.115) 0.068 (0.118) 0.049 (0.026)

n 104 24 51 29

Notes: Ordered probit analysisCoefficients given (sig. in brackets)


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Table 3 provides evidence of the relationship between HRM practices and organisational

Performance in the Italian hotel industry. It is possible to find a strong relationshipbetween the extent to which HRM is used and all three performance measures. Analysing

the sub-samples, however, it is possible to find a relationship only for quality-enhancer

(with the exception of labour productivity) and others. So, there is no evidence that the

adoption of HRM practices improves performance where hotels put a premium on cost

control within their business strategy.

Finally, it is possible to assume that the results positively answer question 1, i.e., that

the effectiveness of HRM is dependent upon congruence with business strategy. A

positive correlation between the cumulative HRM variable and effectiveness exists only

within quality-enhancer and `other hotels. Where hotels emphasise cost control or price

competition, there is no relationship.

Table 3 The relationship between HRM practices and organisational performance in Italian

hotel industry

All hotels Cost-reducers Quality-enhancer Others

Labour productivity

HRM 0.02 (0.021) 0.078 (0.123) 0.054 (0.131) 0.141 (0.042)

n 104 24 51 29

Quality of service

HRM 0.087 (0.011) 0.012 (0.121) 0.134 (0.040) 0.081 (0.021)

n 104 24 51 29

Financial performance

HRM 0.091 (0.019) 0.049 (0.141) 0.081 (0.032) 0.121 (0.030)

n 104 24 51 29

Notes: Ordered probit analysisR2is pseudoCoefficients given (sig. in brackets)

5.2 Internal fit

Here, it should be possible to find evidence on whether hotels introducing HRM practices

as a strategic part of their own business strategy outperform hotels which introducing

HRM practices independently.

Table 4 provides evidence that strategic HRM hotels routinely outperform the

low-HRM hotels across all of the HR outcome measures. On the contrary, the

non-strategic HRM hotels outperform the low-HRM hotels only where organisationalcommitment is concerned.

The results concerning performance outcomes are presented in Table 5, which shows

the impact of internal fit on performance. Whereas the strategic HRM hotels outperform

the low-HRM hotels in terms of labour productivity, quality of service and financial

performance, the non-strategic HRM hotels outperform the low-HRM hotels only on

financial performance. The results here confirm the importance of introducing HRM

practices as part of an institutionally strategic package, i.e., as a strategic part of their

own business strategy [Hoque (1999), says as a synergistic package of mutually

supporting practicesas a coherent, institutionally supported synergistic package].


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Table 4 Internal fit and HR outcomes

Organisationalcommitment

Job satisfaction Staff flexibility

Strategic HRM 0.822 (0.020) 0.788 (0.011) 0.440 (0.024)

Non-strategic HRM 0.491 (0.012) 0.521 (0.311) 0.320 (0.120)

n 68 68 68

Ability to move staffbetween jobs

Quality of work Quality of staff

Strategic HRM 0.610 (0.020) 0.910 (0.030) 0.710 (0.015)


n 68 68 68

Notes: Ordered probit analysisCoefficients given (sig. in brackets)Strategic HRM = above-average no. of HR practices used and hotel has formalstrategyNon-strategic HRM = above-average no. of HR practices used but hotel does nothave formal strategyOmitted category = below-average no. of HR practices used (low HRM)

Table 5 Internal fit and performance outcomes

Labour productivity Quality of serviceFinancial

performance

Strategic HRM 0.590 (0.010) 0.810 (0.032) 0.810 (0.022)


n 68 68 68Notes: Ordered probit analysis

Coefficients given (sig. in brackets)Strategic HRM = above-average no. of HR practices used and hotel has formalstrategyNon-strategic HRM = above-average no. of HR practices used but hotel does nothave formal strategyOmitted category = below-average no. of HR practices used (low HRM)

5.3 Discussion of the findings

The main goal of this paper was to investigate the relationship between HRM and

performance in the Italian hospitality sector, focusing the analysis on two frameworks:

that of internal and that external fit. Further analysis was undertaken to compare thisresearchs results with those of the UK hotels research by Hoque (2009) and those of the

Barbados hotels research by Alleyne et al. (2006).

Alleyne et al. (2006) results showed an adoption of HR practices in Barbados hotels

that is more prevalent than in the UK sample of Hoques (2009) work. This research has

found that for the Italian hotels the results are similar to the UK ones. For Barbados, with

respect to the existence of a formal HR strategy, the results were mixed. Additionally

they show that in many respects Barbados hotels are ahead of their UK counterparts in

the development of the HR function.


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External fit therefore, emerges as a fundamental key factor. A relationship between

HRM and performance exists only among hotels emphasising the importance of qualityenhancement and among hotels in the other category. HRM proves ineffective where

cost control is seen as the key to business strategy. Looking at internal fit, there is strong

evidence that higher performance exists where HRM is introduced as a strategic part of

the individual hotel business strategy. The results here add to the conclusions reached by

Ichniowski et al. (1994), MacDuffie (1995) and Hoque (1999).

The research has provided evidence that the trend of increasing importance of HRM

is valid also in the case of the Italian hotel industry. Moreover, and much in line with past

generic research findings, it was found that formalised HRM in the context of a wider

business strategy is even more successful. The results are not surprising as the literature

review has shown that similar findings have been produced regarding other industries

and/or countries.

The research results though, inevitably give rise to a number of interesting and criticalquestions:

1 Beyond, classical HRM theories, are there any additional reasons why strategically

formalised HRM is becoming increasingly important?

2 Why is strategically formalised HRM more effective than independently adopted

HRM?

3 What are the underlying causes, at the environmental and consumer behaviour levels,

that instigate these phenomena?

4 What are the managerial implications of the findings?

5 Are there any other implications at the collective and/or industry levels, or in relation

to other stakeholders?

These questions obviously demand for empirical research to properly test and validate

any answers/hypotheses ventured. Nevertheless, through the interrelation of its empirical

and theoretical findings, as well as through further literature review and extrapolation,

this research concludes by venturing a conceptual approach to answering these questions.

Regarding question 1, the answers appear to lie primarily in the marketing

interpretation of the phenomenon. Specifically, in the services sector, and especially in

high-contact services, such as this researchs focus, HRM is increasingly related to the

organisations ability to better serve its customers. Beyond the obvious explanations of

this fact, relating to better employee quality, efficiency/effectiveness, transferability,

improved service, customer satisfaction, etc. (Lovelock and Wirtz, 2011) one needs to

zoom out and see the forest rather than the individual trees. The human resource for

high-contact services is not simply important for the organisation; it isthe organisation.The interpretation of this researchs results is more valid if one reverses the perspective

and looks at the organisation through the eyes of the customer, instead of the more usual

opposite. From this perspective, and excluding tangibles, human resource constitutes the

services facade and consequently the measure of service satisfaction (Zeithaml et al.,

2006). Moreover, the human resource, is the means to building an identity for the service,

a brand image, positioning, and overall creating the perceptions that ultimately form and

solidify customers evaluations, attitudes and beliefs regarding individual organisations

(Thrassou, 2007). Not surprisingly therefore, the more attention is being paid to HRM the

better the results of the hotel in terms of performance.


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Regarding question 2, the answer lies in the elaboration of the previous point. Since

HRMs value is closely related to the marketing aspects of the business, it is only naturalthat HRM tactics and processes can never reach their full potential if designed and

applied independently. On the other hand, HRM designed as part of a wider strategy, that

considers all business aspects, including marketing, branding and of course finance etc, is

naturally more successful. At the same time, strategically formalised HRM allows for

decisions to be taken subsequent to methodical and systematic environmental analysis,

while communications and actions can be more effective as part of a wider formalised

strategy (Kotler et al., 2005; Smith and Taylor, 2002).

Regarding question 3, though business theory as utilised in the above two points

explains the phenomena in terms of business practice, it does not unveil their underlying

causes. The latter can be understood through a study of the development of consumer

behaviour in the services sector, a subject largely outside the scope of this paper.

Nonetheless, to touch upon the root-cause of these phenomena one needs to refer toexisting research that sheds valuable light on the subject. Of primary value to this end is

the conceptual framework for a business-consumer relationship (Vrontis and Thrassou,

2007), as well its marketing communications application (Thrassou and Vrontis, 2009).

The authors show that contemporary consumer behaviour increasingly shifts value from

the tangible to the intangible and from the pragmatic to the perceived service. In this

context the value of the human factor and consequently of HRM, are also becoming

increasingly important. In the same context, the input of the human factor in the

construction of subjective perceptions of service value stretches far more than its

functional capability to fulfil its purpose.

HRM therefore, becomes a key factor, not only of the hotels functional abilities, but

also of the customers impressions, attitudes, beliefs and ultimately of the brand image

and value itself. To better use the authors term in this context: HRM is a key factor of

perception management and branding; themselves being correspondingly the primary

strategic marketing process and vehicle towards the terminal strategic marketing aims

of: shift of focus of marketing communications from the products and their attributes to

the product experience, the product intangibles and, in essence, service higher-order

value additions.

Regarding question 4, the managerial implications are obvious in terms of what

these are, but less obvious in terms of how. In terms what these are, the research

findings are direct and explicit: managers need to adopt strategically formalised HRM

practices, which are becoming increasingly important, and in any case more effective

than independently adopted HRM practices. Concerning the how, it is again outside this

researchs scope to enter the field of internal HRM. It is appropriate though, to point

towards a number of steps that appear to be indicated (not proven though) by this

researchs findings:

a hotel managers need first of all to understand and appreciate the value of

strategically formalised HRM, as the realisation of the fact appears to be a greater

obstacle to its adoption than the process itself

b hotel managers need to have or gain the knowledge to develop and apply a

comprehensive strategy, since managers with essentially experiential knowledge tend

to deal with management functions independently and without interrelating them and

incorporating under a wider strategy


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c HRM in services starts from ensuring that the hotel has the right people for the right

positions and not simply by (re)organising existing HR

d this may demand for painful decisions regarding existing HR and in itself poses

another obstacle

e where managers do not have the knowledge/ability to undertake the responsibility of

developing strategically formalised HRM, the option of external consultants must be

considered, either for the HRM function alone or even for the comprehensive

strategic design of the hotel(s).

Regarding question 5, the degree of utilisation of this researchs findings at a

collective/industry level is proportional to the degree to which the industry and related

authorities generally collaborate with each other. In most regions of Italy and elsewhere,

there is substantial collaboration towards the overall improvement of services offered at a

local and regional level. In this context it is easy to see that there is considerable room foraction. Firstly, related authorities and associations can educate and train managers to

adopt the above listed points. Secondly, the same entities may organise or monitor the

training of hotel HR at all levels. Thirdly, and since strategic planning surfaces as a key

issue, authorities and associations may assist in the planning of local/regional tourism

strategies that give specific direction and even assistance to individual hotels strategic

business planning. For many localities, tourism is a primary economic activity and it is

expected that all stakeholders shall collaborate towards an integrated and comprehensive

design regarding all related businesses and of course, especially hotels.

6 Conclusions

While HR practices are more prevalent in Barbados hotels than in the UK sample, for the

Italian hotels the results were similar to those of the UK. External fit consequently

emerged as a fundamental issue. The relationship between HRM and performance was

shown to exist only among some hotels. With regards to internal fit, the results indicate

higher performance where HRM is formally introduced as an inherent part of the

organisational strategy. Additionally the research indicates a change in the role of HRM

in the business context, from a simple HR organisation function to a key strategic

marketing tool.

In the relationship between HRM practice and performance it is difficult to be certain

which is the cause and which is the effect of the correlation. Additionally, it must be

noted that the focus of the research was on larger hotels, whose adoption of HRM

practices is considerably greater than for smaller hotels. The results therefore, are clearly

not representative of the hotel industry as a whole.

The research findings stress the importance of incorporating HRM in the strategic

organisational context, as opposed to applying it as an independent function. In line with

most of the mainstream HRM and internal marketing literature, this researchs findings

support the need for a comprehensive approach to management, within a wider

methodically developed strategic context, as the means to long term business success.

The paper, further to its specific findings, continues to interrelate its theoretical and

empirical findings, and to conceptually develop these towards practical application; both

at the organisational and the industry/collective levels.


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This research is a valuable contribution to knowledge on the subject for three main

reasons: it is the first study of its kind regarding the Italian hospitality industry; it makesuse of past studies to make additional comparisons of international value; and finally, it

interrelates and extrapolates on the findings to offer practical prescriptive findings to both

individual enterprises and collective stakeholders.

Overall, this research has produced findings which, one the hand answer specific key

questions regarding hotel HRM performance, and on the other, interrelate theoretical with

empirical findings to reach more generic conclusions of practical value. The research has

reinforced the belief that HRM must be developed in a strategically formalised manner as

the means to improved performance. More importantly perhaps, it has put forward the

argument that HRM must be viewed, not simply as the means to organising human

resources in a better way, but as a key function of strategic marketing design, and

consequently, of competitive success.

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Notes

1 In this way, we can compare our sample with the one reported in Hoque (1999).

hrm practices performance and strategy in the italian hotel industry-libre

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