Aspects of International Human Resource Management in the Hospitality Industry

Abstract

The phenomenon of globalization emphasized the economic potential of the international hospitality industry and brought to the forefront several challenges that this sector must address, such us human resource management, marketing management and transcultural communication. Taking into account the fact that the hospitality industry is a component of the services sector, it is considered to be a branch centred on human resource and therefore its employees become part of the supplied product image, providing at the same time the instrumental indicators for designing the organization image. The global context of the hospitality industry, due to its international expansion, requires careful management of human resources, beyond geographical boundaries and workforce diversity issues, which implies that the role of human resource management has evolved from the simply administrative one to that of employee supporter and strategic change partner. [PUBLICATION ABSTRACT]

Headnote

Abstract

The phenomenon of globalization emphasized the economic potential of the international hospitality industry and brought to the forefront several challenges that this sector must address, such us human resource management, marketing management and transcultural communication. Taking into account the fact that the hospitality industry is a component of the services sector, it is considered to be a branch centred on human resource and therefore its employees become part of the supplied product image, providing at the same time the instrumental indicators for designing the organization image. The global context of the hospitality industry, due to its international expansion, requires careful management of human resources, beyond geographical boundaries and workforce diversity issues, which implies that the role of human resource management has evolved from the simply administrative one to that of employee supporter and strategic change partner.

Keywords: international human resource management, international hospitality industry, home country, host country, cultural diversity, multinational companies, globalization

JEL Classification: M12, O15

Introduction

The disappearance of economic boundaries between countries has encouraged companies in the hospitality industry to expand globally in order to create international brands, which brought to the fore the necessity of focussing their attention on providing services as an alternative to distinction in the competitive landscape. In this context, employment in international hospitality involves issues that are becoming increasingly important and the companies in the field have to adopt strategies meant to fulfill the social, economic and environmental needs of the countries and places where they operate.

In Torrington's view, international human resource management is in many aspects "... simply human resource management on a larger scale; the strategic considerations are more complex and the operational units more varied, needing coordination across more barriers".

Schuler proposes a slightly different point of view, defining international human resource management as "human resource management issues, functions, and policies and practices that result from the strategic activities of multinational enterprises and that impact on the international concerns and goals of those enterprises".

In the same vein, Boxall views international human resource management as being "concerned with the human resource problems of multinational firms in foreign subsidiaries (such as expatriate management) or, more broadly, with the unfolding human resource issues that are associated with the various stages of the internationalization process".

These definitions reveal the increased complexity of international human resource management, its main challenge being the way in which multinational companies manage to co-ordinate and integrate their units throughout the world, aspect that made Schuler ask a vital question: "Can multinational companies link their globally dispersed units through human resource policies and practices, and if so, how?'

International human resource management in the hospitality industry

Perlmutter, considered by Mayrhofer and Brewster originator and "father" of international human resource management, suggests that multinational organizations in the hospitality industry should aim for more than simply generating sales overseas, and consequently emphasizes an ethnocentric approach which is home-country oriented, a polycentric approach which is host-country oriented, a geocentric approach which is world-oriented; later on, the regiocentric approach, which means regionally-oriented, emerges being added in 1979 by Perlmutter and Heenan.

* The ethnocentric approach suggests that multinational organizations should maximize parent company control in order to suceed in integrating its geographically dispersed subsidiaries. Companies adopting this approach believe in the superiority of the modes of action implemented in the host country, and consequently these will exert a major influence both on their human resource strategies and on the way they manage their overseas units. In other words, this approach involves centralised systems, characterized by a high level of authority at headquarters, that is communication based on orders, commands and reports. Managerial positions are entirely filled with managers from the home country of the parent company, who are recruited, trained and developed to hold key positions anywhere in the world, within the organization's subsidiaries. This is meant to ensure that the home country approach can be easily transferred to other locations and the host country nationals will fully understand the headquarters culture.

* The polycentric approach allows for more local responsiveness and is based on the idea that multinational companies should respond to prevailing local conditions where possible. Companies employ managers from the host country as they know the area and understand its culture, which might lead to more effective staffmanagement. These also benefit from a high level of autonomy, local promotion opportunities, but they may encounter difficulties in dealing with the multinational company and obstacles in managing some of its core values.

* The geocentric approach, as outlined by Caligiuri and Stroh, refers to the situation when "... multinational companies desire an integration of all of their foreign subsidiaries and the melding of a worldwide corporate culture." In other words, as shown by Perlmutter, companies seek "the best man (sic), regardless of nationality, to solve the problems anywhere in the world" - and this is where the great advantage of this approach lies, the fact that companies get the best staffthat will be employed based on their experience and competence. The geocentric approach takes into consideration the competitive advantage generated by the organization's ability to draw on a wide variety of national and cultural opportunities, thus enabling a global strategy that also respects local circumstances - the notion of 'think global act local'.

* The regiocentric approach envisages companies operating regional business, involves recruiting managers within a wider geographic operating area and has the advantage of allowing their transfer.

According to Perlmutter, 'There is some degree of ethnocentricity, polycentricity or geocentricity in all firms', and therefore it is highly unlikely that one of these approaches will ever be found in pure form within any organization, although he strongly claims at the same time that a predominant approach can usually be distinguished.

Pauuwe and Dewe also showed that any dominant behaviour or state of mind of a company may be "determined by the phase of internationalization in which the company finds itself and by its history". A clear and important theme of Perlmutter's research is his acceptance of an evolutionary approach towards internationalization, but equally clear is his recognition of the difficulty and complexity of implementing the most advanced form of the geocentric approach, the "ideal" one. Regarding the geocentric strategy, Caligiuri and Stroh stated that: "... the 'ideal', as it attempts to balance both global integration and local responsiveness. In a hierarchy, the geocentric strategy would be the best because it incorporates both of the theoretical ideals. Polycentric and regiocentric strategies would be second because they satisfy the local responsiveness ideal (usually at the cost of global integration). Ethnocentric strategies, focusing on headquarters control are neither globally integrated nor locally responsive."

A switch to a global orientation would require that the organizations have the necessary means to create a base of 'global' managers, and assuming that this might be possible, it would involve a sophisticated human resource planning system and training infrastructure meant to enable a company to implement such a strategy. Organizations intending to pursue a geocentric strategy of human resource management should shape the following profile:

* The organization key decision factors come from different backgrounds and operate guided by global principles;

* The company culture is integrated and based on the experiences, attitudes and beliefs held by people from different countries

* Recruitment focuses on competence rather than nationality, so that recruits from different countries can be drawn to core positions;

* Training and development aims at treating managers from different countries as equals - managers accomplish a wide range of overseas tasks and build transcultural teams to learn from each other;

* The general principles adopted by the organization, which are based on the best practices in different countries, enable a behaviour adaptated to the local operating environment.

The way in which multinational companies in the hospitality industry manage to stafftheir overseas units represents another key factor of the international human resource management in the field. Being largely influenced by the predominant hedquarters orientation, multinational organizations probably prefer a mix of home-country, hostcountry and third-country nationals, so that in the early period of existence of an overseas subsidiary home-country nationals can be utilized, but over the time, third-country nationals and particularly host-country nationals will play an increasingly important role. Utilizing home-country, third-country and host-country nationals has a number of advantages and disadvantages for the company as follows:

* home-country nationals have the advantage of being accustomed to the headquarters goals, policies and practices, they exert control more easily over the operating subsidiary, they have technical and managerial competence and achieve good communication and collaboration with the headquarters staff. Among the disadvantages of utilizing home-country nationals there are listed the high costs involved in selecting, training and maintaining expatriate managers and their families overseas, the language difficulties and those related to the accommodation to the socio - economic, political, cultural and judicial environment of the host-country or to solving family problems that might arise, the host-country insistence regarding the decentralization of the activity and the promotion of local nationals;

* utilizing third-country nationals probably represents the best compromise made in order to benefit from technical and managerial experience and ensure accommodation to a foreign socio - economic and cultural environment - they may have solid information about the host-country environment and usually develop a career in the field of international business management. As disadvantages, it can be mentioned the host country sensitivity to nationals from particular countries; by utilizing third-country nationals, the local nationals are prevented from being promoted and filling managerial positions in multinational organizations;

* host-country nationals have the advantage of some low costs generated by their employment, they are accustomed to the socio - economic, political, judicial environment and to the business practices of their countries, they are sensitive to the requests of decentralization of the subsidiary activities; by utilizing them, opportunities for the promotion of local nationals are provided, and therefore there is an increase in the motivation and involvement in the organization. The disadvantages consist of the communication difficulties with the headquarters staff, of exerting a more effective control over the activities of subsidiaries, as well as of a lack of opportunities for the home-country nationals for gaining international and transcultural experience.

There might be three situations, of considerable importance, which force multinational organizations to send managers overseas. The first case is the one in which vacant positions need to be filled and the host-country nationals who have the necessary training are not available, and those who do not have it are difficult to be trained. In a more ethnocentric approach, which is control-oriented, properly trained home-country and thirdcountry nationals may be sent to maintain control, due to the fact that they know the rules and the company culture well, which facilitates the process of taking the right decisions. The second case is the one in which the organization aims to develop managers with potential in the long run, and hence offers them valuable international experience, which will probably consolidate their status within the company; in this case, transfers may arise even when there are host-country nationals who are properly qualified.

In the third case, there may be attempts to develop a more geocentric approach, in which control is exerted through acculturation, socialization and interaction between managers of different nationalities in order to create a global organizational culture which does not focus on national cultures; managers would thus become less ethnocentric coming into contact with a variety of cultures and with different cultural perspectives. A company that tends towards a more global perspective may encounter a series of problems related to: the approaches adopted for the development of international managers by the organization, the trajectory of an international career, employees accommodation to a new language and culture, etc.

Multinational organizations intending to pursue a geocentric approach must find answers to a series of questions related to the existence of a constant offer of mobile workforce, due-time availability of suitable applicants for vacancies, the existence of a database, large enough to manage a geocentric approach regarding stafftraining and development, etc. Referring to this, D'Annunzio-Green suggested that "For organizations wishing to develop a truly international manager, there needs to be a major transformation in managerial careers and development opportunities to enable the acquisition of the skills, knowledge and experience needed to work in a global market place".

Following some research, Gliatis and Guerrier added a fourth situation in which expatriation is used as a tool for motivating and keeping managers within the company. They noted that the expatriate managers proved to be more suitable for the roles of general manager, food sector manager, accommodation sector manager, while locals usually fill positions of human resource manager, finance managers and chief engineer due to their local experience.

The research of Gliatis and Guerrier on the one hand and that of D'Annunzio-Green on the other hand pointed out a brilliant future for the multinational organizations in the hospitality industry which adopt different internationalization approaches and utilize international managers.

After doing some research, Ferner considers that the home-country of a multinational organization is a key factor in pursuing a certain type of behaviour and the strategy analysis of such companies should take into account not only the business culture, but also the national economic culture in which they emerged. For example, it has been asserted that in the past the American and Japanese multinational companies had the tendency to be more ethnocentric and were dependent on expatriate managers to ensure that their policies and practices are properly pursued.

This approach lay accent on the detailed control of overseas subsidiaries of multinational companies and led to a higher level of formalization and centralization, to increased confidence in formal systems, in the human resource management policies and standards on a global basis.

As for Van Maanen and Laurent, they claimed that "All multinational companies bear something of a cultural stamp that originates in the society where the organization was first designed". Therefore, as Ferner strongly stated, even if the home country of a multinational organization does not have the capacity to offer a large volume of activities or sales, and it does not create many jobs, in reality, however, this may have a considerably more important role regarding the way of exerting control, the company position, the process of taking strategic decisions, staffselection for managerial positions or innovative areas such as research and development. The extent to which the national force leaves its mark on the behaviour of multinational organizations depends on the aspects taken into consideration, and therefore the national character manifests itself more strikingly in certain areas than in others.

The convergence theory, at the broadest macro-social level, represents a recognition of the capitalist development and this argument suggests that companies and organizations will increasingly resemble each other in order to accept the inevitable universal trends regarding technology, economic development, industrial policies, management styles and human resource practices. Hence, a universal style of business organization will emerge and the management practices and organizational performance will be shaped, by the "logic of industrialization" and by the technological change rather than by cultural or environmental variables. In such a context an important role will be played by multinational companies which will carry the best practices across national borders, will act as forces of convergence of all the practices belonging to the most successful national business environments; this implies the fact that on a national level specific versions of capitalism will emerge and these will be disseminated by multinational companies in hegemonic countries.

Conclusions

The home-country has a powerful effect over the overseas units of multinational companies, but they may be influenced, to a lesser or greater extent, by the particularities of the host-country which may manifest themselves both from a "cultural" and an "institutional" perspective.

The "cultural" perspective draws attention to a cultural diversity existing in any given society, the differences consisting of values, ideas and beliefs shared by people. In this context organizations should take into account not only these differences but also their effect on people's workplace behaviour.

In Tayeb's opinion, this perspective has an important role, firstly due to the fact that it acknowledges the existence of differences between cultural norms, values and attitudes specific to different societies, so people's mentality will probably be shaped by what is considered to be appropriate behaviour within a community. Secondly, he thinks that, in similar circumstances, different cultural groups will behave differently due to the differences underlying their values and attitudes, and finally culture will play a major role in shaping organizations to operate profitably, in colouring managerial behaviour and staffpolicies, as well as social institutions.

One of the most well known speciality literature authors, who studied the impact betweeen culture and people's workplace behaviour was Geert Hofstede. His work is perceived on the one hand as a stereotypical description of national culture, and on the other hand, as a useful tool helping to discover some foreign cultures and which can be used by managers as a practical framework for understanding cultural differences in order to manage effectively different people or diverse cultures. It is very important that the culture assessment focus on the general construction of the nation, thus, this aspect may be thought of as a curve, where most people will be close to norms, although in each society there will be people showing very different characteristics.

Consequently, mass cultural features will be considered a tendency or a description of an average individual behaviour, but clearly there will be potential for other individuals to behave differently. Finally, Hofstede's work is important because it suggests that a real convergence in organizational practices will never emerge, and this is due precisely to the existence of a multitude of cultural differences.

Tayeb observed that "The term "nation" refers not only to culture, but also to other social, economic and political institutions which have a significant bearing on the management style of organizations located in particular countries'. The "institutional" perspective mainly focuses on the companies and organizations' structural aspects, such as work division, career, social status, types of rewards, characteristics generated by the institutions of the host-country and which will affect elements such as education, training and the relations systems employee - organization. The relations system employee - organization is often mentioned as the least permeable element of the host-country environment, because it can often be based on a state regulated legislative framework. As a result, tensions may arise, in any host-country, between the activities of a multinational company and the national relations system employee - organization, this aspect being more evident in countries with strong regulatory frameworks and probably underlying the rules that a multinational organization must obey.

For example, an American company might normally operate without consulting the unions, however, if it operates on the territory of Germany it will be forced to acknowledge the unions and negotiate with them because the regulatory framework requires it.

In conclusion, under the influence of both culture and institutions, multinational organizations in the hospitality industry must carefully analyse what policies and practices of human resource management may be transferred, because, as Ferner noted "... not all elements [of an MNCs human resource policies] are 'exportable' being too rooted in native cultural assumptions; and second because to varying degrees host countries present obstacles to the 'import' of elements of foreign business systems, and colour the operation of those which are transferred."

References

References

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