Major Forces Driving Change in the Multinational Hospitality Industry
Excerpt of IH&RA White Paper on the Global Hospitality Industry
The growing complexity of the customer/employee interaction, driven by technology and the information age, will shape human resources needs in the future. The customer, armed with more information, will expect frontline and other hotel staff to be at least as knowledgeable about the firm’s offerings as they are themselves. This will be difficult in an industry characterized by low-skilled, low-paid personnel and a high degree of cultural and behavioral diversity among its employees.
The transition from teacher-centered education to a learner-centered educational system and to a knowledge-based economy brings a new worker onto the scene. Customers and employees will interact at a higher level; indeed the new worker will enjoy the intellectual challenge of solving the problems of the more informed customer.
The new worker will expect more freedom and will not tolerate the rigid leadership styles inherited from the era of the manufacturing-based economy. Instead, they will want to be treated as free agents in the employment relationship, being valued for their knowledge skills and competencies and compensated accordingly. They will embrace lifelong learning in a quest for personal development. They will also hold management to a higher level of social responsiveness, integrity and fairness which will require a leadership style that is radically different from the command-and-control approach embedded in today’s industry.
This, in addition to labour shortages, will combine to bring about changes in the workplace such as the flattening of the organisational hierarchy to refl ect the growing individualism of those educated in a learner-centred environment. Leaders will favour a more participatory approach with managers developing a ‘first among equals’ style to motivate the new worker. Leadership will be based upon competence, as opposed to seniority, and will be maintained through successful performance alone. New leaders will focus on achieving added value for owners and customers as well as employees.Exhibit 1.4: New Management
A growing shortage of qualified labour at all level of the hospitality enterprise can be expected to occur in the decades ahead, assuming continued economic growth world-wide. Such growth will push up the demand for knowledge workers to tackle the needs of the information age. Few would dispute that knowledge-related work offers more attractive working conditions, better compensation and self-actualization than the majority of the jobs in hospitality. The labour supply will also be impacted by demographics in the developed world as a large number of seniors retire from the workforce putting further strain on the economically active workforce. In the developing world, where the supply of labour is more plentiful, poor educational standards (in view of the need for knowledge-related workers) and the depletion of the workforce by HIV/AIDS and other diseases will ensure that demand for qualified labour continues to rise.
Further changes in the workplace will be brought about by the global capital market system and its influence on all members of the organisation to add value. As competition for business and capital increases, it can be expected that this ‘value adding’ criterion will penetrate to all personnel within the firm. Technology will pervade the human resource domain demanding higher levels of technological skill from all employees even in a ‘high touch’ industry like hospitality. It will also affect the way products and services are offered and sold. While the consumer will benefit from increased transparency, firms will be forced to improve their offerings so that they can avoid the pressure to compete on price alone. Arguably, the influence of technology on distribution will be to commoditize the industry but there are also indications that effective investment by management in such competitive methods are overcoming this problem, provided it has a workforce that can deliver in the technologically complex world.
The management of human resources will also be transformed by technology. Everything from finding a new job or switching job functions to updating skills will be done either exclusively by or with the assistance of technology. Record keeping, compensation and performance-evaluation will also be impacted. Employees will have opportunities to share knowledge-related work needs through intranets designed to allow employees to contribute to the firms needs. This element will become increasingly important in an industry constantly struggling to find and keep quality employees.
EDUCATION AND TRAINING
The above strategic issues will have a profound impact on industry education and training. New leadership and value-adding skills will be taught by new technologies as well as old methods: cyber universities will compete head on with traditional schools. Education will become increasingly customized to meet the individual learner’s needs while students, as purchasers, will be more discriminating as they pursue their self-development goals by customizing their learning experience and demanding the best both in content and delivery.
A new form of excellence will reshape hospitality education. This will threaten the marginal teacher of today especially if they are not industry-relevant, while a ‘superclass’ of academics will emerge that sells its expertise and style in many forms to individuals, schools and companies across the globe. Other academics will perform the role of graders, transfer agents etc. but will have no opportunity to return to centre stage, especially in a learner-centered environment.
Subject content will have to be re-thought. Hospitality education will move from a heavily skills-based focus with strong operational content towards a general management emphasis with value-adding at the central core. This will require a new body of knowledge to be developed and shared where specific research is built upon industry relevancy and need. Importance will also be placed on thinking skills, decision-making capability and creativity as firms seek to compete in a more uncertain, complex environment.
While operational skills will always be required (the industry has not changed to such a degree that it can exist without them) there will be additional emphasis on personal skill development, primarily because of the more complex workplace and the new type of worker mentioned above. It will address the need to be more effective in all customer/employee and employee/employee interaction. As both areas grow more diverse, this need will become greater.
Education and training will also have to focus upon technology. The ability to manage information and use it for competitive advantage is currently not part of the industry’s body of knowledge. Not only will it be necessary to teach managers and employees how the firm will use technology to compete, technology will also be used to train and develop individuals. Already, hospitality firms are developing ‘personal coaches’ using and harnessing multimedia components to guide the employee through everything from making pizza to providing a help desk for night auditors. Tomorrow’s worker will be more familiar with this type of learning and will reject firms and trainers who fail to keep pace with these developments.
The greatest challenge facing the industry today in the area of human resources is the investment in and timing of the education and training process. On the one hand, students will expect a more learner-centered approach. On the other, the industry’s management talent pool has been educated in the old school model. Orchestrating the transition will be no small task, especially if the formal body of knowledge is presently inadequate. The industry has a great deal to do to compete effectively for quality labour in the current environment. In summary, the industry is going through major change, much of it brought about by outside forces. Nowhere is the change so fundamental, nor does it need to be so far-reaching, as in the functional area of human resources. The focus on adding value is reshaping the management skill set that has so long prevailed. Technology is altering the business and likewise the skills necessary to compete. It is changing the learning process and the learner who in turn alters the workplace and the worker and demands a new type of manager. However, the body of knowledge necessary to bring about this new manager and worker is almost non-existent and it will take considerable industry action and leadership to correct this deficiency.
‘Leading Hospitality into the Age of Excellence - Expansion, Competition and Vision in the Multinational Hotel Industry 1995 - 2005’, September 2000, incorporates the fi ndings of the IH&RA’s ‘Visioning the Future’ programme which, in the last fi ve years, has convened more than twenty high-powered Think-Tanks on key themes - notably technology, health and safety, marketing, human resources management and finance in order to anticipate the threats and opportunities in tomorrow’s business environment and make projections about their impact and timing.
The section ‘Visioning the Future: Major Forces Driving Change in the MultinationalHospitality Industry’ considers seven areas decisive to the future development of the industry. Each is examined to determine the scope and complexity of the issue and the timing of its impact.
- Assets and Capital
- Health and Safety
- New Management
- Marketing, Distribution and Capacity Management
- Sustainable Development
- Social issues
The International Hotel & Restaurant Association (IH&RA) is the only global business organisation representing the hospitality industry worldwide. Its members are national hotel and restaurant associations throughout the world, and international and national hotel and restaurant chains representing some 50 brands. Officially recognised by the United Nations, IH&RA monitors and lobbies all international agencies on behalf of this industry, estimated to comprise 300,000 hotels and 8 million restaurants, employ 60 million people and contribute 950 billion USD annually to the global economy. For more information visit .
Caroline Harvey, Press Officer, (33 1) 44 89 94 07