Hospitality Industry in Australia

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Introduction

The Australian tourism and hospitality industry is facing considerable challenges. Economic uncertainty, labour market issues, natural disasters, and other problems have profound negative implications for the development of the entire sector. Because the hospitality industry is labour-intensive, the quality of Human Resource Management approaches predetermines the successes and failures within hospitality businesses.

At present, hospitality managers and leaders are free to choose between the hard and soft approaches to HRM. The former relates to the importance of strategic control, whereas the latter is essentially about motivation through commitment. Senior leaders working in the modern hospitality industry in Australia must adopt a new set of soft HRM skills to ensure the rapid development of sustainable competitive advantage.

Tourism and Hospitality Industry in Australia

In Australia, the tourism and hospitality industry is rightly considered as one of the major sources of revenues and profits, as well as a unique provider of vast employment opportunities.

However, the past several years were not easy for the hospitality businesses in Australia. Back in 2011, Australia had to deal with a series of natural disasters, including Queensland floods, which caused the shutting of large industry parts for a long period of time.

However, even natural disasters were not as damaging to the hospitality sector as the changes in the labour and industry conjunctures. At present, the tourism sector is being pressured by the mining industry, which has become extremely strong and draws workers from hospitality. In addition, continued recession in Europe reduces the number of travellers, who are willing to visit Australia.

Nevertheless, the prospects of industry growth in Australian hospitality are quite promising. The sector is responsible for at least 15 percent of the national GDP and currently employs approximately 500,000 workers. The growth of the new Asian economies, including China and India, promises to increase the number of international visitor arrivals in the nearest time.

Outbound travels by Australians will also increase, outpacing the growing frequency of international arrivals. What the hospitality industry needs is to emphasise the quality and relevance of its labour force, since the presence of high calibre workers is a vital prerequisite for the industry’s survival.

HRM within Organisations

The role of HRM in organisations has been abundantly explored. Moreover, in the recent years, researchers have become particularly attentive to the way HRM influences organisations’ performance. Earlier, the role of HRM was that of training, rewarding, and monitoring workplace performance. Today, the role of HRM has transformed, turning it into a vital driver of firms’ competitive advantage.

Present-day firms have abandoned the systemic view of HRM, which treats human resources as a distinct set of various practices related to personnel management. HRM has become strategy-oriented, and the appropriateness of its practices is reconsidered in light of the appropriateness and effectiveness of firms’ competitive strategies. As a result, the focus of HRM in the hospitality and other industries is on “adopting a new strategic role concerned with developing the organization and the capabilities of its managers.”

Current HR Practices in the Hospitality Industry

Given the unique specificity of the hospitality industry, it is possible to assume that the way HRM operates within the sector differs greatly from the way it works in other sectors. Generally, the hospitality industry is characterized by the high numbers of young, unskilled and low-skilled, low-paid casual workers, whose turnover rates are also high. According to Lucas, the hospitality workplace is highly individualistic, while the majority of HR practices are carried out by general managers.

HR managers and general managers in the hospitality industry do not rely on teamwork, while the instances of recruitment are much more frequent than in other industries. Statistically, at least 63 percent of all employees surveyed by Lucas came to the hospitality industry within the year prior to the study.

Recruitment methods used in hospitality are more informal and, at times, personal recommendations are enough to provide employment. However, the structure of rewards and benefits in the hospitality industry, as well as the historically “low-status” image of the tourism sector, exemplify serious barriers to hiring and retaining quality staff. The hospitality industry is well-known for its low pay and poor conditions of work. As a result, it comes as no surprise that most hospitality businesses experience the lack of professional workers.

Two Approaches within HRM: “Hard” and “Soft”

Generally, two different approaches can be distinguished within HRM. They are usually referred to as “hard” and “soft” approaches. The “hard” version of HRM is inseparable from tight strategic control. “Hard” HRM is quantitative and calculative; it is rational in everything that comes to business and organisational performance. In “hard” HRM, human resource practices and policies should be closely related to the organization’s strategic mission.

It is possible to say that, in the word combination “human resource”, “hard” HRM places emphasis on “resource”, while “soft” HRM is more “human”. In “soft” HRM, human relations, commitments and talents shape the basis for developing a sustained competitive advantage. This model of HRM is synonymous to high commitment work systems.

The basic intent of “soft” HRM is to generate workplace commitment through rewards and recognition of talents rather than external pressures and strict control. “Soft” approaches to HRM rely on communication and interaction. They emphasise collaboration and teamwork. “Soft” HRM facilitates the development of the employee development environment. Unlike the “hard” approach that is unilateral, autocratic, low-skilled and hierarchical, the “soft” approach is pluralistic, participative, demonstrative, and responsibility-devolved.

“Soft” HRM and the Development of Sustainable Competitive Advantage

The debate on how hospitality firms can develop a sustained competitive advantage is ongoing. Undoubtedly, employees and customers in the hospitality and tourism industry have become much more demanding. The centrality of HRM in driving firms’ competitiveness cannot be ignored.

The “soft” HRM approach is often claimed to be best suited for driving sustained competitive advantage in firms. This assumption relies on the premise that “soft” HRM drives competitive advantage by means of workplace commitment and inimitability of human resources. It is not difficult to imagine that people, who are strongly committed to their work and enjoy the workplace environment under the “soft” HRM model, will be much more likely to work for the benefit of the organisation and drive its performance in the long run.

Surprisingly, the current research says little about the relationship between “soft” HRM and sustainable competitive advantage. Generally, the concept of sustainable competitive advantage implies that the firm has a superior strategy that helps the firm resist its competitors’ advantage in a long-term perspective.

However, since sustainable competitive advantage is impossible without skills, it is “soft” HRM that emphasizes talents, commitments, teamwork and skills and that can also give hospitality firms a unique chance to sustain their competitive advantage over a prolonged period of time.

Enabling “Soft” HRM in Hospitality

One of the main questions is how managers in the hospitality industry can enable the implementation of “soft” HRM approaches. Basically, engagement and coaching represent the two most essential aspects of “soft” HRM hospitality businesses can adopt in their striving to improve business performance. More specifically, such firms will have to invest considerable resources in the development of their talents and skills.

They should pursue communication, openness and, therefore, trust in the relationships between employees and managers. The most essential enabling factors of “soft” HRM also include flexible work designs, teamwork, decision making involvement, participation and professional development, training, and pay-for-performance. The principles of control should be delegated and devolved.

Challenges to the Organizations Taking the “Soft” Approach

Excessive reliance on “soft” approaches in HRM is likely to raise a number of challenges, chief among them being misuse of responsibility and high investment turnover. In hospitality firms that do not know how to manage devolved responsibility, the consequences of “softness” in HRM may become devastating. However, the biggest problem is that the rhetoric of “soft” HRM does not always match the organisational reality.

Organisational behaviour may change little or not change at all, even when the organisation has all prerequisites for developing and implementing “soft” HRM models. The “soft HRM rhetoric communicates an attractive image of people trusting each other, sharing risks and rewards, and united by a strong feeling of identity, but it gives little sense of the impersonal economic rationalism that characterises management thinking in the real world.”

In other words, “soft” HRM approaches may lead hospitality firms into the darkness of irrationalism and unreasonable trust, thus losing the grip of the rational economic choices that are bound to profitability goals and strategic objectives.

“Soft” HRM and Senior Leaders

The use of “soft” HRM in the hospitality industry demands that senior leaders adjust their skills and decision making styles to match the requirements of the “soft” model. It goes without saying, that changes in HRM approaches invariably impact senior leaders. A senior leader who is trying to comply with the principles of “soft” HRM will first have to adopt a vision that differs from everything everyone else has been doing.

This vision should be clear to everyone, and the leader must ensure that it makes sense to everyone within the organisation. In addition, the leader must create a team of people, who support the vision, understand it, and show commitment to it. Such leader will have to provide continuous support through education and training, praise followers for their achievements, create employment conditions that foster and encourage personal development, and motivate followers to improve their skills and refine their talents on an everyday basis.

In the hospitality industry, many of these tasks are likely to be challenging. The reason is that leadership and HRM responsibilities are often imposed on general managers. They may simply be unable to combine their numerous tasks and obligations and bring the hospitality business towards its strategic goal. This is why the modern hospitality and tourism industry in Australia demands the creation of new leaders, who are aware of the benefits and challenges of “soft” HRM.

Discussion

The current state of the hospitality and tourism industry in Australia has enough resources to pursue continued growth but, at the same time, faces a number of challenges. Today’s hospitality managers are being torn between the “soft” and “hard” approaches to HRM. The former emphasises workplace commitment and talent development, while the latter is about strict compliance and workplace control.

Senior leaders in the Australian hospitality industry have different skills and talents to develop sustainable competitive advantage through “soft” HRM, from professional development and training to communication and employee engagement. However, the challenges posed by the use of “soft” HRM models should not be ignored.

Therefore, and taking into account the economic, labour, and social problems in the hospitality industry, senior leaders should find an appropriate balance of soft and hard approaches, which will motivate employees to work better while making them more responsible in their workplace obligations.

Conclusion

The vital role of HRM in driving firms’ competitive advantage has been abundantly explored. Today’s hospitality and tourism industry in Australia can use the growth potentials of HRM to meet its long-term sustainability objectives. The current research suggests that “soft” HRM holds a strong promise to develop and sustain firms’ competitive advantage in the long run.

This can happen, if senior leaders in the hospitality industry promote personal development and encourage their followers to participate in workplace decision, as well as create flexible work designs and facilitate teamwork.

However, given the limitations of “soft” HRM, senior leaders should find an optimal balance of the “soft” and “hard” approaches, to ensure that hospitality workers operate in favourable workplace conditions that foster their development and career growth, while also monitoring their compliance with the rules of the workplace game.

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