HR and Sustainability: Australian Tourism and Hospitality

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Introduction

Human resource is one of the most important factors in an organisations attempt to develop and maintain sufficient competitive advantage. Human resource plays an important role in the operation of business enterprises.¹

It also enhances an organisations ability to attain its goals and objectives. Findings of previous studies reveal that effective formulation and implementation of HR practices, systems, and policies contribute towards improvement in a firms operational and financial success.

Additionally, the alignment of a firms business strategy and with its HR systems increases the probability of attaining sustainability.

Sustainability refers to a firms ability to attain its goals in addition to maximising its shareholders long-term value. One of the known ways of achieving sustainability is by integrating various social, environmental, and economic aspects within a firms business strategy.²

Managers are currently listing sustainability as one of the core components in a firms operations. Integration of optimal HR practices by organisations in different economic sectors promotes their ability to attain greater sustainability.

In a bid to achieve, sustainability and hence competitive advantage, firms in different economic sectors should adopt effective in managing their employees. Firms can choose from two main HR approaches, viz. the soft and hard HR.

This paper evaluates the role of HR towards attainment of sustainability, and undertakes an analysis of the Australian tourism hospitality industry to illustrate the relationship between HR and sustainability.

Outlook of the tourism hospitality industry in Australia

The tourism hospitality industry is an important component of the Australian economy. The industrys earnings account for more than15 percent of the countrys Gross Domestic Product. It also provides direct employment to more than 500,000 citizens in addition to earning more than 10 per cent of the countrys total export earnings.

The industry ranks as the largest service export industry in Australia. Earnings from the tourism industry go to funding other vital economic infrastructure such as hotels, road networks, and airports.

The Australian tourism industry is characterised by a high-level diversity. A study conducted by Tourism Australia reveals that about 280,000 enterprises promote the industrys operations. The enterprises range from travel agents, casinos, transport companies, cafes, and accommodation.

The industrys success also arises from the fact that Australia has an efficient supply chain that generates high economic multipliers.

The Australian tourism industry is broad in nature, actually, people know it as the visitor economy, which is composed of international and domestic travels, work and study and visiting friends and family.³

The Australian tourism industry has a high competitive advantage compared to other countries. Its competitive advantage arises from its unique landscapes, indigenous heritage and culture, culturally diverse population, and nature-based tourism offering.

The tourism industry faces two major challenges, which include appreciation of the Australian dollar and increase in the intensity of competition. Despite these challenges, the industry has a high potential for growth due to its rich cultural, natural, and artificial attractions.

Approximately, substantial improvement within the industry will result in increment in its contribution to the countrys GDP to 50 per cent.⁴

The industrys future growth will rely on the high rate of economic growth being experienced in emerging economies such as Asia and China. The high rate of technological innovation will promote growth by making it possible for tour operators to interact with their customers.

Approaches that organisations can take in managing employees

Human resource management is a unique approach, which aims at enabling organisations attain competitive advantage by strategically ensuring a motivated workforce.⁵ There are two main perspectives to Human resource management, viz. hard and soft HRM.

Soft HRM

This approach deals with nurturing an organisational environment that is employee-centred. Employees are important contributors in a firms effort to achieve its goals. This approach asserts that employees are more productive if their level of commitment to the organisation is high.

The soft approach to HR management assumes that employees contribute to the creation of value thus leading to a firm attaining sustainable competitive advantage. For a firm to qualify as an employee centred unit, this approach emphasises on a number of aspects.

Some of these aspects relate to job satisfaction, employee motivation, developing employee knowledge and trust to improve employees engagement.

This approach also integrates management aspects aimed at promoting employee autonomy in addition to giving them an opportunity to participate in decision-making processes.

Soft approach to HR management postulates that management teams should allow employees to make decisions on their own regarding certain organisational issues rather than being controlled.

Additionally, the approach assumes that employees are most committed if they have a comprehensive understating of the organisations mission and operational strategies.⁶

In an effort to help organisations attain competitive advantage, soft approach to HRM supports various human resource practices and policies that recognise employees as valuable elements in the success of organisations.

In summary, the soft approach to HR management holds that an organisation can attain sustainable competitive advantage by ensuring effective and efficient employee involvement.

Other aspects that should be nurtured include high-trust, high employee commitment and developing an effective organisational culture.

Hard approach

This approach to HR is more instrumental and economically rational.⁷ The approach perceives employees as other organisational resources.⁸ Therefore, employees are managed in a similar manner like other resources with the objective of maximising returns.

People management strategies, which organisations incorporate in their operations, emphasise on maximising organisational control and attaining minimum labour cost.

This aspect paints the hard approach as a quantitative and calculative approach. Additionally, in this approach, labour is an important resource.

The hard approach to HR takes into account a number of approaches. Firstly, employees are considered as important resources in the operation of an organisation, and thus firms management teams have to use this resource effectively and efficiently to gain a high level of competitive advantage.

Secondly, line managers are assigned the responsibility of controlling employees in their effort to implement competitive and corporate strategies. This move shows that the hard approach is hierarchical and autocratic.

In summary, the hard approach to HR is business-oriented and emphasises more on increasing employee productivity and improving efficiency in the deployment of human resources.

Soft approach to enabling a sustainable competitive advantage for service industries

Hospitality industries such as tourism industries are more inclined to adopting soft approach in their effort to develop sustainable competitive advantage. Sustainable competitive advantage refers to unique sources of competitiveness, which competitors cannot imitate.⁹

Organisations that integrate soft HRM stand a high probability of attaining a high competitive advantage in the market. The soft approach to HRM maintains that employees are unique organisational resources for value can be added to them thus generate sustainable competitive advantage.

One of the factors that promote increased inclination towards soft approach within the service industry is the need for capable, reliable, and service-oriented employees.

The success of firms within the service industry hinges on the quality of service delivered. Managers of service companies cannot measure the performance of employees like in the case of dealing with products. Therefore, they have to trust their employees to offer efficient services.

Considering the competitive nature of the Australian service industry such as the tourism industry, it has become critical for firms in the industry to become service oriented with the objective of ensuring that their customers attain the highest level of satisfaction.

The management of these firms can only achieve this goal by ensuring that employees are highly committed towards service delivery. Additionally, HRM in the service industry incorporates soft approach in an effort to align HR strategies, business strategies, and plans.

Initiatives and enablers that the hospitality industry can take

Management teams of firms within the hospitality industry can adopt a number of human resource initiatives to develop sustainable competitive advantage. These initiatives will contribute towards development of a sustainable enterprise and they include:-

Change management

The tourism industry in Australia is characterised by intense competition and to counter the negative effects of competition, firms in the industry should formulate optimal operational strategies. One of the ways to achieve this objective is by adjusting some of the operational strategies.

In most cases, organisational management teams experience resistance from employees during the process of incorporating change and thus to ensure successful change implementation, firms management teams should adopt effective change strategies, which can be attained by educating the employees regarding the intended change.¹⁰

Additionally, change management will also lead to development of competencies in addition to supporting workforce engagement.

Change management will also enhance a firms ability in managing talent thus increasing the firms capacity to attain sustainable competitive advantage. One of the change initiatives that a firm should consider relates to coaching its employees in a bid to develop strong core competencies.

Developing and inculcating effective values

Firms management teams should develop sustainable values. Sustainable values form the basis of a firm attaining competitive advantage. Inculcating values amongst employees culminates in the creation of a sustainable mindset amongst the employees.

Nurturing good values amongst employees will increase the probability of the organisation attaining its business goals, for the firms management team will manage to incorporate effective leadership style, thus leading to a total transformation of the organisation.¹¹

Facilitate holistic integration and collaboration

The success of an organisation is greatly dependent on the effectiveness with which lower level employees collaborate with the top management. Consequently, tourism firms should nurture a high level of collaboration and teamwork amongst its employees to succeed in the dynamic nature of the tourism industry.

Through collaboration, it will be possible for a firms management team to deal with diversity within its workforce and other business associates.

Incorporation of teamwork and collaboration initiatives will improve the effectiveness with which management teams develop strong relationships within and without their organisations.

Challenges that organisations experience by taking into account soft approach

Despite the benefits that firms within the hotel industry can achieve by incorporating soft HR, a number of challenges come with the adoption of such challenges. Soft HR considers employees as an important resource in the success of the organisation.

Soft HR requires firms management teams to formulate and implement an employee-training program to improve employee job satisfaction.

In addition, an organisation might be required to implement a number of programs in an effort to motivate employees. Implementation of such programs may be expensive to the organisation thus leading to financial constrains.

Soft approach to HR also postulates that firms management teams should give employees an opportunity to participate in decision-making processes. This element might limit the effectiveness and efficiency with which hospitality firms respond to changes in the business environment.

Employee participation may cause the decision making process to take a long duration and thus the organisation may not manage to exploit the opportunities present in the market.

Ways in which HR influences senior management to develop sustainable competitive advantage through soft HR.

Human resource management influences top management teams to develop their human capital in a number of ways, and thus increases the probability of organisations attaining sustainable competitive advantage.

Some of these ways relate to adoption of best HR practices such as leadership and development, incorporation of change management, talent management, ensuring workforce engagement, and promoting ethics and governance.

HR also influences senior management by promoting a high level of cohesiveness in the organisation through adoption of various collaboration and teamwork initiatives.

Discussion

The analysis of soft and hard approaches to human resource management shows that soft approach to HR is more effective in the hospitality industry when compared to hard HR.

The appropriateness of soft HR to tourism hospitality industry is increased by the fact that the industry is service oriented. Hospitality firms are required to become effective and efficient in their service delivery in a bid to ensure a high level of satisfaction.

Adoption of the soft HR approach also contributes towards a firm developing a strong reputation as an employer. Soft HR enhances an organisations ability to incorporate knowledge management in addition to nurturing a more creative workforce.

Conclusion

The tourism hospitality industry is an important component of the Australian economy. However, firms in the industry are facing a number of challenges currently. One of these challenges is the ever-rising competition and appreciation in the value of the Australian dollar.

Therefore, in a bid to counter the intense competition in the market, firms in the industry should consider developing sustainable competitive advantage. One of the ways through which firms can achieve this goal is by incorporating optimal HR management practices.

Given that tourism hospitality is service oriented, firms in the industry should adopt soft HR practices for such a move will contribute towards development of sustainable competitive advantage.

Bibliography

Armstrong, M, Strategic human resource management: a guide to action, Kogan Page, London, 2008.

Hitchcock, DA & MA Willard, The business guide to sustainability: practical strategies and tools for organisation, Earthscan, London, 2009.

Lamb, CW, JF Hair & CD McDaniel, Essentials of marketing, Cengage Learning, Ohio, 2009.

Nickson, D, Human resource management for the hospitality and tourism industries, Butterworth-Heinemann, Amsterdam, 2007.

OFallon, MJ & DG Rutherford, Hotel management operations, John Wiley, New York, 2009.

Page, SN & JC Connell, Tourism: a modern synthesis, Thomson, London, 2007.

Thompson, JL, Understanding corporate strategy, Thomson Learning, London, 2001.

Thompson, JL & FM Martin, Strategic management: awareness and change, Thompson Learning, London, 2005.

Footnotes

¹ M OFallon & D Rutherford, Hotel management operations, John Wiley, New York, 2009, p.86.

² D Hitchcock & M Willard, The business guide to sustainability : practical strategies and tools for organisation, Earthscan, London, 2009, p.109.

³ OFallon & D Rutherford, p. 111.

⁴ Hitchcock & M Willard, p. 97.

⁵ J Thompson & F Martin, Strategic management: awareness and change, Thompson Learning, London, 2005, p. 211.

⁶ J Thompson, Understanding corporate strategy, Thomson Learning, London, 2001, p.47.

⁷ D Nickson, Human resource management for the hospitality and tourism industries, Butterworth-Heinemann, Amsterdam, 2007, p.75.

⁸ M Armstrong, Strategic human resource management: a guide to action, Kogan Page, London, 2008, p.185.

⁹ Hitchcock & Willard, p. 164.

¹⁰ S Page & J Connell, Tourism: a modern synthesis, Thomson, London, 2007, p.99.

¹¹ C Lamb, J Hair & C McDaniel, Essentials of marketing, Cengage Learning, Ohio, 2009, p.57.

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