Tuesday, December 14, 2010
The hospitality industry has been suffering from a significant outflow of personnel for a long time now. In recent years however, hotels in particular are finding it increasingly difficult to find new, properly qualified staff. In the long run, the ageing of the existing workforce and the failure to recruit young people will cause a major problem in the industry, especially in the western world. Here, Dr. Rob Blomme, Associate Professor of Management and Organization at Nyenrode and Chair Professor HRM at Hotelschool The Hague, discusses the background of the staffing problem in the hospitality industry. In his opinion, these problems are due not only to the nature of the work, but also to the culture existing in the industry.
The world within our reachMuch has changed in the world in the field of hospitality and leisure over the past ten to fifteen years, says Blomme. “Living standards in regions such as Brazil and Southeast Asia have increased dramatically and many countries have also become more open to visitors. Twenty years ago, for example, it was very complicated for a westerner to take a cycling holiday in Vietnam. You needed to have a visa and all the paperwork. Now it is fairly easy to organize such a trip via a travel agency. Bhutan, often called ‘the world’s last paradise’, was closed to the outside world for centuries but this country has also opened up for tourism in the past ten years. Moreover, there is an ongoing trend for global passenger transport to get cheaper.” The result is that the opportunity to travel has come within the reach of many more people worldwide. Blomme: “The small hotels have profited from this, but the increase in demand has led, above all, to a boom for the major, international hotel chains.”
A combination of real estate and hospitality
According to Blomme, the multinational hotel chains are characterized by an unusually flat organizational structure: a head office and separate branches in the form of hotels. “Hotel chains have two faces", he continues. "On the one hand, the hospitality industry is about having real estate that has to make a profit. The profit is generated because people pay to stay in the hotels. The industry's other face is about offering hospitality. Big hotels are businesses that offer hospitality to make the real estate profitable. By contrast, small hotels are more oriented towards the authentic side of hospitality. For them, the main thing is that people have welcoming accommodation and feel comfortable.”
The outflow is lost to the industry
The combination of focuses – on the one hand making their real estate profitable and, on the other hand, providing hospitality – has all kinds of consequences for big hotel businesses when it comes to recruiting and retaining personnel. According to Blomme, “The outflow is increasing rapidly, especially as regards professional and management staff. In itself, a certain amount of outflow is healthy for an industry, but in this case it is not. This is because almost all the people leaving do not just switch companies; they switch to a different industry entirely." Blomme cites the example of a food and beverages manager at a hotel. Such a person can, he says, fairly easily switch to another function such as facilities manager at a hospital. “People who have been educated in hotel management to a high level are in great demand in other industries involved in some way with service provision. That means they are
head-hunted by businesses in other sectors.”
The combination of focuses – on the one hand making their real estate profitable and, on the other hand, providing hospitality – has all kinds of consequences for big hotel businesses when it comes to recruiting and retaining personnel. According to Blomme, “The outflow is increasing rapidly, especially as regards professional and management staff. In itself, a certain amount of outflow is healthy for an industry, but in this case it is not. This is because almost all the people leaving do not just switch companies; they switch to a different industry entirely." Blomme cites the example of a food and beverages manager at a hotel. Such a person can, he says, fairly easily switch to another function such as facilities manager at a hospital. “People who have been educated in hotel management to a high level are in great demand in other industries involved in some way with service provision. That means they are
head-hunted by businesses in other sectors.”
An interesting question is why workers do not switch to another company in the hospitality industry when they change jobs; for example, they do not switch from the Hilton to Starwood or NH. According to Blomme, this has everything to do with the very traditional character of the hotel industry. An important phenomenon in this is the corporate culture and here, one could say that there is a kind of master-apprentice relationship, in which people are brought up within a certain culture with a strong emphasis on loyalty.
Switching to a lower position: Loss of income
“Technically, there is nothing to stop high-level managers switching from one company to another", Blomme continues. "However, it does have the consequence that they have to start again at the lowest level of management, which of course has an effect on their salary. After all, they still have to prove that they fit in well with the culture of the new company. From that lower position, they then have to start all over again on their career path. So, due to the impossibility of moving to a different company at the same level or higher, many people opt to work outside the hospitality business altogether. In short, it has a deterrent effect.”
“Technically, there is nothing to stop high-level managers switching from one company to another", Blomme continues. "However, it does have the consequence that they have to start again at the lowest level of management, which of course has an effect on their salary. After all, they still have to prove that they fit in well with the culture of the new company. From that lower position, they then have to start all over again on their career path. So, due to the impossibility of moving to a different company at the same level or higher, many people opt to work outside the hospitality business altogether. In short, it has a deterrent effect.”
An extensive problem
Rob Blomme outlines the extent of the problem. “Research that I carried out in 2004 shows that seven out of ten graduates from the Netherlands' three major hotel management schools go to work in the hospitality industry. By the time they reach 30, only two are left. When they get to 40, only one is left. So you can conclude that 90% of them quit before they are 40. These people probably started their studies with plenty of enthusiasm, but, in the end, could not find any satisfaction in the sector.” In the past Blomme has studied the relationship between the psychological contract and the outflow. People are taken on in the hospitality industry because they have the ability to solve problems rapidly and are prepared to work extra hours when necessary. They have to radiate enormous loyalty and, at a given moment, this simply becomes too much for many people.
Outflow per age categoryIn relation to the outflow, Blomme says that it is interesting to zoom in on different age categories. In his opinion, salary is not the most important motivation for people wishing to work in the hospitality industry. “Hotel management students know that they will earn less in this industry than in comparable functions elsewhere. Nevertheless, they put up with the lower salaries because of the other aspects they feel the industry gives them: varied work, an international orientation, the chance to meet people and so on. These aspects compensate them for having a salary that is not so high. However, once they start working in the industry, they find out that it is not nearly so glamorous. And precisely because one strives to offer the same level of service, the work is fairly monotonous. The nature of the work is therefore the most important reason why young people leave the industry, not the salary.”
Another occasion when many employees quit the hospitality industry is when they decide to start a family. That is because this industry is, by definition, busiest at times when most other people are not working. The hospitality industry is very traditional, says Blomme. “The impossibility of working flexible hours and the poor balance between work and one’s private life are two of the most important reasons why people quit. In other industries they have been better able to counter this through all kinds of benefits, such as childcare facilities. In this way, such industries make it as easy as possible for people to continue working so that work can carry on as normal. Therefore many women stop working in this industry when they have children and recently, this is also increasingly applying to men."
However, if people are still working in the industry after they reach 40, it becomes less likely that they will leave it. In cases where that does happen, says Blomme, it is mainly as a result of the monotonous work. “The older managers themselves started off in a master-apprentice relationship and therefore tend to assume that everyone should adapt to their way of working. Such managers are less open to the idea that people should also be able to move around horizontally within the chain. However, I think that when the older managers retire, they will be replaced by new blood that will implement the changes, even if the old culture still persists to a significant extent.”Forced to make changes
Blomme believes that the hospitality industry pays too little attention to the people who work in it. “The outflow statistics are alarming, but the industry has not really noticed the effect yet due to the recent recession. In the western world, it will only become a major problem as demographic ageing increases. What will happen then, if young people no longer want to work in the industry?” Despite that, Blomme is positive about the future and thinks that the industry will be forced to make the hanges once the staff shortage becomes acute enough. “The United States and Europe will remain economic superpowers for the foreseeable future, which means there will be a continuing high demand for hospitality activities in the regions. Unlike ICT, management activities and professional service provision cannot be offshored in this industry. That means a turnaround has to come sometime.”
Blomme believes that the hospitality industry pays too little attention to the people who work in it. “The outflow statistics are alarming, but the industry has not really noticed the effect yet due to the recent recession. In the western world, it will only become a major problem as demographic ageing increases. What will happen then, if young people no longer want to work in the industry?” Despite that, Blomme is positive about the future and thinks that the industry will be forced to make the hanges once the staff shortage becomes acute enough. “The United States and Europe will remain economic superpowers for the foreseeable future, which means there will be a continuing high demand for hospitality activities in the regions. Unlike ICT, management activities and professional service provision cannot be offshored in this industry. That means a turnaround has to come sometime.”
Possible solutions
In recent years, organizations like Hilton and Starwood have set up all kinds of new management programs and are also looking for ways to make the hospitality industry interesting again for young people, says Blomme. But other hotel chains are looking for solutions in another direction. “They are looking for a solution through more control and standardization; for example, through protocols. That is a rather more ‘Taylorian’ approach and makes it possible for an organization to deal with a higher staff turnover. In effect, the rules do the work and new personnel can be trained relatively quickly.” This brings Blomme to a fundamental question: What actually is hospitality? Wouldn’t people prefer to go for a company that pays a lot of attention to hospitality than such a robotically managed company? Will the customers accept it or not? Various studies show that they won’t. According to Blomme, “Organizations that operate like machines lose out to organizations that try to polish up their hospitality and give their guests more intrinsic quality."
Therefore, because it is not always possible to achieve greater efficiency, solutions will have to be sought in other directions. Here Blomme feels that leadership in organizations has an important role to play in keeping staff turnover within limits. “Leadership plays a very important role in the psychological contract and in the amount of stress experienced by employees. We have carried out research in a variety of hotel chains and fortunately we came across few cases of autocratic leadership (‘do as the boss tells you’). At the same time, it is apparent that the dominant leadership style in the industry is very businesslike, highly task-oriented. It does not focus strongly on inspiring people, enthusing them and getting them involved in the effort to achieve a common goal. These are matters that are part and parcel of transformational leadership.” He therefore believes that a change in leadership style could get major results. “Real estate remains very important to head office, but in the hotels themselves one can still ensure that the guests feel good and that all the small but important details are covered. And for this, the employees and the management should also be appreciated and rewarded.”
Furthermore, Blomme believes there are various ways to improve the balance between work and private life. It is a fact that this sector has peaks at times when most people have time off work. However, hotel businesses are missing certain opportunities, he states. For example, they could make services available to their own employees so they can manage their family life better, something which ICT companies are already making a good job of. They could also investigate how to bring more flexibility into the functions. “At present, many people are on a 40 hour per week work contract and they are actually working 80 hours. Why shouldn’t you split that up, at management level, into a job for two people? Maybe that is not possible at a higher management level, but it is in the echelon below – at least for the group with few aspirations to get much higher."
In recent years, organizations like Hilton and Starwood have set up all kinds of new management programs and are also looking for ways to make the hospitality industry interesting again for young people, says Blomme. But other hotel chains are looking for solutions in another direction. “They are looking for a solution through more control and standardization; for example, through protocols. That is a rather more ‘Taylorian’ approach and makes it possible for an organization to deal with a higher staff turnover. In effect, the rules do the work and new personnel can be trained relatively quickly.” This brings Blomme to a fundamental question: What actually is hospitality? Wouldn’t people prefer to go for a company that pays a lot of attention to hospitality than such a robotically managed company? Will the customers accept it or not? Various studies show that they won’t. According to Blomme, “Organizations that operate like machines lose out to organizations that try to polish up their hospitality and give their guests more intrinsic quality."
Therefore, because it is not always possible to achieve greater efficiency, solutions will have to be sought in other directions. Here Blomme feels that leadership in organizations has an important role to play in keeping staff turnover within limits. “Leadership plays a very important role in the psychological contract and in the amount of stress experienced by employees. We have carried out research in a variety of hotel chains and fortunately we came across few cases of autocratic leadership (‘do as the boss tells you’). At the same time, it is apparent that the dominant leadership style in the industry is very businesslike, highly task-oriented. It does not focus strongly on inspiring people, enthusing them and getting them involved in the effort to achieve a common goal. These are matters that are part and parcel of transformational leadership.” He therefore believes that a change in leadership style could get major results. “Real estate remains very important to head office, but in the hotels themselves one can still ensure that the guests feel good and that all the small but important details are covered. And for this, the employees and the management should also be appreciated and rewarded.”
Furthermore, Blomme believes there are various ways to improve the balance between work and private life. It is a fact that this sector has peaks at times when most people have time off work. However, hotel businesses are missing certain opportunities, he states. For example, they could make services available to their own employees so they can manage their family life better, something which ICT companies are already making a good job of. They could also investigate how to bring more flexibility into the functions. “At present, many people are on a 40 hour per week work contract and they are actually working 80 hours. Why shouldn’t you split that up, at management level, into a job for two people? Maybe that is not possible at a higher management level, but it is in the echelon below – at least for the group with few aspirations to get much higher."
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